Most employees in the United States are paid with direct deposit because of its cost and convenience benefits to both employers and employees. The direct deposit process starts with the employer establishing direct deposit capabilities with their bank and then paying out payroll via the Internet using the bank's software. No traditional "hard copy" check is written. The costs to employers vary from bank to bank and state to state. The bank may charge set-up fees depending on the size of the employer and relationship with bank and some banks may also charge ongoing monthly service fees.
Direct deposit benefits for employers include:
Direct deposit benefits for employees include:
1. The employer needs to contact their bank representative (at the bank where they hold an operating/payroll account) and ask if they offer direct deposit and if the bank has the capability of having a “NACHA” file uploaded thru their website.
2. The bank will provide the employer with documents to complete in order to initiate the set-up process. Banks sometime refer to the documents as “ACH payment set up”.
3. An individual from the bank’s Treasury Management Department will contact your accountant to discuss direct deposit set up.
4. Once the setup is complete, the accountant will schedule a time to test out the NACHA file. This test is done one of two ways:
If the test is unsuccessful, the accountant will go back and adjust their ACH field setup and try again.
5. While the above set up process with the bank is under way, the employer should begin gathering the routing and account numbers of their employees and share this information with their accountant.
The entire direct deposit process normally takes 4-6 weeks to implement. Due to the complexity of the process and the time invested, we only recommend direct deposit to employers who plan to commit all employees. As mentioned above, some of the benefits of switching to direct deposit include no longer having to disburse payroll checks or track down lost employee checks. In addition, direct deposit provides added security to your business’s routing and account number,preventing potential check fraud. The direct deposit process can be time consuming and confusing, especially when you’re running Domino’s franchises. You have a lot on your peel, let us at D & S Management Services help you with all your accounting needs.