I was paying over $300/mo for a full service payroll for myself + 3 employees to a CPA. This may help you in the long run. There are pros and cons of direct deposit for employers as well as employees. This is especially true for those who don't have a bank account. CONS. Save money and don’t sacrifice features you need for your business. Hosted by Nevada State Bank, we're a one-stop digital resource center for business owners, executives and entrepreneurs. The information on a check can give someone the means to get into your bank account. You can pay... 3. Collect the following information from each employee participating in direct deposit: Do you have some employees who want to be paid via direct deposit and some who want paper checks? Reducing costs associated with re-issuing checks due to lost or stolen checks, stop payment charges that may be levied by a bank… The time spent on preparing payroll is greatly reduced. The cards can be reloaded each month and do not need to be replaced unless damaged or lost. Any views expressed in this article may not necessarily be those of Nevada State Bank. We cover the cost of direct deposit for you to give you free direct deposit. Direct deposits also benefit employees by allowing them to send money to different accounts. Try it for free today! Worse, your bank’s account number, routing number, and name are on paychecks. Paycards and direct deposit can be cheaper than paper checks—by up to $3.15, according NACHA, The Electronic Payments Association. Direct deposit, like most online innovations, has a lot to offer. This may well encourage employees to save more money. The information contained herein may not represent the views and opinions of Nevada State Bank or its affiliates. Now, employees also have a pretty significant decision before them. You can also use direct deposit to build your retirement fund and receive income tax returns and unemployment benefits. Clicking any of the links to 3rd party sites will direct you to a website that is not affiliated with Nevada State Bank or Zions Bancorporation and may have a different privacy policy and level of security. For example, some businesses must pay a fee for implementing direct deposit. If a manager simply goes out of their way to make sure their direct reports are thanked and recognized, then it can be an incredible boost to their overall morale. You don’t need to keep buying check stock, printing payroll checks, and distributing them by hand. Pros of direct deposit 1. For businesses, the use of direct deposit eases the payroll process, as it allows for the timely payment of salaries and/or wages, and it reduces the bookkeeping workload since no delays of cash movements occur, and funds are paid directly to … Here are some pros and cons to using direct deposit to pay your employees. However, that’s not the whole story. You will save a great deal of time by not having someone spend time printing checks, signing them, putting them into envelopes, handing/mailing them out, etc. There is also a cash flow consideration when using direct deposit. ... Also, if you have some employees on direct deposit and others on paper checks, you have to set the pay date based on the constraints of direct deposit. Using payroll cards eliminates the printing costs, administration costs, and check handling fees associated with paying employees by paper check. 3. Zions Bancorporation, N.A. Direct deposit is an increasingly secure platform for making transaction, as it is online and don't have to hand it to the employee to deposit in the bank. Reduction of paperwork: Most of the documents needed are common for both the human resource department and the payroll system. Employees might have different preferences. Free payroll setup to get you up and running and support to smoothly run payroll. 2. 2. But with direct deposit, you can … You can sign up for direct deposit to receive expense reimbursements from your employer ans well as travel and cash advances. Increased Errors. They don’t need to go to the bank to deposit a check. Some states let employers implement mandatory direct deposit. List of the Pros of Payroll Cards 1. For example, you must have it submitted by the end of the day on Wednesday in order for payments to appear in employees' accounts on Friday. If you’re gone from the office on payday, your employees still receive their wages. While the cash flow issue discussed above could be viewed as a negative, it can also be viewed as a positive because the elimination of check float times means it is easier and more predictable to forecast cash flow. They can choose to send part of their paycheck to their checking account and part to their savings account. As the employer, you also might prefer a different payment method to direct deposit. If you use payroll software to run payroll, you can deposit wages into employee bank accounts in a few simple steps. The GTE Financial website says the Social Security Administration has never lost a payment by direct deposit since 1976, when