Employees trade their time and skills for money. Even though they may receive performance bonuses, their salary depends on the total number of hours worked, among other factors. As an employer, you may round their clock-in and clock-out times to the nearest quarter hour in order to streamline payroll calculations. However, when you have a small business, every minute and every cent counts. One way to reduce your expenses is to calculate the hours and minutes worked.
Try Different Calculation Systems
No matter your business size, payroll is a major expense. Its calculation can be tedious and time consuming, especially for those who are doing it manually.
Today, most companies use computerized systems to streamline this process and prevent human error. Another option is to outsource payroll so you can have more time for the core aspects of your business.
If you only have a few employees, you may want to calculate their payroll yourself including calculating the hours and minutes worked for each shift. This can be done manually or by using apps and software.
Use a Time Calculator
Ask your employees to complete their timesheets and then check their accuracy. Next, use a timesheet calculator, such as Miracle Salad or Humanity.com, to determine the exact number of hours and minutes worked.
These online tools feature a user-friendly dashboard where you can enter working hours and breaks for each day. The program will automatically calculate everything, including total hours, overtime hours, gross pay and overtime pay. Some programs can even generate time cards and allow employees to enter their information into the system.
Timesheet calculators are convenient and easy to use. You will no longer have to deal with handwritten timesheets and spend hours doing the math. However, these tools have their limitations. They may be suitable for a small business but not for large companies and corporations.
Calculate Payroll Hours Manually
If you don't want to use a time calculator, you can always go the traditional route. Check your employees' timesheets and divide the minutes worked by 60 to convert them to a decimal.
For example, if your personal assistant works 39 hours and 15 minutes this week, you should divide 15 by 60. The result is 0.25, which means that your assistant worked for 39.25 hours.
You can also create a spreadsheet in Excel or use the 24-hour military time for more complex calculations. Remember to subtract the time taken out for lunch and other breaks.
If your employees work overtime, leave a note on the spreadsheet so you can calculate their wages accordingly. The overtime pay rate needs to be 1½ times an employee's usual hourly rate.