Bank Direct Deposits is Crucial To your Business - Learn Why!

To send or receive payments, we have several options like cash, cheques or electronic payments. Now a day’s many organizations prefer to use electronic payments. Direct Deposit is an electronic method of paying or crediting from one bank account to the other chosen bank account. Direct deposits offer a convenient, secure and reliable alternative to the traditional paper cheque.

How do Bank Direct deposits works?

Firstly, The employer must establish a bank account for its payroll activities. The employee submits a copy of his/her bank account information to the employer to enter into the payroll management software. The employer automatically transmits the amount into its bank account on the payday. The employee will receive a pay slip with all the Basic information, Earnings / Allowances, Deductions and Taxes from the employer after the salary has been credited into the employee bank account.

Reasons to switch to the Bank Direct Deposits:

•          Payments are deposited automatically among designated employee accounts
•      Reduced chance of losing cheque or having them stolen
•      No need to spend time visiting banks or ATMs to deposit cheque
•      Access to the funds right away on payday
•       Maintains an electronic record
•      Reduces the usage of paperwork

Other Types of Payments

Direct deposit is not just for paying employee wages, as is evidenced by the following uses:

• Independent contractors: Your business can pay independent contractors with direct deposit. Your bookkeeping software or current payroll provider should be able to accommodate those payments fairly easily, although the cost may be higher than the cost to pay W-2 employees.
• Social Security Benefits: Starting in 2013, the Social Security Administration required that beneficiaries receive payments electronically. 
• Child support and maintenance: To receive child support and maintenance payments electronically, contact your state’s department responsible for handling those payments.
• Tax refunds: You’ll get your money faster if you use direct deposit for tax refunds. Tell your tax preparer that you prefer direct deposit, or provide your bank account information to the government when you file your returns. You can even split your refund so that the money goes into several accounts, making it easier to save some of your refund money.