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Payroll in Excel

Payroll in Excel involves collecting employee information like names, addresses, pay rates, and hours worked. A basic payroll template in Excel has columns for this information plus formulas to calculate gross pay, taxes, deductions, and net pay. Formulas multiply pay rate by hours to calculate gross pay. Tax rates as a percentage of gross pay are used to calculate taxes. Net pay subtracts taxes and other deductions from gross pay. The template is customized and saved for future payroll calculations.

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6K views

Payroll in Excel

Payroll in Excel involves collecting employee information like names, addresses, pay rates, and hours worked. A basic payroll template in Excel has columns for this information plus formulas to calculate gross pay, taxes, deductions, and net pay. Formulas multiply pay rate by hours to calculate gross pay. Tax rates as a percentage of gross pay are used to calculate taxes. Net pay subtracts taxes and other deductions from gross pay. The template is customized and saved for future payroll calculations.

Uploaded by

sindhu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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HOW TO PREPARE PAYROLL IN

EXCEL (WITH PICTURES)


WHAT IS PAYROLL?
• Well, payroll can mean a few different things:
• Payroll refers to the employees you pay, along with employee information.
• Payroll is also the amount you pay employees during each pay period.
• Or payroll can refer to the process of actually calculating and distributing wages and taxes.
• EMPLOYEE INFORMATION:
• Before you can begin to run payroll, you need to collect some information from your employees.
Every employee needs to fill out form W-4. This form will provide you with information about
each employee’s federal income tax withholding exemptions, along with their names, addresses,
and social security numbers. You need all of this information to properly run and distribute
payroll.
• Every time you hire a new employee, they will need to fill out a form w-4.
STEP 1: OPEN A NEW EXCEL SPREADSHEET
STEP 2: CREATE THE COLUMN NAMES

• You’ll see that a spreadsheet has letters across the top (to
identify each column) and numbers down the left-hand side (to
indicate the row). Each cell is named according to its letter and
number (A2, B5, and so on). A basic payroll template needs the
following columns (you can adjust the name as you want):
• Employee name (A1)
• Pay rate (B1)
• Total hours (C1)
• Overtime pay rate (D1)
• Overtime total hours (E1)
• Gross pay (F1)
• Income tax (G1)
• Other deductions (if any)
• Net pay (H1)
• You can bold these column names, centre them in the cell (as
you would in a word document), make the font size bigger, or
anything else to make it look how you want it.
STEP 3: CREATE SOME SIMPLE FORMULAS
• Excel (or its equivalent) is useful because of its calculation features. You can create a mathematical
formula and apply it to a cell, or an entire column. When you make changes, it automatically updates
all the corresponding cells and data.
• For payroll, you’ll need to apply some basic formulas to calculate your employee salary. For each
column we created, apply the following:
• Employee name - no formula. Simply enter an employee name on each row starting in A2 and moving
down (A3, A4, A5…)
• Pay rate - no formula. Enter the numerical hourly rate for each employee, without any dollar sign.
$25.00/hr would be entered as 25. $17.50/hr would be entered as 17.5.
• Total hours - no formula. Enter the total number of hours worked during the pay period.
• Overtime pay rate - no formula. Enter the OT hourly rate of pay, without the dollar sign.
• Overtime total hours - no formula. Enter the number of OT hours worked during the pay period, if
any.
• Gross pay - FORMULA. You want to create a simple formula that will automatically calculate each employee’s
gross pay (rate x hours + OT rate x OT hours). Click on the gross pay cell for your first employee (the one entered
in cell A2) and enter this basic formula in the input field just above the spreadsheet table: =(B2*C2)+(D2*E2) and
hit enter. Make sure you include the “=”. this formula tells the spreadsheet to take the number in cell B2, multiply
it by the number in cell C2, then multiply the number in cell D2 by the one in cell E2, and finally to add those two
numbers together.
• It will display that number - your employee’s gross pay before deductions - in the gross pay column.
Congratulations! You’ve completed your first spreadsheet calculation. In order to apply that formula to every
employee, you need to click on the cell itself (F1). The cell will be outlined in bold, and you should see a little
black box in the bottom right corner. Place your cursor over it, click, and drag the box down the length of the entire
column. You have now applied the gross pay formula to every employee.
• Income tax - FORMULA. Most of your employees will be paying income tax, right? You can quickly calculate
their deduction using a simple formula. You will first need to determine their deduction rate. For our example, we
will use a base rate of 10%. Click on cell G1, and enter this formula in the calculation field above the spreadsheet
table: =10%*F2, and hit enter. This formula instructs the spreadsheet to multiply the gross pay figure appearing in
cell F2 by 10%, our base tax rate. It will automatically do so and display the deduction amount in the cell.

• As with the gross pay formula, you’ll want to apply this formula to the entire column by dragging it down. Of
course, be aware that employees may have different tax rates. Group those together that share a rate, apply the
formula, then group the next bunch and apply the new formula (say 12%, for example, in which case the formula
would become =12%*F2).
• Other deductions - FORMULA, if there are any. Depending on where you are, other deductions may include
social security, medicare, NIC, CPP, EI, and so on. The formula would reflect either the percent or flat rate.
• Net pay - formula. The final column you created is your net pay after all deductions. For the purposes of this
example, we’re going to assume income tax as the only deduction, in which case net pay would appear in column
H. Click on cell H2 and enter this formula in the formula field: =F2-G2, and hit enter.
• The spreadsheet will automatically subtract the income tax deduction (g2) from the gross pay (f2) and display the
result. Don’t forget to click and drag to apply it to the entire column. Presto! Your employee net pay. If there are
other deductions, you can simply add them with a formula along these lines: =F2-(G2+H2+I2) depending on how
many other deductions were applied.
STEP 4: CUSTOMISE AND SAVE YOUR TEMPLATE

• That’s all you need for a basic payroll template. You can bold titles, make column names bigger or centred in the cell, add
a pay period at the top or at the bottom. Experiment and play around until it looks exactly as you want it. When it’s
finally ready - and BEFORE you use it - save a copy and name it PAYROLL TEMPLATE or something similar.

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