Common examples of non-billable hours include administrative work, accounting, promotion and advertising, and developing proposals for new clients. These are all important tasks, but they don’t advance a specific project for your client, so they are categorized as non-billable hours. Manage your non-billable time For example, if you want to reach a goal of 2,000 hours annually, you would need to bill for roughly 40 https://www.bookstime.com/ hours each week, or eight billable hours a day.
Devote More Time to Billable Work
- In an effort to meet your billable hour requirements, you may be tempted to work around the clock, through weekends, and on holidays.
- When you know how many billable hours you’ve spent on a project, you can compare that to labor and materials expended to determine the project’s profitability.
- Lawyers charge billable hours by logging the time spent on client work and multiplying these hours by their hourly rate, usually using 6 or 15-minute increments to ensure precise billing.
- Billable hours are a key income source, so tracking them is essential for measuring your income-to-expense ratio.
- The chart accounts for vacations, coffee breaks, conference times, and even chit-chat – all those activities that take up an attorney’s time but are not billable.
In short, non-billable hours are all the hours that a company cannot charge its customers for because the employees are not working on a given project at the time. The House of Delegates also passed a resolution urging all legal employers to adopt policies and practices that promote flexible work arrangements. This could include permitting lawyers time off to address personal and family needs beyond what is permitted under federal and state laws.
- Track hours and resource utilization throughout the lifecycle of every project.
- These articles and related content is not a substitute for the guidance of a lawyer (and especially for questions related to GDPR), tax, or compliance professional.
- The fastest path to creating a 7-figure coaching and consulting business is to position yourself to sell ultra-high end services.
- Fortunately, my friends at Tri-Merit Specialty Tax Services conduct an annual CPA Career Satisfaction Survey to address some of these legacy issues.
- If you’re at the top end of that spectrum, you may need to consider whether it’s better for your mental health to work longer hours on the weekdays or work six days a week.
Billable Time vs. Non-Billable Time
This time, however, we will choose a random month for a calculation, as the equation will differ depending on the period of choice. For service companies in general, non-billable hours also include the work of the marketing, sales, and other support departments, as they do not participate directly in the projects. On average, full-time employees in the United States work 8.49 hours per day or 42.45 hours per week. Fortunately, my friends at Tri-Merit Specialty Tax Services conduct an annual CPA Career what are billables Satisfaction Survey to address some of these legacy issues.
Factors that can affect the total number of work hours in a year
Understanding these subtleties is crucial, as it can impact targets and overall approach to workload management. Fulfilling the average billable hour requirement is not just about logging hours; it’s about the effective and efficient use of time. The average billable hours for attorneys can swing widely, influenced by elements such as the size and reputation of the law firm, the attorney’s level of experience, and the area of law practiced. As we mentioned, many law firms require their lawyers to work between 1,700 and 2,300 billable hours per year, depending on their situation. This means working between 142 and 192 hours per month, or between seven and ten billable hours per day.
Be Proactive in Communicating with Clients
Utilization rate represents the portion of working hours that can be billed to clients. A common utilization rate in professional services is around 60% to 80%, considering non-billable activities. For example, if 3 employees work on a time and material Certified Public Accountant project for 160 hours a month, the customer that ordered the project will get an invoice for the 480 billable hours spent working. Billable hours are the hours an employee spends working on a customer’s projects. In other words, these are the hours the company can charge its customers for.