Employee Time Clock For A Small Business

How should one choose a time clock for their small business? This is not a trivial task. There are many things to consider. You may already have a specific type of time clock in mind. Maybe you're thinking of a mechanical wall mount, perhaps a digital wall mount. Or possibly you see the benefits of technology and are envisioning a PC or online time tracking system. This guide will also help with employee time tracking for nonprofits. 

I have a little secret you will find near the end of the article. Please read on.

Either way, I will ask you to take the specific type of clock out of your mind for now. The first thing that needs to be done is determining the kind of time clock that best suits your business needs. So please take a moment to explore the 4 basic types of employee time tracking systems.

Mechanical Wall Mount Punch Clock

This is the traditional punch clock that everyone has seen and possibly used before. You can buy these clocks at your local office store or online for about $200 - $400 each. You will also have to purchase punch cards for your employees to use. These are weekly cards. The punch cards will cost about $100 per year for 15 employees. With this type, the time clock is mounted in a central place in your facility. There is typically a time card rack mounted on the wall. Each employee will grab their time card, insert it into the clock, and the current time will be punched onto the card. When using paper time cards, it is recommended that you keep records of employee hours for at least 10 years. Get a big file cabinet for this. An ex-employee can come back at any time and file a DOL investigation against you. Proper records will be a great benefit to you.

Benefits

• Super easy to install
• Easy for employees to use
• Highly reliable

Drawbacks

• Increased risk for buddy punching
• High error rate when calculating time cards
• Consumes large amounts of time to add hours

Digital Wall Mount Time Clock

Next, we have the digital wall mount time clock. This device is generally connected to the computer network of your organization. A professional will need to perform the installation, running network cables and possibly a power outlet. Once installed, the clock will need to be configured on your network. Again, an IT tech will need to do the network installation of the device. The software will need to be installed (and updated regularly) on your server or possibly a PC. This software will collect the employee punches and perform the necessary calculations to generate time cards for payroll. The actual device will cost between $300 and $600 per station. You will also have to consider the possibility of running network cables and power to the device itself. Some systems require a server. If you do not have a server, the cost can be upwards of $3000 for initial installation. There are also monthly/yearly computer and server maintenance fees to consider. For the one server, you can expect around $300 per year. You will also want to think about offsite backup. At any time, a former employee may hit you with a DOL investigation, and you are required to have the proper records in place.

Benefits

• Automatic time card calculations
• Integrates with payroll
• May offer biometric (fingerprint) capabilities

Drawbacks

• High initial & annual investment
• Difficult install & moderately challenging to use
• No offsite backup

PC / Networked Employee Punch Clock

This type of punch clock system does not use a wall-mounted clock. Instead, employees punch in and punch out using computers. There are two variants. The first is where each user uses their PC to punch, and the second is when many employees use a single PC to punch in/out. This system generally requires a server to be installed and a PC setup for every punch location. The software will need to be installed (and updated regularly) on the server and each PC. Costs for a server are the same as the aforementioned digital time clock system, about $3000 for the server and about $300 per year for maintenance. Backup of time data is also essential here. You will want at least 10 years of retention in the event of a DOL suit against you.

Benefits

• Automatic time card calculations
• Integrates with payroll
• Lower investment than digital wall mounts

Drawbacks

• Moderate initial & annual investment
• Difficult install & moderately challenging to use
• No offsite backup

Online (Web Based) Time Clock

Finally, we have the online time clock solution or SaaS as coined by SalesForce. With this system, all interaction is performed using a web browser or with phone apps. Some systems will even have biometric (fingerprint) employee punch options. Others will have Geofencing(GPS location) controls to limit where employees can clock in and clock out from. The initial investment into a web-based system is generally $0, as most SaaS companies offer free trials of their time clocks. Most online time tracking systems charge a nominal monthly fee. This fee is generally between $2.00 and $5.00 per employee per month. With an online punch clock system, there are no server or PC installations required. As a bonus, there are no updates or monthly maintenance costs either. As I have mentioned in the previous three types, backup is essential. With reputable web-based punch clock apps, offsite backups happen automatically.

Benefits

• Instant setup & easy to use
• No hardware or software installation
• Integrates with payroll
• Available on any device
• Location control eliminates time theft (buddy punching)

Drawbacks

• It only works when the internet is up
• Vendor must prove reliability & uptime
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Take-Aways

So here I have compared the four basic types of time tracking systems: Mechanical wall mount, digital wall mount PC/Server based, and online. There is one thing that I did not tell you at the beginning of this article, and this is my “little secret.” The secret is that I am the founder & CEO of OnTheClock, we are an online punch clock app. I believe that your best option is to choose online, be it us or our competition, it will be the best choice for you. Just search Google for “Online Time Clock,” and you will find many options to choose from. 

Here I created a chart comparing the primary time clock types. The dollar amounts assume you have 15 employees.