Using a Time-Tracking Spreadsheet in Your Business (with Templates)

Tracking employee time is an essential task for a business of any size. The hours worked determine how much an employee gets paid and whether they follow the company attendance policy. But while tracking time is a must, the method used to manage hours can vary between businesses. Explore the use of a time-tracking spreadsheet. We’re also covering the pros and cons of this method, templates, and how to implement one.

What is a Time-Tracking Spreadsheet?

A time-tracking spreadsheet uses cells to manage employee time and labor data. It’s typically built in Microsoft Excel, the most common software used for spreadsheet creation and management. The data tracked in a spreadsheet for payroll can vary, but the most common elements include:

• Employee name or number
• Dates during the pay period
• Daily hours
• Overtime hours
• Total hours worked during a pay period

If an employee took time off during a pay period, they might include certain things in the spreadsheet. These include any PTO, sick, or vacation hours used. A more detailed tracking sheet might have spaces for the time in and time out. The sheet could also include space for breaks taken during the workday.

Other details that your company may want to track on the spreadsheet include:

• Project (for hours allocation)
• Manager (for verification)
• Deadlines
• Department (for hours allocation)

Is a Spreadsheet a Good Solution for Time Tracking and Payroll?

Every company, regardless of its size or the industry in which it operates, needs a consistent way to track time. A spreadsheet can serve as a short-term solution until your business is ready to implement something better. Explore some of the benefits and drawbacks of using a time-tracking spreadsheet for employee hours.

5 Benefits of Using an Excel Spreadsheet Instead of Employee Timecards

1. The spreadsheet eliminates the hassle of trying to read or interpret employee time data. See clock in, clock out, break times and total shift hours.
2. No more calling, or tracking down employees for missing or illegible information. An Excel spreadsheet quickly shows if a field is missing or absent. Employee income totals won’t populate if the employee is still clocked in or if they failed to clock in for a shift. That means that employees won’t miss a punch before turning in their timecards. This will save your payroll department processing time.
3. Upgrading to an Excel Spreadsheet for your time tracking prevents your physical timecards from getting lost. Did you know that on average it costs a business $139 to replace a missing document? When that lost document is a timecard, the cost could be much higher, especially if the document is discovered missing during a labor dispute or audit.
4. An up-to-date, accurate Excel spreadsheet can help with compliance. Did you know that most employment and labor laws are written to assume employer guilt when there is incomplete or missing documentation? That means that even a single missing timesheet could result in penalties for your business. At the very least, it will mean extra time and lost productivity while your employees track down and attempt to duplicate the information to the best of their abilities.
5. You can copy and paste hours data into the payroll system instead of manually entering it. This will save time for your payroll manager.

Disadvantages of Using a Time-Tracking Spreadsheet

Although payroll spreadsheets have pros, they also come with drawbacks.

Limited Functionality Options

One of the key drawbacks of tracking employee time in Excel is the limited functionality available. While Excel does have a range of tools built right in, not all of these tools will function in the way you need to track time more efficiently. In fact, Excel is quite limited in its time and attendance functionalities.

Payroll and HR managers often have to create formulas or perform manual calculations when doing payroll with Excel. Advanced metrics, such as billable hours and project costs, are difficult to calculate in Excel.

Time-Consuming Data Entry

Entering time data takes a lot of time and effort from all involved. Employees who track their own time must spend a portion of their work hours inputting their clock in and out times. Supervisors and payroll processors invest additional time in reviewing and calculating each spreadsheet.

Time-Consuming Template Creation

Creating templates for time-tracking spreadsheets also takes a lot of time. Depending on your business and workforce, you may need multiple templates. These would track different employee classifications, projects, and departments.

Difficult Organization and Storage

It’s challenging to organize and store time log sheets effectively. Employees may accidentally enter their time in the wrong file or send the log from a previous pay period. These errors slow down payroll and add extra work for all involved.