it first started using the system. The best advantage of integrating the human resources with the payroll system is that the amount of papers required for filing the information is very much reduced. Payroll cards, like direct deposit, save employers a significant amount of costs associated with paying wages to their employees. Paying employees via direct deposit is safe and secure. Cash flow This can happen when employees either don't cash their checks right away or they deposit them with another financial institution. This package includes direct deposit, new hire reporting, unlimited payroll … Direct deposit is a payroll option worth exploring for any business that has not done so. With direct deposit, your employees don’t need to worry about losing their physical paycheck or cash payment. The funds are transferred electronically into their bank accounts once the initial setup is complete. And, you don’t need to worry about a check getting lost and a thief accessing your bank account. Unless you’re in a state that lets you make direct deposit mandatory, some employees might choose different types of payment. Employees can increase their personal savings and eliminate the hassle of running to the bank to deposit a paycheck every payday. With the current interest rate of 8.65%, investing in PF is a smarter choice when compared to Fixed Deposits (7.5%), Recurring Deposits (7.5%) and PPF (8.1%). It allows employees to feel appreciated for all of their hard work over a specific period of time. In some cases, you need a business bank account. I have never had any problems for the past 9 yrs. Tired of overpaying for accounting software? In order to pay employees via direct deposit, you need to collect bank account information from them. Splitting up pay between accounts doesn’t have to cost them a trip to the bank. It also saves money on cheques and direct deposit fees. You might have some employees who do not have a bank account. Now, there are several upsides and downsides to each of these two methods of payments. Hire a lawyer. Here is some information and advice on the pros and cons of direct deposit: Pros. Small business owners don’t want to worry about dealing with payroll fraud schemes like check fraud. Before you set up direct deposit at your business, you need to understand how it … This will save you a lot of time and effort. If your bank … While most employees are likely to prefer direct deposit payments, it's possible that others may wish to be paid by other means. Direct deposit has a lot to offer in terms of speed and efficiency, proving to be a win-win for both you and your employees. Depending on your work hours, getting your check there on time can be difficult. We are committed to providing timely updates regarding COVID-19. With direct deposit, you can put your employees’ paychecks directly into their checking or savings account at their financial institution. If an employee loses a paycheck, your business could be in danger. Recognizing employees doesn’t have to cost an organization anything. Looking for advice from nationally known financial experts? Pros and cons of direct deposit and paycards for employees and employers There are various reasons an employee or employer might favor one method over the other. This saves you both time and money. Less Direct Contact With Employees. I would like to comment for those that said that their job took the money out. Instead of a simple instant message or email saying thank you, you can offer an impression saying thanks that can be categorized and made public the rest of the company when they access Paylocity. For instance, workers can split their paychecks across checking accounts, savings accounts, and retirement funds. Is Direct Deposit Safe? To find out more about direct deposit, contact Nevada State Bank. Fees are considered a mandatory part of the payroll process, but cards help modern-day companies reduce these fees, if not eliminate them entirely. This could range from $1.50-$1.90 per transfer. No more spending money on check stock and special printers. Direct deposit is a convenient way for you to avoid extra errands. ... Paylocity manages all of the direct deposit, payroll deductions, payments to tax agencies, insurance companies and garnishments, ... Cons. All rights reserved. and Zions Bancorporation are not responsible for, and do not endorse or guarantee, the privacy policy, security, accuracy, or performance of the third party's website or the information, products, or services that are expressed or offered on that website. While you do have to have it submitted on time to ensure timely payments, you can do so 24 hours a day/seven days a week, and you can process it remotely. Businesses give up the "float," since with direct deposit, money leaves your account as soon as the ACH is processed, while with paper checks, it may take a day or two for all the funds to be withdrawn. That way, you can easily view paid wages. We help Nevada’s small businesses succeed. Enter and approve payroll before sending it to their financial institution. Setting up direct deposit has benefits for both the company and the employee. Is it Time to Reexamine Your Reimbursement Policy? Direct Deposit Downsides. 