Timesheet Conversion: How to Convert Time for Payroll

🕐Timesheets, when automated, tend to have minimal processing time and demonstrate maximum accuracy in converting work time, overtime, time off, and other rates offered to workers into payroll.

However, a major challenge of converting timesheets is to make the process efficient by:

• choosing formats that help correctly encode the data
• feed it into the payroll system for accurate pay determination.

This guide will help you understand all the necessary steps for successful timesheet conversion.

What is Timesheet Conversion?

First, let us explore the concept of timesheet conversion in detail.

Timesheet conversion is the act of taking the initial data recorded by an organization by the employees, such as the number of hours worked, the time they started work and the time they left work, their breaks, and the overtime hours among others, and converting them into a format that is usable for payroll, billing and legal compliance.

This normally entails decimal time conversion, i.e., transforming time worked into decimal hours and then performing other business rules and policies on the results.

The conversion process typically involves several steps.

✅Uniformly gathering data. Converting entries in the 12-hour format, 24-hour (known as military format), or just any entries in different time zones to a single universally acceptable format

✅Cumulating time records by different means (physical timesheet, mobile clocks, login data, etc.)

✅Verifying completeness and the accuracy of the data

• Time Calculation Transformations: Converting time spans into decimal hours (for instance, 7:30 becomes 7.5 hours), regarding the company policies for rounding (for example, rounding the time to the nearest 15 minutes)
• Policy Application: Meal break rules and deductions, hourly rates, shift differential. Dealing with special scenarios such as vacations, times off, or absence from work.
• Compliance Considerations: All overtime hours must be assigned according to the local labor laws on overtime in the country.

✅Documenting: Conforming with specifications characteristic of the respective sector; managing employees according to state and federal laws.

Accuracy in timesheet conversion is crucial because errors can lead to:

• Failure to adhere to labor relations statutes
• Employee dissatisfaction.

❗That is why it is common to apply automated conversion of the timesheets when calculations and compliance are guaranteed to be carried out.

Methods of Timesheet Conversion

Manual Entry and Calculation

The old tradition of time card conversion entails using paper timesheets and having the employees enter their data into the payroll systems. Then, a payroll clerk is required making careful entries of hours worked, breaks, overtime, and other special pay.

Practically, they use a calculator or a conversion chart while undertaking arithmetic operations for regular time, time and a half, and other premium rates. Although this process seems simple because it does not involve the use of technical infrastructure, it has many drawbacks.

Manual entry is very time-consuming, especially in cases of data entry for big teams and organizations.

Human error in data entry or calculations can lead to payroll mistakes. It also opens doors to timesheet fraud by altering paper records or engaging in wrong computations intentionally.

Spreadsheets

The next level beyond simple manual data entry is obtained from spreadsheets since they can conduct calculations and have simple tabular systems.

Employers commonly develop forms where ‘friendly’ formulas include features for regular and overtime hours and pay.

Managers can key in timesheets into worksheets, where the worksheets can perform relevant calculations independently.

However, there are still some constraints to using the spreadsheet. Compound formulas are especially problematic – an error, when entering a number into a formula, can self-perpetuate and go unnoticed.

Version control becomes a problem whenever anyone else edits timesheet information. Finally, spreadsheets do not integrate with Payroll and Human Resource systems, and data usually have to be copied in and out of these tools.

Dedicated Timesheet Software

There are specific and dedicated timesheets with extended features including total time control through automation of work time calculations and biometric time clocks.

These systems typically offer:

• Online submissions of timesheets
• Calculations of overtime and special rates
• Labor law compliance
• Supervisor's approvals to time entries
• Analysis tools for reporting on payroll data and tracking labor costs.

Payroll management systems like QuickBooks Payroll, Gusto, Paychex, Xero, etc. in integration with time tracking perform hours to decimal conversion without effort, and provide seamless data transfer.

These timesheets provide geolocation confirmation, biometric identification, and scheduling compliance.

Timesheet software is easily accessible via any device. It is most often updated through the cloud. Local timesheets give more control over data and protection.

API Integration Approach

When it comes to timesheet processing, API (Application Programming Interface) integration is the most complex method. It changes how time tracking systems and payroll systems interact by eliminating intermediate data transfers.

When properly implemented, API integration offers several advantages:

• Real-time integration between two or more systems
• Reduction or complete eradication of manual data input
• Validating the timesheet data against business rules without having to involve human beings
• Reduced time in payment calculation of complicated pay structures
• Audit trail and improved features of data security.

Choosing the Right Method

To select the method that will suit you, consider the following factors.

• Number of Employees: Small teams can work effectively with simple spreadsheets but larger businesses require software.
• Budget: The cost of dedicated software can be higher but the results are accurate compared to the manual method.
• Complexity: There are many occasions when your schedules will be complicated with variance such as multiple pay scale systems, varying shift premiums, or numerous deductions, – in such situations, software or a service provider is most advisable.
• Time Commitment: Manual payroll is time-consuming while software and service providers make it easy.
• Accuracy: Messed-up payroll is the most costly mistake because it makes the morale of the employees go down. Using timesheet software prevents these detrimental scenarios.