Human Error

When humans are responsible for managing their own time, errors are bound to happen. If an employee alters any of the cells in a payroll spreadsheet, whether intentionally or by mistake, this can cause problems. It could affect all the calculations and formulas throughout the file. Entering the wrong time also causes issues. Employees may do so by accident or on purpose to increase their paychecks.

Difficult to Adapt for Business Changes

When an organization goes through changes, a time-tracking spreadsheet makes it hard to adapt. Business growth is one example, which is often the goal of most company owners. If your business is growing, you need a time solution that grows along with it.

Not Scalable

As your business grows or scales, the process of managing employee time on a payroll spreadsheet becomes more challenging. This tracking method isn’t suitable for managing an increasing workforce. It’s too time-consuming to use countless spreadsheets when processing payroll every pay period.

The Components of a Complete Time-Tracking and Payroll Spreadsheet

If your business uses time-tracking spreadsheets, it’s vital to include key elements for accuracy. Certain components also ensure compliance with regulations. Explore some of the components of a complete time-tracking and payroll spreadsheet.

Time Tracking

Of course, the first element of a time-tracking spreadsheet is a place to track employee time. This section should allow an employee to input the date and the times at which they clocked in and out. A spreadsheet may need multiple time in and out cells to accommodate meals and breaks. Additionally, the time-tracking portion of a spreadsheet should include cells for overtime hours. Depending on the location, overtime pay may apply when an employee exceeds 40 hours in a workweek or eight hours in a workday.

Pay Rates

Every employee has their own rate of pay, which needs to be included on the spreadsheet for faster calculations. Include their regular pay rate and overtime pay rate for accuracy when calculating payroll.

Regulation Compliance

Maintaining compliance with federal and state regulations is a must for any business. Failing to comply with labor laws can result in costly fines and penalties. Additionally, it can put your business at risk for legal repercussions. The Fair Labor Standards Act (FLSA) establishes the following standards for private employers:

• Time and labor recordkeeping
• Overtime and minimum wage pay
• Youth employment

The Defense Contract Audit Agency (DCAA) performs contract audits for certain federal agencies. Depending on the sector in which your business operates, it’s vital to ensure compliance with all applicable laws and regulations.

What to Watch for with Payroll and Time-Tracking Spreadsheets

When using payroll and time-tracking spreadsheets, make sure to keep an eye out for these potential issues.

Human Error Auditing

One of the biggest issues that can affect time-tracking spreadsheets is human errors. When reviewing employee time or performing calculations, the auditor may make a mistake. An error of any size impacts the accuracy of the entire time record. Even something as simple as an inaccurate calculation can cause incorrect pay. This results in the need for a time-consuming correction.

Cloud Collaboration or Version Control

You may encounter struggles depending on how your business manages its time spreadsheets. Two common issues are cloud collaboration and version control. Cloud collaboration allows employees to work on a shared document that’s stored in the cloud. While this is a functional option, it can create problems if multiple employees are editing data at the same time.

Version control refers to the ability to manage which version of the file employees input their time on during each pay period. Inputting time on the wrong version can impact:

• Paycheck accuracy
• Benefits eligibility
• Other labor issues

User Visibility and Permissions

Adjusting each time spreadsheet to allow users to access and edit the cells can also take a lot of time and effort. But failing to adjust the user visibility and permissions often results in an inability to input time data. Your business might lock spreadsheets once approved, which can minimize some of these issues.

