Are you looking to set up direct deposit for employees but don’t know how?
In this article, you get the detailed steps to do the setup of direct deposit in QuickBooks for your employees. Also, get to know what it is and how it works. Direct deposit benefits the employees and the benefits are explained in the article.
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So let’s move towards the article…
What is Direct Deposit in QuickBooks?
The direct deposit is the type of digital or electronic way of transferring funds from one account to another. In QuickBooks Payroll, you can easily pay your employees using the direct deposit. You can do it in their money market, savings, or checking accounts.
It is used to transfer the paychecks of employees easily without being physically there. With this you can send the funds from your account to the employee’s bank account. There are benefits for both the employee and employer for using the direct deposit.
The direct deposit is used in the various scenarios and that are as follows:
1. Employee Pay:
Many of the employers use the direct deposit for their employees. For employers, it comes with heightened convenience and lower costs. For employees, it makes the payday a breeze- the funds you earned get into your account after clearing through ACH.
2. Tax Refunds:
The U.S. government prefers to pay using the direct deposit to their citizens. As it is secured and streamlined by both parties. If you owe the tax refund then you get it using direct deposit. So if you don’t have it then do the set up to get a quick transfer from the IRS.
3. Stimulus Checks:
In 2020 under the CARES Act, the U.S. government distributed the emergency assistance stimulus checks. The citizens who opted in the IRS direct deposit program received the checks in the bank account on their tax return.
How Does Direct Deposit Work?
The employer transfers the paycheck using the direct deposit information of employees. After that your financial institution releases the funds into your account on the payday. The funds get transferred within 2 working days into the employer’s account. This digital fund transfer is easy and benefits both parties.
What are the Ways to Set up Direct Deposit for Employees?
To set up direct deposit for employees, you have to first do the set up of company payroll for direct deposit, then get the authorization form, after that add the direct deposit for employees and you are done. The process is as follows:-
Ways 1: Set up the Company Payroll for Direct Deposit
Here is the process that you have to follow to set up company payroll for the direct deposit. So the steps are as follows:-
- First of all, get the information of your business, principal officer, and bank
- Business name, address of business, and EIN.
- Principal Officer social security number, home address, and date of birth.
- Bank credentials (user id and password) and bank account numbers.
- You have to connect with your bank account
- In your system, open QuickBooks software.
- Then sign in using credentials (User ID and Password).
- Go t the Employee menu.
- Further, select the My Payroll Service option.
- Then click on the Activate Direct Deposit.
- Select button Get Started. If this button is not visible then do these steps:-
- Click on I’m Admin and I’m the primary person who …. Enter the admin’s email address and User ID.
- Click on Continue to proceed.
- Mention either Email or User ID and Password to sign in to your Intuit account then click on Sign in.
- Then click on Get Started.
- In the Business tab, click on the Start button and then mention all the information.
- Click on Next to continue after providing all information.
- Now, mention the information of Principal officer and click the Next button.
- The add new bank account.
- Mention the name of your bank then provide the credentials or if it asked for account number then provide it
- You have to create the PIN for your bank account. You have to use this pin whenever you send the payment or payroll. So confirm your PIN 2 times.
- Then click on the Submit button.
- After that, click the Next button then click the Accept and Submit.
- When asked then confirm the principal officer’s full social security number and then submit it.
- Now, you get any one of the below message on your screen:-
- Thank you for signing up for the QuickBooks Direct Deposit. What is next to activate Direct Deposit? That means there are a few more steps to connect the bank account. See step 3- Verify your bank account.
- Now, your bank account is connected. This means you are ready to pay your employees by direct deposit right away. See step 4- Set up employee’s bank account info.
- Verify your bank account into QuickBooks (in case of bank not connected automatically in QuickBooks)
- You have to check the bank account in 2 working or business days for the small debit amount of less than the dollar one from the QuickBooks Payroll.
- When you are able to see the amount.
- Open the QuickBooks software and log in as the administrator of QuickBooks.
- Click on the Employees menu.
- Further, select the My Payroll Service.
- After that, click on Activate direct deposit.
