All state governments and the federal government require businesses to keep accurate records concerning the number of hours employees work for paycheck calculations. Therefore, it is vital that the records you keep for your business are correct. Though you could spend money on an expensive time card system, its not necessary. It is entirely possible to calculate your hours with a simple spread sheet on a computer or sheet of paper.
Figure out which days will consist of your work week. Some companies will use a Sunday through Saturday work week. You could also use a Monday on Sunday. Look at your business levels and determine what works best for your company.
Decide of the rules of your time keeping system. First, you need to determine how you will handle partial hours. For example, you might decide that all hours are to be broken down into four parts, meaning a person who works 15 minutes past the hour would work .25 hours. Then, you must decide how to calculate in exact punch times. For example, you may decide that a person who clocks in at 11:06 will be marked as starting at 11:00, but a person who clocks in at 11:07 will be marked as starting at 11:15.
Write down or enter into a spreadsheet the actual time the employees clock in and clock out for their shift and lunch break. Make sure that the employee takes their lunch break according to the guidelines in your state.
Round up or down all times according to your timekeeping. Write the rounded times in the employee's time sheet.
Calculate the hours each employee worked from their initial clock in time to their lunch break. For example if an employee clocks in at 9:15 a.m. and goes to lunch at 2 p.m., their first working period for that day is 4.75 hours (9:15 a.m. to 1:15 p.m. is 4 hours and the 45 minutes to 2 p.m. is an additional .75 hours).
Repeat Step 5 for the second period of the day, calculating hours from the time the employee comes back from lunch to the time they leave to go home. Using the same example, if an employee comes back from their lunch break at 3 p.m. and leaves at 5:30 p.m., their second period time worked is 2.50 hours (3 p.m. to 5 p.m. is two hours and then the 30 minutes to 5:30 is .50 hours).
Add the numbers from the two periods together. In this example, the employee will have worked 7.25 hours (4.75 + 2.50 = 7.25). Add together the hours from all days they worked to get the sum of the hours they worked for that week.
Make sure all employees sign their time cards to approve that they are correct. Once the time cards have been signed, keep them in a payroll file. You will pay them according to this information and you will need to keep them for legal reasons.
Be cognizant of employees who use the system to get extra pay. If an employee is continually clocking in or out just shy or past the cut off for rounding up (11:06 or 11:07 for example) they will be getting paid for time they do not work. That money can add up.
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