The timer is that bar at the top of the screen in N. When you're playing, you begin the episode with 89.999 seconds, and it decreases with time. It doesn't seem like a lot of time to complete a level, does it? Don't worry; you can increase the amount of time on your timer by collecting gold. One piece of gold adds two seconds to your timer.
Be aware that the amount of time you have on your timer in one level carries over to the next level in the episode. You do not start each level with 89.999 seconds (unless you're doing Highscores).
If you get hit by an enemy or hit a surface too hard, your timer will automatically stop and you will be forced to redo the level again, starting with the same amount of time you had when you first started the level. For example, if you start the level with 114.725 seconds and you get hit by a zap drone, you will restart the level with 114.725 seconds on your timer.