How to Implement a Time-Tracking Spreadsheet in Your Business

Prepare the Spreadsheet

1. Open an Excel Time-Tracking Spreadsheet
2. Import it into Google Docs if desired
3. Prepare the spreadsheet for use
4. In Google Docs, do this through the SHARE button on the top right. You can share access for editing or for view only
5. Do NOT give link-based access as there will be no way to trace alterations to the spreadsheet
6. Assign Excel permissions
7. Populate company information and employee information
8. Firstly, Cell D3 should contain the employee’s name
9. Secondly, Cell D5 should have the first date of the pay period
10. Thirdly, Cell D7 should contain the employee’s hourly rate

Train Employees

1. Instruct employees to accurately enter shift start, shift end, break start and break end
2. Enter employee location in C14, C16, C18, C20, C22, C24, and C26
3. Record employee clock in time should on D14, D16, D18, D20, D22, D24 and D26
4. Enter employee lunch break clock out times on E14, E16, E18, E20, E22, and E24
5. Record employee lunch break clock in times on F14, F16, F18, F20, F22, and F24
6. Enter employee shift clock out times on G14, G16, G18, G20, G22, and G24
7. Employee total regular hours will calculate in cells H14, H16, H18, H20, H22, and H24
8. Any employee overtime hours will calculate in cells I14, I16, I18, I20, I22, and I24
9. Employee pay for the day will calculate in cells J14, J16, J18, J20, J22, J24

How to Troubleshoot Errors

My Total Hours won’t calculate

• Make sure that the clock in, break out, break in, and clock out times are all filled out accurately.
• Check that the clock in times doesn’t run over a 24 hours period. For example, if you started work at 8 am and are clocking out at 5 pm, make sure you haven’t input 5 am as your clock out time.
• Make sure your time is recorded on the same calendar day. An overnight shift of 11 pm to 5 am will cause issues as Excel timekeeping is not made to handle shifts covering more than a single calendar date.

My Total Wages are wrong

• Check that all clock in and out times are accurate.
• Verify that the employee’s hourly wages are accurate in cell D7.
• Check that the employee’s overtime multiplier is accurate in cell D11.

Using an Excel employee time-tracking spreadsheet is a definite step up from manual timecards! But the system isn’t error-free. Problems can cost your company in extra wages, penalties, and disputes as you work out how to keep track of payroll.

The Excel Timekeeping Spreadsheet tracks time to the closest 30-minute increment.

That means that if your employees are 5 or 10 minutes late, they will still earn wages for the time they were late. This can cost your company money in unnecessary wages.

It’s human nature to exaggerate in one’s behalf. That means that even honest employees tend to not notice exactly how late they were or how often they have been late. As a result, time theft is something that nearly all businesses deal with. On average, employers overpay employees an average of 4.5 hours each week. If you are using a clock in clock out spreadsheet to track time, it is important that you plan for those extra hours and understand that spreadsheets tend to average nearly twice as many excess wages as other higher-tech forms of timekeeping.

Retention guidelines and procedures are vital!

Since you are keeping your timecards in Excel, that means that it is up to your business to maintain permanent records of employee time worked. You should have a system where you backup all your timesheets. Without this system in place, you are at risk of losing them.

That could happen if you get an angry employee who willfully deletes timekeeping records. It could happen with a server or desktop glitch or virus. Furthermore, it could happen with a physical emergency such as a fire, flood, hurricane, or other storm or natural disaster. Or it could happen with a technology failure. Be aware of these while planning how to keep track of payroll.

No matter how it happens, your business is still responsible for those records. The Federal Department of Labor and all 50 state Departments of Labor hold a business is liable for missing employee records. Some states have costly fines for missing documents.

Track Federal, Local, and State Labor and Employment Laws regarding employee timekeeping and payroll requirements

Are you familiar with federal meal and break laws and the requirements for tracking and retaining timesheets? Don’t forget about your local state and city sick leave laws or secure scheduling laws. All of these laws require specific reporting, tracking, and retention requirements. In addition, if you have employees who work in multiple locations (Column C) make sure that you accurately calculate the minimum wage for each location. Some cities require a minimum wage for employees even if the business is not located within that city.

Once the employee has submitted the spreadsheet, make sure that you create a permanently locked file of the data.

This will help to ensure that the information cannot be altered or corrupted in the future. It will also help to ensure that questions of legality and accuracy don’t come into play. You can save the spreadsheet to a PDF for a more permanent copy or in Excel, you can permanently lock a specific sheet or an entire spreadsheet file.