The Best Way to Track Non-Billable Time for Capacity Planning
For accounting firm leaders, the mystery of "where did our time go?" often lies in untracked non-billable hours. This step-by-step guide shows you how to capture this data to make informed capacity and strategic growth decisions.
Topic: Practice Management • Updated: January 2026
Accurate capacity planning in an accounting firm requires visibility into all time, not just what's billable to clients. Non-billable time—admin, training, business development, and internal projects—represents a significant portion of your team's capacity. Tracking it is the key to realistic forecasting, fair workload distribution, and protecting profitability.
Your 5-Step System to Track Non-Billable Time
Follow this actionable framework to build a sustainable tracking habit across your firm.
Define & Categorize Non-Billable Activities
Start by creating a standardized list of non-billable categories that make sense for your firm. Avoid vague labels like "admin."
- Firm Operations: Internal meetings, software training, file management, proposal writing.
- Business Development: Networking, drafting engagement letters, marketing activities.
- Professional Growth: CPE courses, technical research, mentoring.
- Strategic Projects: Process improvement, tool implementation, firm initiatives.
Integrate Tracking into Existing Workflows
Force new habits by embedding non-billable tracking into your current time-entry process.
- Add the standardized non-billable categories as selectable options directly in your practice management or time-tracking software (e.g., Karbon, Jetpack Workflow, QuickBooks Time).
- Mandate that all time (billable and non-billable) must be logged to complete a daily or weekly timesheet.
- Set the non-billable default rate to $0 to avoid accidental client billing.
Set Realistic Budgets & Expectations
Non-billable time isn't wasted time—it's invested time. Budget for it strategically.
- For each role (staff accountant, manager, partner), establish a realistic weekly or monthly budget for key non-billable categories (e.g., 10% for training, 15% for firm development).
- Communicate that these budgets are part of their expected capacity, not extra work.
- Use this to answer the question: "Do we have the capacity to take on this new internal project?"
Review, Report & Analyze the Data
Transform raw data into actionable insights with regular reviews.
- Generate a monthly "Capacity Utilization Report" that shows billable vs. non-billable ratio by person and team.
- Analyze trends: Is a particular service line consuming too much internal time? Is our training investment paying off?
- Discuss findings in leadership meetings to inform decisions on hiring, pricing, and process improvement.
Refine Processes & Adjust Capacity Plans
Use your insights to optimize workflows and plan accurately.
- Identify Inefficiencies: Spot recurring internal tasks that take too long and streamline them.
- Adjust Project Planning: When scoping new client work, include the related non-billable time (e.g., setup, admin) in your resource calculations.
- Strategic Decision-Making: Use data to decide if you should hire an admin, invest in automation, or decline low-margin work that requires excessive internal support.
Recommended Tools for Effective Tracking
Choosing the right tool is critical for adoption. The best tool is the one your team will actually use.
- Dedicated Practice Management Software: Karbon, Jetpack Workflow. These have non-billable codes built-in and tie directly to workflows.
- Time Tracking Suites: QuickBooks Time, Harvest, Toggl Track. Excellent for simplicity and often integrate with other tools.
- Starting Simple: A customized spreadsheet or a form in Microsoft Teams or Slack can work for very small firms to build the habit first.
The key is integration. The tool should fit seamlessly into your team's daily routine with minimal extra clicks.
Turning Time Data into Strategic Advantage
Tracking non-billable time isn't about micromanagement—it's about gaining a complete picture of your firm's most valuable asset: your team's capacity. By implementing this systematic approach, you move from guessing to knowing, allowing you to plan confidently, price accurately, and build a more sustainable and profitable practice.
Ready to Get a Clear Picture of Your Firm's Capacity?
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