Unless you work in payroll, you probably didn’t start your small business so that you could learn about direct deposit. Nonetheless, everyone in small business wants to find ways to cut down on costs – especially for functions outside of your core competency. Every business owner loves finding a new opportunity to reduce expenses on administrative overhead. It’s what might be called a “no-brainer.”
Paying workers by direct deposit is a no-brainer. First off, you will save money. The National Automated Clearing House Association estimates that businesses spend two dollars each time they pay a worker with a paper check. Such a high cost might sound odd if you have never thought about it – after all, how much does it cost to write a check – but it reflects the real costs of your time, the risk of fraud, and the occasional snafu arising from a lost check. Your time is what counts the most. Direct deposit will save time – which is one of your most precious resources. Your employees will appreciate it as well, as they’ll have access to their pay on payday.
So, how do you go from paper to direct deposit? It starts with how you run payroll. Many small businesses pay workers in cash or check as a matter of technical proficiency, unaware that there are easy-to-use services out there that can work with any size company.
The first thing to understand is the pricing. The general rule across the industry is to charge employers a monthly base rate service fee plus a per-employee charge.
Many small business owners rely on an add-on QuickBooks service to facilitate the payment of wages by direct deposit.
At QuickBooks by Intuit, you can choose from several QuickBooks Payroll. Intuit’s “self-service payroll” package costs $35 per month. With self-service, employers can send direct deposits around the clock, calculate paycheck amounts, file year-end forms, and run an unlimited number of payrolls. With the Full-Service Payroll plan, you get all of that plus help with filing taxes, an option to run same day direct deposit, and assistance from customer service agents. With both, you will pay an additional four dollars every month for each employee.
To set up direct deposit, you will need to be able to give information to QuickBooks about both your company and the employee to whom you want to send wages. With regards to your company, QuickBooks needs to know your company’s zip code, the industry classification (there’s a drop-down menu), the email address of the firm’s principal owner, his or her 9-digit social security number, and date of birth.
Additionally, if the business owner is not the payroll person, then QuickBooks will ask for information about the person who has the responsibility to administer payroll. QuickBooks will ask you to verify your ownership of the bank account from which you want to withdraw funds to make the direct deposit. QuickBooks will make two micro-deposits, each of less than one dollar, and you’ll have to verify the amounts. Last, you’ll need to let QuickBooks know your employee’s bank account information: the routing number of the bank, the account number associated with the employee’s account, the name and address of the bank, and then the sum of funds to be withdrawn. Except for wages, you will only have to enter the information one time.
People tend to say that QuickBooks is a great out-of-the-box solution for small businesses who don’t mind a bare-bones product. Customer service can be mixed, but the simplicity of setting up your account means that you may never need much customer service support.