How to Calculate Overtime in Excel
Using Excel is one of the best ways an employer can keep track of his employees and calculate their total hours and pay. By setting up the spreadsheet with a few standard formulas, you can let the software do most of the work for you. All you really have to do is plug in the numbers. Let’s get started.
Set Up Your Spreadsheet
The first step, of course, is to set up your spreadsheet the way you want it. Going with a very simple format, enter the following information into the designated cell:
Begin Entering Known Variables
- A1 – Starting Time
- B1 – Ending Time
- C1 – Total Hours Worked
- D1 – Regular Hours in a Shift
- E1 – Regular Hours Worked
- F1 – Overtime Hours Worked
- G1 – Base Pay Rate
- H1 – Overtime Pay Rate
- I1 – Regular Wages Earned
- J1 – Overtime Wages Earned
In this step you can begin entering the numerical values you already known. For instance, in cells A2 and B2, you can enter the starting and finishing time for the individual’s shift.
In cell D2, enter the number of hours in a standard shift and G2 should contain the employee’s base pay rate, which would be whatever that person makes per hour. You can also calculate the overtime pay rate and enter that value into cell H2. The remaining cells will require formulas.
Formula 1: Total Hours Worked
You have already entered the values for this formula by filling in cells A2 and B2. To get Excel to calculate the sum, enter =B2-A2 into cell C2. Once you press enter, Excel will automatically calculate this value and enter it into the cell.
Formula 2: Regular Hours Worked
This requires a slightly more complicated formula. Known as a conditional formula, this will tell Excel what to do if the condition is true and what to do if the condition is false. The conditional formula for E2 is =IF(C2>D2,D2,D2-C2) and this will display as the number of regular hours worked.
Formula 3: Overtime Hours Worked
This is exactly the same as the regular hours worked, except that it uses a different range of cells. In cell F1, enter this formula: =IF(C2>D2,C2-D2,0).
Formula 4: Regular Wages Earned
As you have already set up the values for regular time pay, all you need to do is plug in a new formula to calculate the wages earned within the given period. The formula for that is =D2*G2 and should be entered into cell I2.
Formula 5: Overtime Wages Earned
Again, this will mimic the previous formula with a different selection of cells. Using the variables already entered in previous cells, the formula =F2*H1 entered into cell J2 will calculate the overtime wages earned.
There you have the basic format for using Excel to calculate hours worked, wages, and overtime wages for each employee. Each row of cells will constitute one pay period, so the next row will simply have to be adjusted with new values and the new cell ranges. Once you have done this a few times, the formulas will become second nature and you’ll find that Excel can be better than hiring a bookkeeper.