Timesheets for SBIR Companies: Why Everyone, Including the CEO, Tracks Time

Many SBIR companies are founded by researchers who came out of a university lab, where effort was often reported as a rough percentage once a month or once a semester. A federal R&D award to a company works differently, and timekeeping is where that difference shows up first.

The short answer

Everyone in the company keeps a timesheet, including the CEO and people who never work on a funded project. Entries are made daily, record actual hours rather than percentages, and list each contract, grant, and internal activity separately. A supervisor approves each timesheet, and corrections leave a visible record. This applies to SBIR grants as well as contracts.

Why timesheets matter more than you think

It is tempting to see timesheets as a way to bill the hours on a project. For an SBIR company, they do something bigger: they prove the indirect rate.

Time spent running the business, writing proposals, and preparing commercialization plans is often a small company's largest single indirect cost, and without a daily record there is no way to prove it was incurred. Without timesheets, a CEO's labor cost for running the company cannot be counted toward the indirect rate, which quietly loses the company money it could otherwise recover through billing. For how that rate gets built, see How to Build the Indirect Rate in Your SBIR Phase II Cost Proposal.

Who needs a timesheet

Everyone, including the president or CEO, even if they never perform work billable to a customer. This is explicit in the U.S. Small Business Administration's own SBIR accounting guidance.

On grants, too. Timesheets are not only a contract requirement. Granting agencies like NIH and NSF expect them as well. NSF's own position: organizations receiving NSF awards are required to have adequate timekeeping systems, with time and effort records maintained so that salary charges to a grant can be verified. For how the rules differ by agency, see SBIR Grants vs. SBIR Contracts.

What a compliant timesheet looks like

Feature	What it means	Why it matters
Daily entries	Time is recorded each day, not reconstructed at the end of the week or month	Records made at the time are credible; reconstructions are not
Actual hours, not percentages	Each entry is hours worked on a specific activity	The SBA specifically warns against the percentage-of-day approach common at universities
Every activity listed separately	Each contract, grant, and directly billed project has its own line, plus indirect activities such as proposals, admin, and paid leave	Costs must be accumulated by award, and indirect time must be visible
All hours recorded	The total includes hours beyond a standard day, not only the billable ones	Reviewers look for total time reporting, including uncompensated overtime
Employee certification and supervisor approval	The employee signs off, and someone who knows the work approves	Shows the record is both accurate and reviewed
Traceable corrections	Changes keep the original visible, with who changed it and when	Overwritten entries are a red flag in any review

The SBA's guidance also recommends weekly submission, even where a sample timesheet is twice-monthly, as a way to make sure daily entry is actually happening. For the full set of controls auditors test, see DCAA Timekeeping Requirements: What Auditors Actually Check.

What auditors actually check

In a floor check, a live test of timekeeping, auditors want to see the days already recorded by the time they arrive. Paul Calabrese, a former DCAA auditor, has described the single most common mistake this way, in one of our DCAA Ready sessions:

"Not filling your timesheet out daily. You're gonna get a letter. It's going to all your [...] procurement offices."

Paul Calabrese, former DCAA auditor

Uncompensated overtime is the other pattern reviewers look for. When people regularly work beyond a standard week but only record the standard hours, reviewers want to understand how that additional time is reflected, particularly when it is split across more than one award. Total time reporting, recording every hour worked rather than only the billable ones, is central to passing this kind of review. For what else a floor check covers, see How to Prepare Your Team for a DCAA Floor Check.

The academic habit to unlearn

Researchers coming from universities are used to effort reporting: a periodic statement that, for example, 60% of their time went to one grant and 40% to another. The SBA's guidance is explicit that a small business should record actual time, not percentages of the day "as is popular at some universities," especially once the hours add up to more than eight in a day.

The practical shift is small but real. Instead of certifying a split after the fact, a researcher records what was actually done, each day, by activity. The percentages still exist; they just come out of the records instead of going into them.

Planned or projected time runs into the same issue. In a cost-reimbursable award, what counts is time actually charged, not a forecast of how hours will likely split. As Paul Calabrese put it:

"Projections of time are not appreciated, because everything with [a] cost reimbursable contract [...] is actual time charged."

Paul Calabrese, former DCAA auditor

Legitimate exceptions, such as a pre-approved vacation entered in advance, belong in a written timekeeping policy that spells out how they are recorded and approved.

A simple rollout for a small team

1. Put a timekeeping policy in writing. Cover daily entry, who approves, how corrections work, and how leave and holidays are recorded.
2. Set up every activity people can charge. Each award as its own project, plus indirect categories such as general admin, bid and proposal, PTO, and holiday.
3. Start with everyone, including founders. Leaders who skip timesheets undermine the indirect rate and set the wrong example for the team.
4. Approve weekly. A supervisor who knows the work reviews and approves each timesheet.
5. Practice before it counts. Run a short mock floor check so people can explain what they charge and why before an auditor asks.

How WiseCost fits

WiseCost turns the rules above into how time entry actually works day to day, on top of the QuickBooks Online account a company already uses.

Instead of asking a team to remember the requirements, the system enforces them: time is logged daily by the person who worked the hours, approved by someone else who knows the work, and locked against the quiet edits that undermine a record's credibility. Indirect activities (proposal writing, admin, PTO, and holidays) get their own place to be charged, so a full week is accounted for rather than just the billable part of it. Expected weekly hours and automatic reminders keep total time accounting from depending on anyone's memory.

Every entry, edit, approval, and rejection is kept with who acted and when, which is exactly what a floor check tests. And because approved hours flow into labor cost in QuickBooks Online each payroll period, the same timesheets that satisfy a reviewer also feed the company's indirect rates.

A short walkthrough of how it works:

Alongside the system, a written timekeeping policy and a short team training round out what a reviewer looks for. The free DCAA Readiness Self-Assessment is a quick way to see where a company's current setup stands.

FAQ

The Bottom Line

Timesheets are not paperwork for its own sake. For an SBIR company, they are the evidence behind both the hours charged to an award and the indirect rate that pays for running the business. Everyone records, every day, in actual hours, with approval and a trail. Start that habit in Phase I, while the team is still small, and it will already be second nature by the time a Phase II review asks to see it. The full Phase II checklist is in SBIR Phase I to Phase II: How to Get Your Accounting Ready Before the Award.

---

WiseCost offers a 14-day free trial, no credit card required, or you can book a demo to see daily time entry and approvals set up for your team.

Official Sources

• Timesheet expectations for SBIR/STTR companies, including NSF's requirement: SBA, Accounting and Finance Tutorial 2
• DCAA guidance for contractors: dcaa.mil
• The SF-1408 form: GSA, Preaward Survey of Prospective Contractor (Accounting System)