Distinguishing Between Direct and Indirect Hours

Monday, 14 October 2019

As a business owner, you deal with direct and indirect hours. It’s essential to understand how these work and what they mean for your business. This article explores the differences between direct and indirect hours and how they’re used in Keeping.

Direct and indirect hours help you keep more accurate time records

A Plus subscription is required to distinguish between direct and indirect hours. Check out our pricing page for more information.

What’s the Difference Between Direct and Indirect Hours?

For business owners, it’s crucial to know which hours you can bill clients for. To make this easier, Keeping allows you to distinguish between direct and indirect hours.

Direct hours are those that relate directly to the core activities of your service or business. Indirect hours include tasks outside these core activities, such as administrative work, internal meetings, or time spent on courses and training. Since these indirect hours cannot be billed to clients, they’re marked as “indirect hours.”

Indirect Hours for Tax Purposes (Freelancers)

For freelancers, direct and indirect hours have an additional significance. You can count both direct and indirect hours toward the hours requirement for tax purposes. Indirect hours that can be included might consist of:

time spent preparing for a project,
travel time for client visits or assignments,
commute time, and
time spent on business website creation.

These hours can be counted under the indirect hours label toward the hours requirement.

Tracking Direct and Indirect Hours with Keeping

We’ve made tracking direct and indirect hours as flexible as possible by allowing these labels to be assigned at both the project and task levels. This means that for each project, you can specify whether it contains direct hours. Additionally, for each task, you can specify if hours logged are direct or indirect.

Using Direct and Indirect Hours in Invoicing

If you’ve linked Keeping with an external invoicing program, you can use the distinction between direct and indirect hours when creating invoices. By default, indirect hours are not included in invoices. However, you have the option to include indirect hours if necessary, making it easy to create accurate invoices for your clients. Extra invoice options Choose to include indirect hours when creating an invoice.