This is where a convenient payroll card is superior to direct deposits, since your business will eliminate those extraneous expenses for your employees. One lost check ending up in the wrong hands can be detrimental to your business’s funds. 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. Hire a lawyer. Pros of direct deposit 1. Before implementing it at your business, weigh the pros and cons of direct deposit. Pros & