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Direct deposit is a reliable, convenient and speedy way to pay your employees. But it isn't free, so you'll want to weigh the costs before signing up.
The steps required to set up direct deposit might look different depending on the method you use, but here's what you can expect:
Decide whether you're going to use your bank or business software for payroll. If you're using a bank, you can usually sign up in person or through your online account. With payroll software, signing up for direct deposit will likely be integrated into the process of setting up your account.
Your employees need to sign a form authorising you to pay them electronically. You'll also need to collect the following information from each of your employees:
If you use an HR software, it could help you manage this process, as employees can likely log into their account to authorise payment and provide their bank account details directly. Otherwise, you'll need to gather this information manually.
If you manually collected your employees' bank account information, you'll have to do this step manually as well. Enter your employees' bank account information and save it to the system.
Share your pay schedule with your provider and employees so they know when to expect the money.
Once the direct deposit service is activated and verified, you're ready to pay your employees. This process differs slightly depending on whether you're using a bank or business software provider, but generally takes less than 10 minutes.
Direct deposit is when your business deposits a payroll check directly into your employee's account. It's entirely digital and automatic, meaning your employees won't have to manually accept the money and you won't have to physically sign a check.
When you send money via direct deposit, it goes through the Australian Payments Network (AusPayNet). The AusPayNet facilitates transactions between financial institutions in Australia. It's a common payment method for employers of all sizes, and is popular because it reduces the amount of paperwork required to run payroll.
The cost of direct deposit depends on which provider you use. In general, you've got two options — your bank or payroll software.
If you use your bank to send the direct deposits, fees might include:
However, some banks may not offer direct deposit but partner with a payroll provider that does.
If you use payroll software to facilitate your direct deposits, the fees depend on the software you choose — though direct deposit is generally included in the price. For example, with Intuit QuickBooks Online Payroll, direct deposit is a service provided at no extra cost.
Businesses frequently use direct deposit to streamline the payment process. A few reasons why it's popular:
Before signing up for direct deposit, weigh the drawbacks, including:
Direct deposit is a common and convenient way to pay your employees, though you'll have to ensure the fees associated with it make sense for your business. The right payroll software can make this process painless.
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