How to Gather and Verify Timesheet Data

Collect all timesheets

Obtain timesheets from employees, whether submitted electronically or manually (timesheets, time clocks, kiosks, or timer applications). Ensure you have all employee timesheets for the relevant pay period.

Choose a conversion method

For a smooth time conversion experience for payroll, consider apps like TMetric, which offers automatic time tracking and native integration with payroll systems.

Verify accuracy

Employee information: Make sure names, employee IDs, and other relevant identifiers are correct.

Dates and times: Confirm that all dates, start times, end times, and break durations are accurately recorded.

Address discrepancies: Double-check all entries for typos, inconsistencies, and missing information.

Data Validation: Implement rules to flag potential errors, such as exceeding daily or weekly limits.

Compliance: Ensure compliance with all relevant labor laws and regulations.

3 Steps to  Convert Time to Payroll

Here is a breakdown of the process in 3 steps.

Calculate the Total Time Worked

First, record start and end times for work (day, week, month, etc.)
Account for unpaid (lunch) breaks
Separate overtime thresholds
Track multiple shifts if applicable

Sum up the total hours worked for the pay period. This could be weekly, bi-weekly, or monthly, depending on your payroll cycle.

• Calculate Total Hours

• Standard Time: Calculate regular hours worked.
• Overtime: Identify and calculate any overtime hours based on legal requirements (usually hours over 40 in a week) or your company policy. Determine if overtime is applicable and calculate the corresponding hours.
• Meal Breaks: Account for meal breaks and deduct them from total hours.
• Leave: Note any sick leave, vacation time, personal time, or other types of paid or unpaid leave.

Rounding Hours for Payroll: In this case, the employers have an option of rounding employee hours to the nearest increment, – for instance, a quarter of an hour.

For example, if an employee clocks in at 8:07 and provided that the rounding interval is 15 minutes, the time may be rounded upwards to 8:00 o’clock to the benefit of the employee or downwards to 8:15 o’clock to the benefit of the employer depending on the policy to be adopted.

Or another, more structured, example:

Start time: 8:30 AM
End time: 5:00 PM
Lunch break: 12:00 PM - 1:00 PM
Total hours = (5:00 PM - 8:30 AM) - 1 hour lunch = 7.5 hours

Best Practices

• Use military time (24-hour format) to avoid AM/PM confusion
• Document all breaks
• Keep detailed records of all time adjustments
• Round according to company policy (typically to nearest quarter hour).

Convert Standard Hours to Decimal Hours

Simply speaking, to convert hours and minutes to decimal format without fail, most payroll systems work by formula.

Decimal Hours=Hours+(Minutes: 60​)

For example, 8 hours and 30 minutes should be entered as 8.5 hours.

Common Conversions

15 minutes = 0.25 hours
30 minutes = 0.50 hours
45 minutes = 0.75 hours

Examples:

7 hours and 15 minutes = 7.25 hours
8 hours and 30 minutes = 8.50 hours
6 hours and 45 minutes = 6.75 hours

Best Practices

• Always carry calculations to at least two decimal places
• Use a conversion chart for frequent calculations
• Double-check decimal conversions to ensure accuracy.

Multiply the decimal time by the wage rate

Once you have the decimal hours, calculating gross pay is straightforward.

Formula: Decimal Hours × Hourly Rate = Gross Pay

Important Considerations

Regular Pay

• Standard hours × Regular rate

Example: 40 hours × $20/hour = $800

Overtime Pay (if applicable)

Overtime hours × Overtime rate (typically 1.5 × regular rate)

Example: 5 overtime hours × ($20 × 1.5) = $150

Special Pay Rates

• Holiday pay
• Shift differentials
• Premium pay for weekends
• Special project rates

Example Calculation

Regular Hours: 37.5 hours × $20 = $750
Overtime Hours: 2.5 hours × $30 = $75
Total Gross Pay = $825

Additional Tips

• Always verify calculations twice
• Keep detailed records of all calculations
• Document any special rate applications
• Consider using payroll software for complex calculations
• Maintain audit trails for all adjustments.

Enter Data into Payroll System

Input the total hours in decimal format into your payroll system. This ensures that the system can accurately calculate the wages based on the hourly rate.

Review and Approve

Approvals: Ensure all timesheets have been approved by the appropriate manager or supervisor and the time conversion chart for payroll is ready.

Investigate and resolve any discrepancies, inconsistencies, or missing information before proceeding. Review the entered hours for accuracy and approve the payroll for processing.

Here is a scenario for the marketing coordinator whose weekly schedule at work looks as follows.

• Monday: 8 hours 15 minutes
• Tuesday: 7 hours 45 minutes
• Wednesday: 8 hours
• Thursday: 7 hours 30 minutes
• Friday: 8 hours 30 minutes

To convert the timesheet for payroll, track all the hours worked.

Calculate total hours in the decimal format

Monday: 8.25 hours
Tuesday: 7.75 hours
Wednesday: 8 hours
Thursday: 7.5 hours
Friday: 8.5 hours

Total hours = 8.25 + 7.75 + 8 + 7.5 + 8.5 = 40 hours

Input 40 hours into the payroll system.

