How to Convert Time for Payroll
Small crews and big companies alike need a solid payroll strategy. You already ask your crew members to track their time. But how can you quickly turn those records into payroll data? Stop wasting hours every pay period and find out how to convert time for payroll.
How to Convert Time for Payroll
- Collect Time Clock Data
- Factor in Break Times
- Round to the Quarter Hour
- Add Up Time Manually
- Multiply by the Pay Rate
- Calculate With a Spreadsheet
- Stick to a System
Before turning time into money, you need to collect information from your crew. Start by collecting timesheets, timecards, or time clock data from each hourly employee. The best way to do this depends on how your crew keeps time. Do they use a manual time clock or a mobile or web-based system? Perhaps you use a fingerprint reader or an ID scanner to track time.
No matter what system you use, log in to download the records for each employee or collect the timecards each crew member has punched for the pay period. Once you have all the necessary time clock data in hand, you’ll be ready to convert the time for payroll.
First, you need to know how much time your employees have put in each day. Most employees get paid 15-minute breaks. However, your employees may not get paid lunch breaks. Add up the total number of minutes your employees are on the clock each day.
If your employees work overtime, make a note of those hours, too. Keep a separate tally for overtime, since the pay rate will be different.
In most cases, your employees won’t clock in on the hour or leave at a precise time every day. Instead, they’ll arrive a minute or two before their shift and leave around the time it ends. Yet few companies pay for every second on the time clock. If your company pays by the quarter hour, you need to round up or down before moving forward.
Add up the total number of minutes an employee works on the first workday of the week. Then divide that number by 15, which is the number of minutes in a quarter hour. If you get a whole number, you don’t need to round.
If you get a remainder, you need to round up or down. Round down to the lower multiplier of 15 if you have a remainder between one and seven. If you have a remainder between eight and 15, round up.
Next, convert time into decimals. Depending on your company policy, take either the total number of minutes or the rounded number. Divide the minutes by 60. You’ll usually get a whole number followed by one or two decimal points.
If you’re working with quarter hours, you may be able to refer to a standard chart instead. For example, 15 minutes equals one quarter-hour, or 0.25 hours. Along the same lines, 45 minutes equals three quarter-hours, or 0.75 hours.
Once you’ve converted minutes into decimals, you can calculate the employee’s pay. Multiply the time in decimals by the hourly pay rate. Add up each day’s total to get a weekly or biweekly pay amount.
Don’t forget to factor in overtime. Multiply the time in decimals by the overtime pay rate, and add up the weekly or biweekly amount.
If you’d rather let a computer do the math, use a spreadsheet program like Microsoft Excel. With a spreadsheet, you can enter the hours and minutes to save time. Enter the time worked into cell A1 using “xx:yy” format. Use “xx” for the number of hours and “yy” for the number of minutes.
In cell B1, enter the formula “=(A1-INT(A1))*24” to convert the time from cell A1 into decimal form. Copy and paste the formula down the B column to convert all times you’ve entered. In cell C1, enter the formula “=B1*[hourly rate]” to calculate the daily pay. Add up the daily amounts to get the weekly or biweekly pay amount.
Remember that there isn’t a single best system for converting time into payroll. You can use the simple and straightforward manual system or you can use a high-tech digital system. Make sure the payroll system works smoothly with your timekeeping method. Then stick to it to make payroll and time tracking as quick and easy as possible for you and your team.
With this simple process in place, you can save time and money every pay period. After all, from payroll to heavy equipment rental, a reliable system is the key to doing the job right every time.