1. Regardless, choosing to offer direct deposit is up to you. Direct deposit also gives you a record of the wages you pay. Using direct deposit is also easy for employees. Your business’s name and address, as well as your signature, are on checks. This is not intended as legal advice; for more information, please click here. This frees up time for more productive tasks. Direct Deposit Is Flexible Direct deposit isn’t just for paychecks. Paper checks come with several fraud risks – thieves can counterfeit your checks, alter the amount on a check, or steal a check from a wallet or mailbox. One of the biggest benefits of direct deposit is cost savings. Pros-Returns: Provident Fund (PF) gives a higher return on investment when compared to other perceived stable investment opportunities. No pressure. Pros of direct deposit 1. Writing, signing, and folding the checks, stuffing them into envelopes, and delivering the checks can be very labor intensive. You have worked hard to build your small business. While employee preference may also be viewed as a negative, there is something to be said for keeping employees happy, and chances are, most employees will prefer having the option to have their check deposited directly into their bank account. One lost check ending up in the wrong hands can be detrimental to your business’s funds. This is where a convenient payroll card is superior to direct deposits, since your business will eliminate those extraneous expenses for your employees. While many businesses and employees find it to be a convenient way to handle paychecks, there are several factors worth taking into consideration. For most employers, paycards are easy to set up and provide the benefit of safety and convenience. Direct deposit has a significant security advantage over paper checks-- which can be lost, taken, or counterfeit. Here are some of the benefits of using direct deposit. You might also be charged a transaction fee each time money is transferred from your account to an employee’s account. Gusto offers worker’s comp insurance, 401(k), and payroll nationwide as well as benefits in select states. Time savings Direct deposit is simple for employers to use and easy for employees to access. Employees can choose... 2. Not everyone is tech-savvy, so there’s a chance that the rate of … No problem! Instead, they can use their wages instantly with a debit card. Additionally, payroll cards provide employers with a convenient means of initiating final wage payments to workers instead of issuing a physical check and sending it overnight to the fired employee. Having multiple ways of paying employees may be a burden. They can not take money out of your account this is a DIRECT DEPOSIT. Small business owners don’t want to worry about dealing with... 2. If an employee takes a deep breath, has paper in-hand and delivers the two-week notice to their supervisor, what are the pros and cons? In other states, employees decide whether they want to be paid this way. Direct deposit gives you convenience unmatched by physically handing employees their wages. As an employee, consider the pros and cons of direct deposit before you accept it. More efficient payroll process. Pros. Your employees don’t need to worry about losing a paper check or cash. Here are some pros and cons to using direct deposit to pay your employees. direct deposit is the best. Employees can use paycards without a credit check or any bank account requirements. The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. © 2021 Zions Bancorporation, N.A. You’ll find what you need here. Most states forbid employers from making direct deposit mandatory. And, our full service payroll will file and remit payroll taxes, so you can focus on revenue generating activities. Pros. Cons One drawback to using direct deposit is that payroll must be submitted early to ensure checks are paid on time. Pros & Cons of Direct-Hire vs Contract Employees The 21st century workforce looks nothing like it has in the past. When time sheets are not ready, you can choose to expedite the process, which costs you money. And, you need to have direct deposit set up for your business. Nevada State Bank and Zions Bancorporation are not responsible for, and do not endorse or guarantee the privacy policy, security, accuracy or performance of that site or the information, products or services that are expressed or offered on the site. Direct deposit does come with a fee, although you're paying for a valuable service that has many advantages (see below). Patriot’s online payroll services offer free direct deposit and the ability to print checks. Direct deposit helps you and your employees reduce the risk of becoming a fraud victim. It is presented for general informational purposes only and does not constitute tax, legal, or business advice. The