Bookkeeping12 June 20263 min read

Invoicing hours and projects: time tracking that holds up

Whether you work by the hour or use fixed project prices, good time tracking matters to freelancers for two reasons: for your own invoicing and for the hours criterion in your tax return. This article explains what accepted time tracking looks like, how to bill hours per project, and when a fixed price or an hourly rate serves you better.

What is the hours criterion and why does time tracking matter?

The hours criterion is a minimum number of hours you must spend on your business each year as a freelancer to qualify for certain tax benefits, such as the self-employed persons' deduction. Check the current minimum number of hours with the Belastingdienst, as this can change.

To demonstrate that you meet this criterion, you must keep watertight time records. This means not only billable hours for clients, but also time spent on acquisition, admin and training.

Without credible time records, the Belastingdienst can question the hours criterion, and therefore your tax benefits, during an audit, even if you actually put in enough hours.

What makes time records credible?

Log hours as close to the moment itself as possible, or at the end of the day, rather than reconstructing afterwards what you did a month ago. Records filled in all at once at tax return time look less reliable.

For each entry, note not just the number of hours but also a short description of the work, and where relevant, for which client or project. This makes the record verifiable and concrete.

Preferably use a digital system with timestamps rather than a loose Excel file you can edit retroactively. The latter raises suspicion more quickly during an audit, even if everything is actually correct.

How do you bill hours per project to the client?

If you work on several projects at once, link every logged block of time to the correct project or client. That way you avoid hours for one project accidentally being billed to a different client.

For longer projects, periodically send an interim overview of hours worked, even if you only invoice at the end. This gives the client visibility and prevents surprises on the final invoice.

State a clear breakdown on the invoice itself: date, number of hours, description of the work and the hourly rate applied. An invoice that just shows a total amount for 'work carried out' often prompts questions from clients.

Fixed price or hourly rate: when do you choose which?

An hourly rate suits work whose scope is hard to estimate in advance, such as maintenance, support or work with an unclear scope. You then run less risk of being underpaid for extra work.

A fixed price works better for a clearly defined project with a concrete end result, such as building a website or delivering a report. The client knows exactly where they stand upfront, which builds trust.

A middle ground is a fixed price per phase, where you split a larger project into manageable chunks, each with its own price. This combines the predictability of a fixed price with the flexibility to adjust along the way.

How do you keep time tracking and invoicing aligned?

Avoid duplicate work by linking hours you log for a client directly to invoicing, instead of keeping them separate and retyping them later. Retyping is a well-known source of mistakes.

When drawing up the invoice, check that the logged hours match what you agreed with the client, especially with a fixed hourly rate or a project cap. That prevents discussion afterwards.

TelMaar links time tracking directly to invoicing, so logged hours end up on the invoice in a single action, with the correct description and rate. That not only saves time, it also reduces the chance of mistakes between the log and the invoice.

Frequently asked questions

Do hours spent on acquisition count towards the hours criterion?

Yes, it is not only billable hours for clients that count, but also time spent on acquisition, admin and training related to your business.

Is an Excel file enough as time records?

It can work, but a digital system with timestamps is more credible during an audit, because an Excel file is easier to adjust retroactively without this being visible.

Do I always need an itemised list of hours on the invoice?

It is not mandatory in every case, but it is strongly recommended for hourly-rate work. It makes the invoice transparent and prevents discussion with the client about the amount billed.

This article is general information, not tax or legal advice. When in doubt, consult an adviser; rules can change.