Glossary
Payroll

Time Tracking

By: Alec Hollingsworth
Updated:  
November 10, 2026

DEFINITION:

Time tracking is the process of recording employee work hours for payroll and project allocation purposes.
Time tracking in payroll refers to the systematic recording of employee work hours, including regular time, overtime, breaks, and paid time off. This process ensures accurate calculation of wages, compliance with labor laws, and proper allocation of labor costs to specific programs or grants. Nonprofits often require meticulous time tracking to fulfill grant requirements and demonstrate program efficiency. Effective time tracking also aids in budget planning and audit preparation, as organizations can provide detailed records of how staff time is utilized across projects. Many organizations use digital tools or software to simplify capturing and reporting employee hours.

Key Takeaways

  • Ensures employees are paid accurately for hours worked
  • Supports compliance with labor laws and grant requirements
  • Enables proper allocation of staff costs to programs or funds
  • Facilitates transparent and auditable payroll records

Why It Matters

Accurate time tracking ensures fair pay, legal compliance, and transparent grant reporting.

Real World Example

A nonprofit youth center receives a government grant to fund an after-school program. To comply with the grant’s reporting requirements, staff must track their hours spent on this program separately from other duties. Using a time tracking system, employees log their daily hours dedicated to the grant-funded activities. At the end of the pay period, the organization can accurately calculate wages paid from the grant and demonstrate to the funder how resources were used. This also ensures that only eligible time is billed to the grant, protecting both the nonprofit and the grantor.

How Aplos Helps

Track employee hours and manage payroll with Gusto, which integrates with Aplos fund accounting. Employees can log their hours in Gusto, and approved time can be used for payroll. Payroll transactions then flow into Aplos, helping your organization track labor costs by fund and prepare financial reports.

Frequently Asked Questions

Why is time tracking important for nonprofits?

Time tracking helps nonprofits pay employees accurately and document how staff time is spent. When required by a grant or project, those records can also support labor cost allocation and funder reporting.

Can Aplos support time tracking?

Through Aplos’ integration with Gusto, employees can log their hours in Gusto for payroll. Payroll transactions then flow into Aplos to support fund accounting and financial reporting.

What methods are commonly used for time tracking?

Organizations may use paper timesheets, spreadsheets, or digital tools such as Gusto to record and manage employee work hours.

How does time tracking support grant compliance?

Time records can help document work charged to a grant and support financial reports and audits. Requirements vary by funder, so organizations should check what documentation each grant requires.

What should be included in a time tracking record?

A time record typically includes the employee’s name, the date, hours worked, and, when needed, the project or activity. Organizations should also follow their policies and funder requirements for review and approval.

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