How to Track Employee Hours Without Expensive Time Tracking Software

Time tracking that stands up to a payroll query, built without per-employee monthly fees. Includes the overtime formula and what your records legally need to show.

Published 2026-08-31 · 4 min read

Time tracking software is typically priced per employee per month. For ten staff at five dollars each, that is six hundred a year to record numbers that mostly come from people telling you what hours they worked.

For small teams, a properly built timesheet system does the job. The emphasis is on properly — timesheet records are what you rely on in a payroll dispute, so structure and discipline matter more here than in most systems you will build.

A note before we start: employment record-keeping requirements differ by country and sometimes by state or region. This covers the practical structure. Check what your jurisdiction requires you to retain and for how long.

What the records need to show

Whatever tool you use, the records need to demonstrate:

That last pair is what people skip and it is the part that matters in a dispute. A number in a spreadsheet nobody confirmed is a claim, not a record.

The structure

Sheet one — employees. One row per person: employee ID, name, role, standard weekly hours, hourly rate, overtime rate, start date, status.

Sheet two — time entries. One row per person per day: date, employee ID, start time, end time, break minutes, total hours, notes, approved by.

Sheet three — weekly summary. Totals per employee per week, split into regular and overtime.

Keep entries daily rather than weekly. A week entered as a single total cannot be checked against anything and is much weaker as a record.

Calculating hours worked

With start time in C and end time in D and break minutes in E:

=(D2-C2)*24-(E2/60)

The multiplication by 24 converts Excel's time format into decimal hours, which is what payroll needs. Format the result as a number rather than time, or you will get confusing results.

For shifts crossing midnight:

=IF(D2<C2,(D2+1-C2)*24,(D2-C2)*24)-(E2/60)

Without that adjustment, a shift from 22:00 to 06:00 calculates as negative sixteen hours.

Splitting regular and overtime

Overtime rules vary — some places calculate it daily over eight hours, others weekly over forty, and contracts sometimes differ from the statutory minimum. Check what applies to you before relying on any formula.

For a weekly forty-hour threshold, with weekly total in C:

Regular hours: =MIN(C2,40)

Overtime hours: =MAX(0,C2-40)

For a daily eight-hour threshold, apply the same logic per day instead.

Weekly pay:

=(D2*Employees!E2)+(E2*Employees!F2)

Regular hours times standard rate, plus overtime hours times overtime rate.

Weekly totals per employee

=SUMIFS(TimeEntries!F:F,TimeEntries!B:B,A2,TimeEntries!A:A,">="&$B$1,TimeEntries!A:A,"<="&$B$1+6)

Where B1 holds the week start date. Change that one cell and the whole summary moves to a different week.

The approval step

This is the part that makes your records defensible.

Add an Approved by column and a Date approved column to the time entries sheet. Nothing goes to payroll unapproved.

For employee agreement, the simplest reliable method for a small team: print or export each person's weekly summary, have them sign it, scan and file it. Slightly old-fashioned and very hard to dispute later.

If your team submits hours by message or email, keep those messages. They serve the same purpose.

Flagging what needs attention

Three conditional formatting rules catch most problems before payroll runs.

Missing end time: =AND($C2<>"",$D2="") in amber. Someone forgot to clock out.

Unusually long shift: =$F2>12 in red. Either a genuine long shift needing sign-off, or an error.

Not yet approved: =$H2="" in grey. Your pre-payroll checklist.

Before each payroll run

A short routine that catches errors while people still remember the week.

Check for missing entries against the roster. Chase anything unapproved. Review anything flagged. Compare each person's total to their contracted hours and query anything wildly different. Then export or print the summary and file it.

Fifteen minutes. Considerably less than resolving a pay dispute three months later with no records.

Retention

Keep timesheet records for as long as your jurisdiction requires — commonly several years, but check.

Keep them somewhere backed up and somewhere you can actually find them. A folder per year, a file per pay period. Retained records you cannot locate are not much better than records you did not keep.

When to buy software

More than about twenty employees. Manual entry and checking becomes a job.

Genuine clock in and clock out needs. If people must physically register arrival, buy hardware and software built for it.

Multiple sites. Consolidating separate spreadsheets is worse than paying for a system.

Integrated payroll filing. Once tax filing is involved, software that handles both saves real money in accountant time.

Complex shift patterns or union agreements. Do not encode complicated overtime rules by hand. Get that wrong and it is expensive.

Below those thresholds, a well-built timesheet system with a real approval step is sufficient, defensible, and costs nothing per employee — which matters most at precisely the point when you are hiring and every fixed cost is under scrutiny.