How to Calculate Employee Hours Using Software
Whether you’re an independent contractor creating an invoice or responsible for the payroll of an entire company, using software to keep track of hours worked is a great convenience. There are 2 main ways to do this: you can use spreadsheet software (like Google Sheets or Microsoft Excel), or you can use an online time clock.
Tracking Hours with Spreadsheets
One of the most common ways to track hours worked is with a spreadsheet. Keep in mind that you’ll need to create multiple spreadsheets to reflect each worker, as well as each pay period. If you’re an independent contractor, you’ll create a spreadsheet for each client each pay period.
Step 1: Set up your spreadsheet.
First, you’ll need to create a new workbook — we like Microsoft Excel, but these instructions should also work for Google Sheets. To set up your workbook:
- Name the first column "Date" to track the dates worked.
- Name the second column "Start Time" to record the start time of each work period.
- Name the third column "End Time" to record the end time of each work period.
- Name the fourth column "Total Hours" to calculate the hours worked for each day.
Step 2: Enter the data.
If you’re a freelancer, we recommend that you record your working times throughout the pay period. If you’re processing payroll for employees, you’ll need to obtain this data from your workers. Either way, here’s how to fill out the spreadsheet:
- In the "Date" column, enter the dates for each workday.
- In the "Start Time" column, enter the start time for each workday.
- In the "End Time" column, enter the corresponding end time for each workday.
Step 3: Calculate the hours worked.
In the "Total Hours" column, use a formula to calculate the hours worked for each day. Subtract the start time from the end time to get the duration of work. If you’ve formatted your spreadsheet per our instructions, you can simply enter the formula =C2-B2 into cell D2. That’s because cell B2 is your start time, cell C2 is your end time, and cell D2 is the total hours worked.
Step 4: Format the total hours column
Now, we need to change how the hours worked are formatted.
- Select the "Total Hours" column (column D) and format it as a time format.
- Right-click on the column and choose "Format Cells."
- Select the desired time format (in this case, "hh:mm").
Step 5: Calculate the total hours for the pay period.
Next, we’ll use another formula to tally the total work hours for the pay period. Below the last row of the "Total Hours" column, use the SUM function to calculate the total hours worked for the pay period.
For example, if the "Total Hours" column ends at row 20, the formula for the total hours worked would be: =SUM(D2:D20).
Step 6: Save your spreadsheet.
Remember to save your file periodically to ensure your data is safely stored. It’s best to name your files in a way that helps you keep them easily organized (such as by date). Additionally, you can create different sheets or tabs within the workbook to track hours for different periods, projects, or workers.
That’s it! If desired, you can customize your Excel sheet by adding additional columns for notes, overtime hours, or any other relevant information. You can also use Excel's built-in functions and features to analyze your data further, such as calculating average hours, identifying days with the most hours worked, or creating charts to visualize your work hours.