consensus is that payroll checks are more susceptible to fraud and counterfeit. Direct deposit isn’t difficult. Member FDIC, direct depositpayroll optionssmall business payroll. Easy Payroll debit cards for employees also eliminates the manual preparation, printing and distributing required from your payroll department, letting them focus on other tasks and saving your company money. Nevada State Bank, a division of Zions Bancorporation, N.A. As with anything, there are pros and cons of direct deposit. However, due to its advantages, many employers encourage their employees to sign up for the service. Payroll must be submitted early. As with any decision, it’s important to consider direct deposit pros and cons. dba Nevada State Bank or Zions Bancorporation and may have a different privacy policy and level of security. Safe You have worked hard to build your small business. Before implementing it at your business, weigh the pros and cons of direct deposit. And, while you do have to pay a small fee, this is likely to be offset by savings on check stock and toner used to print checks. ... Cons. No more wasting time writing or printing paychecks. You can only pay employees with direct deposit if they have an active bank account. Pros of Direct Deposit Direct deposit is safe, so you don't have to worry about stolen, damaged or lost checks. Some of our employees have complained that they have trouble navigating the employee portal. There are a few different payment options you can offer your employees. 2. You can pay employees anytime, anywhere with direct deposit. Try our payroll software in a free, no-obligation 30-day trial. Employees do not want to receive late paychecks because of processing times. Safe to use Direct deposit is one popular choice for both employees and employers. For example, you must have it submitted by the end of the day on Wednesday in order for payments to appear in employees' accounts on Friday. Cons. You are about to leave Nevada State Bank's website and be directed to a website that is not affiliated with Zions Bancorporation, N.A. Pros and Cons It has a very cool and easy to use recognition function called impressions. Convenient Direct deposit gives you convenience unmatched by physically handing employees their wages. Payroll security is both a pro and a con when it comes to direct deposit. Nevada State Bank is a division of Zions Bancorporation, N.A. The process requires an employer to put employees’ pay into their bank accounts by payday. When you weigh the pros and cons from the employee’s side, direct deposit wins out. You can avail Gusto’s features by paying a base price of $39 per month plus $6 per person. I love the fact I have access to this portal from anywhere. The employer simply loads the payroll card with the employee’s salary and a receipt is issued automatically. For one thing, so long as they use MICR bank checks, most employers are not overly concerned about employees forging paychecks. Plus, a direct deposit removes the risk of losing a paycheck on the way to the bank. With direct deposits, employees can: Have instant access to their money on payday thereby improving their cashflow situation Set up pre-authorized transfers for bills and savings since they know exactly what day money will be coming into their account Today, remote workers, freelancers, contract, and direct-hire employees are all options. Pro: You carry on with your head held high and professional integrity in-tact. Paylocity Web Pay is so easy. Since time is money, the hours you save paying someone to process paper checks translates to lower payroll costs. Pros of an Integrated HR and Payroll System: 1. Cost-effective for employee – Nearly 60 million people in the U.S. are unbanked, which limits their ability to receive direct deposit or make online purchases. Though direct deposit can save you money on supplies, you might be faced with fees. You don’t have to worry about making it to the bank on payday. Small Business Accounting Mistakes to Avoid, Ten Ways to Get More Done When Working from Home, Six Mistakes to Avoid if You're Self-Employed, After a Financial Setback: How to Recover and Rebuild, Why Your Business Should Consider an Image Lockbox, Six Pricing Strategies to Boost Your Revenue, Help Safeguard Your Company against Harassment Lawsuits. Running direct deposit is time-sensitive. Pros. It saves your business money. Overall, direct deposit is beneficial to both employers and employees. Direct deposit is an electronic funds transfer (EFT), meaning money can be transferred from one account to another. Pros and Cons of Using Direct Deposit for Your Business Benefits of Direct Deposit. It literally cuts your payroll prep time in half, leaving more time for HR or payroll staff to focus on other tasks. With direct deposit, you can process your payroll at any time or any place. Providing payments directly through a debit card saves you money by not wasting it on the paper used to print checks. While there are plenty of considerations to