Review the entered hours for accuracy and approve the payroll.

Here is another scenario for overtime for a warehouse worker.

Regular hourly rate: $22.50
Overtime rate (1.5x): $33.75
Week of March 4-8, 2025

Timesheet breakdown

Monday: 9 hours
Tuesday: 8 hours
Wednesday: 10 hours
Thursday: 9 hours
Friday: 8 hours

Total: 44 hours (40 regular + 4 overtime)

Calculation

Regular pay: 40 hours × $22.50 = $900.00
Overtime pay: 4 hours × $33.75 = $135.00

Tips for Business Owners

Choose the Right Time Tracking System: To be specific, a company can optimize the time tracking process and minimize the need for manual input through the proper selection of time tracking tools. You should also consider looking for systems that are compatible with your payroll software.

Establish Clear Time Tracking Policies: Demonstrate to employees how to record their working hours appropriately. This will go a long way in reducing calculation errors and variation between timesheets entered.

Data Security: Make sure your working hours’ information is kept safe and confidential.

Regularly Review and Audit Timesheets: Having a schedule for reviewing and auditing the timesheets used in determining employee remuneration can assist in eliminating wrong figures before affecting payroll.

Consider Outsourcing: Large organizations that have a complicated payroll are most likely to benefit from outsourcing the conversion of the timesheets to a payroll service provider.

Stay Updated on Payroll Regulations: Payroll regulations are an ever-evolving compliance area and your timesheet conversion process should ensure it follows all of the current legal requirements.

How to Track Time for Payroll with TMetric

What TMetric does fantastically well is to help you quickly assign large chunks of time to tasks and projects without making it unnecessarily complicated —and then present some pretty comprehensive reports including ones for payroll.
All information is in sync so you can switch from phone to laptop seamlessly.

Below, we explore the role of time tracking tools and show how to convert hours and minutes effectively with TMetric.

Preparing Data

• Exporting Data: TMetric has provided different export formats to its users, such as CSV, Excel, or PDF. Select the format that you prefer for payroll software.  
• Payroll Software Compatibility: Check whether your payroll software is linked to the program that will automatically pull data from TMetric, or whether it will need to be input manually.
• Data Mapping: Match TMetric data fields Employee name, Hours, Project, Rate, etc. to the payroll system data field names.

Payroll Calculations

• Hourly Rates: Check that all of the hourly rates of each employee are correctly placed in TMetric or your payroll software.
• Overtime Calculations: If you work overtime, set up TMetric or your payroll system to follow your company’s policies regarding overtime.

• Deductions and Taxes: TMetric offers to categorize work to facilitate payroll and easily incorporate deductions and taxes into calculations.
• Payroll Reconciliation: Check monetary figures in TMetric with actual payroll records and detect the mistakes, if any.

Reporting and Analysis

• Time Usage Reports: Use TMetric to create reports to track time doing various projects or tasks. It can assist in defining key opportunities for change and will point out whether scarce resources are being properly directed or not.  

Additional Tips

• Regular Training: Educate new hires on when and how to use TMetric. Provide training to teams on how to track time with it.
• Clear Policies: Develop comprehensive policies to uphold time recording and timesheet conversion for payroll.
• Regular Reviews: At regular intervals review TMetric for keeping smooth payroll integration.

Key Takeaways

Here are key facts about timesheet to payroll conversion that are valuable to understand:

• Actual working hours must be split into groups – regular hours, overtime, holidays, sickness, and personal leaves because their payment and date time may vary.
• One must understand various rules of overtime. Employees doing overtime are paid more for the extra time they have to work, which needs additional calculations.
• Most automated time tracking devices work in tandem with payroll programs to minimize manual data input, which saves from 2 to 3 hours per pay period for the middle-scaled company.
• Distinguishing between exempt and non-exempt employees affects how hours are calculated for payroll, especially concerning overtime.
• Employment laws mandate employers to preserve time records of all non-exempt employees for as least 2 years as necessary for payroll and compliance.
• There can be no arbitrary rounding of timesheet entries – for instance, while many businesses round off in 15 minute increments, whichever method is used has to be applied company-wide to prevent wage and hour law violations.
• Pay period cut-off dates have to match the timesheet submission to prevent backdating.
• Different departments often have varying approval workflows for timesheets before they can be processed for payroll, requiring a system that can handle multiple levels of authorization while meeting payroll deadlines.
• Codes on the time sheets may relate to project billing where this format is used and to payroll information where appropriate.
• Time clock synchronization across multiple locations needs to be verified regularly to ensure accurate payroll calculations, especially for organizations operating across different time zones.
• Data from the timesheets (data input) is transformed into a payroll-friendly format. This may include data cleansing; arranging it in the right manner; and making sure that it is correct.
• The converted data is scrutinized to detect if there is any error or inconsistency. This step is significant to help avoid mistakes when determining the payroll.
• Once validated, you output data into a format that will integrate into the business payroll software or system.