How To Set Up Direct Deposit
Our guide on how to set up direct deposit for your employees shows how easy it actually is to do, plus how beneficial it is for your business.
The process of how to set up direct deposit for your employees is almost always quick and easy, and it cuts down on errors and saves your business money. Plus, doing so can make employees happy and create an easier payroll system for employers.
For employees, getting money quickly and securely can be a major concern, and one of the best ways to ensure that you are getting paid accurately and on time is to set up direct deposit.
Read on to learn about what direct deposit is, some of its benefits, and the steps you’ll need to take to set it up.
Table of Contents
- What You’ll Need To Set Up Direct Deposit
- How Long Does Direct Deposit Take To Set Up?
- How Much Does It Cost To Set Up Direct Deposit For Employees?
- How To Set Up Direct Deposit As An Employer
- How To Set Up Direct Deposit As An Employee
- Getting Started With Direct Deposit
- Direct Deposit Set Up FAQs
What You’ll Need To Set Up Direct Deposit
Setting up direct deposit is incredibly simple, and you’ll just need a few key pieces of information. From there, all additional paychecks will automatically appear in your bank account, sometimes even before you would receive a paper check.
Employers Will Need
- To select a direct deposit provider (either their bank or through a payroll service)
- Employee authorization
- Employee bank information
- A predetermined pay cycle
Employees Will Need
- A direct deposit form from their employer
- Bank information (routing and account number, etc.)
- A voided check
How Long Does Direct Deposit Take To Set Up?
The actual process of signing up for direct deposit can be extremely fast. Employers should be able to provide you with the proper direct deposit form shortly after you’ve asked for it. All of the basic information you will need can generally be found through your checking account, assuming that is the account you wish to have money deposited into.
You can then void a check and send it over to your employer along with your bank information in a matter of minutes.
From there, you may be enrolled instantly, or it could take as long as a few weeks for your employer to get your information into their payroll system.
How Much Does It Cost To Set Up Direct Deposit For Employees?
Of course, as an employer, a key question is, “How much does it cost to set up direct deposit for my employees?”
Most banks or payroll services will charge a service fee for setting up direct deposit ranging from $50 to $149. They may also charge per individual transfer each time money goes into an employee’s account, and those fees can range from $1.50 to $1.90 per transfer.
How To Set Up Direct Deposit As An Employer
To set up direct deposit for your employees, you’ll need to complete a few basic steps, such as selecting a direct deposit provider and setting up a consistent pay cycle, along with getting the bank information from employees looking to enroll.
Choose A Direct Deposit Provider
Your provider can either be your bank or your payroll service. Whichever you choose will end up storing all of your employees’ information and will be responsible for running your payroll. If you decide to run your direct deposits through a payroll service, it will also be what you use for your HR and other accounting needs.
Receive Employee Authorization
Any employees interested in direct deposit will need to authorize that as their form of payment. They will need to request a direct deposit form that has information from the individual’s bank and potentially their Social Security number as well.
Enter Employee Banking Information
With the direct deposit form, employees will need to provide you with the routing number and account number where they want their paychecks submitted. They will also need to tell you what type of account it is, and they may have the option to split their paychecks between accounts as well. You may also need a voided check with this information to complete the process.
Set Up A Payment Cycle
You will now need to determine how frequently you want to pay your employees and on what days of the month. Employers commonly pay employees monthly, bi-monthly, or every two weeks. You will also want to find out from your provider if there is a cut-off date for when payroll is due.
How To Set Up Direct Deposit As An Employee
Setting up direct deposit as an employee is extremely simple, assuming you have easy access to the few pieces of information required. Traditionally, the process simply involved getting a direct deposit slip from your employer and providing them with your bank’s information.
However, some company accounting programs now have employee portals that can have you set up direct deposit by yourself. Here are the few basic steps you’ll need to follow.
Receive A Direct Deposit Form From Your Employer
You can ask your accounting department directly for a direct deposit form that you can fill out either physically or digitally. You will need to provide your bank’s account number and routing number and, depending on the payroll service, potentially your Social Security number as well.
Provide a Voided Check
Not in every circumstance, but in many, you will also be required to void a check and send it to your employer to confirm your banking information and make sure there are no errors.
Wait For A Test Deposit
Often, the payment provider will send out a test deposit to ensure everything goes through. Once the account has been confirmed as active, employees are then ready for paychecks to be deposited.
How To Set Up Direct Deposit With Gusto
Gusto is a popular and intuitive payroll software for employers and employees alike. And, like many of its other features, setting up direct deposit through Gusto is a simple process. Once you’ve signed into your account, click on the Jobs & Pay tab. From there, find the Payment Methods link and click Edit.
This will allow you to enter your direct deposit information, providing your bank account’s routing and account numbers. You can also split up your paychecks among up to five different banks with Gusto under the same heading.
Once you’ve saved all of your information, Gusto will send out a test deposit to make sure that everything you have provided is accurate. This can take a few days to process, but once verification is complete, your next paycheck will be deposited accordingly.
How To Set Up Direct Deposit With ADP
ADP is one of the largest payroll companies in the country and has an extremely rich feature set. As you might expect, it can easily run direct deposit as well and makes it easy on employees. To enter your information, your company will need to have the Employee Access feature activated.
Once in the portal, click on Get Paid Faster and then Add An Account. You will then enter your account and routing numbers twice for confirmation. You are allowed up to four accounts for deposits with ADP.
You can then select how much of your paycheck you want into this specific account by dollar amount or percentage. Select the account type (either checking or savings) and enter a name for the account before hitting Next. After you review your information and click Save, you should be all set up. It may take up to two pay cycles to activate.
How To Set Up Direct Deposit With QuickBooks
QuickBooks is one of the most popular accounting and payroll software services around, with all of the tools that businesses and individuals may need. Setting up direct deposit with QuickBooks is easy.
First, you need to provide banking information to your employer. Next, in the QB software, select Settings and Payroll Settings. Then, under Payroll, click the link for Direct Deposit. You will then fill in the appropriate files with the bank routing and account number and personal information and select Continue. You should receive an email confirmation and then wait for your test deposit.
Once the deposit has been verified, you’re all set to receive your paychecks into the specified account.
How To Set Up Direct Deposit With Square Payroll
Square has an entire software suite for small business owners, and like all of its other products, Square Payroll is highly intuitive and affordable. Through Square Teams, employees have the ability to manage their accounts and how they like to get paid. They can download the Team app for either iOS or Android. Then log in to the member dashboard.
From here, there are a few ways to set up direct deposit. You can opt to be paid with CashApp, allowing them to be paid a day faster and have access to a free Visa debit card. More traditionally, you can set up your banking information, adding your routing and account number. You can also opt to split your paycheck among multiple accounts if you’d like.
Getting Started With Direct Deposit
Hopefully, you’ve realized that setting up direct deposit is a very quick and easy process for both employers and employees alike. For employees, you just need to have a few pieces of information from your bank, and you can be paid on time and accurately. And for employers, direct deposit can save you time in your payroll process and reduce potential errors.
Of course, there are still companies that may prefer to provide at least the option of paper checks. Fortunately, there are good companies that offer check-printing services. But if you’re considering direct deposit at all, don’t be put off because you think it may be a hassle.