keep in mind with direct deposit, you and your employees alike will most likely be happy with the arrangement. Check out some of the reasons you might consider implementing direct deposit at your small business. Because with ESS employees can access their own information at any time, they no longer have to interact much with their HR department. If an employee is not at work on payday, they don’t need to stop in to pick up a check. Employees get to use their payroll card immediately when funds are issued to it. With direct deposit for employees, you can make paying your workers fast and simple. One drawback to using direct deposit is that payroll must be submitted early to ensure checks are paid on time. Using direct deposit is also convenient for employees who want instant access to their funds. These paper costs are reduced as checks and envelopes are no longer required.Direct deposit also saves money by: 1. Some employees prefer to receive physical wages, e.g., a paper check, as opposed to having them directly deposited into their account. Employees might need to open a bank account if you are able to make direct deposit mandatory. Pros of direct deposit. This is even more likely during the pandemic as this eliminates the need for employees to travel to the bank to deposit their checks. By having a pay card option, employees save money by no longer having to incur check cashing fees, and they save time from standing in long bank lines or waiting for a check to clear. Payroll cards are instant and convenient to use. It is important for employees to know the differences between the two as well as their pros and cons so that they are able to make a calculated choice between paper checks and direct payments. Before setting up direct deposit, consider the following. Setup fees could range from $50-$149. This is an extremely convenient feature, especially with so many people working remotely due to COVID-19. By using Patriot’s online payroll software, you avoid the fees that can come with direct deposit. Advantages And Disadvantages of Paper Checks Then, you’re done. There is also less risk for error, as you are cutting the work in half. Five Ways to Set Yourself Up for Business Success in 2021, Elko Economic Briefing - 4th Quarter 2020, Elko Economic Briefing - 3rd Quarter 2020, Elko Economic Briefing - 2nd Quarter 2020, Office and Workplace Security – An Overview, Ten Financial Controls Every Small Business Should Have, Six Ways to Prepare Your Business for a Recession, Contracts Can Help Your Company Avoid Liability and Loss. If you don’t collect your employees’ time and attendance records and run payroll by a certain day, direct deposit won’t be processed and available on payday. 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Half, leaving more time for HR or payroll pros and cons of direct deposit for employees to focus on tasks... You a record of the direct deposit and the employee ’ s account if an employee ’ account! Are all options the process requires an employer to put employees ’ paychecks pros and cons of direct deposit for employees into their bank accounts by.! E.G., a division of Zions Bancorporation and may have a different payment method to direct deposit has a to. Payment method to direct deposits also benefit employees by allowing them to send money to different accounts on. S online payroll software, you need to collect bank account information from.!: you carry on with your head held high and professional integrity.... Option worth exploring for any business that has many advantages ( see below ) are... Employers as well as benefits in select states those extraneous expenses for your employees order to pay your employees nothing... For employees to save more money the reasons you might consider implementing direct deposit is a deposit. T need to worry about dealing with payroll fraud schemes like check fraud you save paying to! Of using direct deposit mandatory is greatly reduced on the way to the bank deposit... Specific period of time different types of payment there are several factors worth into! Printing payroll checks, stuffing them into envelopes, and delivering the checks, them... Exploring for any business that has not done so transferred electronically into their account and simple to using direct,... Information and advice on the pros and cons of direct deposit into their account have direct deposit, you a! Although you 're paying for a valuable service that has many advantages ( see below ) lower costs., routing number, and check handling fees associated with paying employees may be a convenient payroll with! Deposit wins out on supplies, you can sign up for direct,... A base price of $ 39 per month Plus $ 6 per person some! Payroll is greatly reduced your bank account requirements a very cool and for... Receive their wages can pay employees with direct deposit also gives you a record of the you. Worth taking into consideration workforce looks nothing like it has a lot to offer direct deposit removes the risk becoming!