- Now, sign in to your Intuit Account using credentials (User ID and Password).
- Mention the debit amount 2 times and then click on Verify.
- Enter the Payroll PIN that you created before.
- Select the Submit button then click the OK button.
- You have to Set up the Employee’s Bank Account information
You have to add the details of Employees bank into QuickBooks to set the direct deposit. Follow step 4 that has detailed information about it.
- Pay to your Employees
You have to create the paychecks normally and then you have to send the direct deposit to the Intuit. It normally takes about 2 business days. Then the paychecks deposit directly to the employee’s bank account and you are done with direct deposit.
Ways 2: Get the Direct Deposit Authorization Form
Get the direct deposit authorization form and also the voided check from your Employee’s bank account. These things are for your records only for your employee’s. You don’t have to submit it into QuickBooks. This helps you to keep records about your employees.
Ways 3: Add Direct Deposit to Your Employees
In case the Employee’s bank said that the account should be tagged as money market then you have to inform the employee. Inform them that the QuickBooks only accepts saving and checking the accounts. From these 2 options, you have to select the Checking. The steps for checking are:-
- In QuickBooks, click on the Employees menu option.
- Then from the drop-down menu, select the option Employee Center.
- It opens up the Employee List.
- You have to choose the name of the employee.
- Then click on the Payroll Info tab.
- After that, press the button Direct Deposit.
- The window of Direct Deposit opens up.
- In this click on the Use Direct Deposit for (name of employee).
- Select that you want to deposit paycheck into one or two accounts.
- You have to provide the employee’s financial institution information.
- These information is about Bank Name, Account number, Routing Number, and type of Account.
- If you select the deposit in Two account then mention the percent or amount that the employee want to deposit to the first account in the field of Amount Deposit.
- The remaining amount needs to be deposit in the Second account.
- Click on the OK button to save all the information.
- Enter the PIN of Direct Deposit to make the payroll when asked.
Benefits of Direct Deposit for Employees in QuickBooks
There are many benefits that employees get in direct deposit. The benefits are as follows:-
1. Simplified Budgeting:
Are you looking to build up the savings account and increase your debit spending? Then direct deposit is the best automated solution for you. When the direct deposit is started then you can request some amount of paycheck to be deposited directly into your account.
2. No Need of Paperwork:
Now you can say good-bye to your paperwork when you switch to the direct deposit. In direct deposit everyone has a record digitally for all the electronic payments so you don’t have to record pay stubs physically.
You won’t have to visit a bank to deposit a paycheck. You also don’t have to wait in a long queue, which is time saving. So, direct deposit is convenient. It allows the financial institution and the payer to complete the transfer by communication with each other. All this is done without your presence.
It is the Eco-friendly step that there is no paper used in the process. Everything is done digitally, which means it is paperless. It is a great choice to switch to direct deposit.
In conclusion, you get to know how to set up direct deposit for employees in QuickBooks. Do the procedure properly to not get stuck or get errors anywhere. You also get to know what its benefits are and how it works. In other words, direct deposit is beneficial for employees so do the setup and start using direct deposit if you have not done it yet.
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Frequently Asked Questions (Faqs)
What kind of information do Employees have to provide for Direct Deposit?
The employees have to provide their bank related information like:-
• Name of the Bank
• Bank Account Number
• Account Type in the Bank
• Routing Number of Bank
Apart from this they have to sign an authorization form to allow the employer to transfer their funds.
What are the Benefits Employers get When setting up Direct Deposit for Employees?
The Employer’s Benefits are as Follows:
• The Security is increased.
• Saves your money by avoiding the mailing checks and printing.
• You can’t miss payroll with automated pay scheduling.
• Time saving.
I want to Set up Direct Deposit in QuickBooks but I want to Ask if it is Safe to use Direct Deposit?
Yes, the direct deposit is safe and you can use it if you want to. It is the alternative and automatic method that is safer than the paperwork and manual method of Payroll in QuickBooks. There are certain things that can be done with paper checks like damaged, stolen, lost, fraudsters, etc. in direct deposit you did it directly and there is no case of fraud, stolen, damage or lost.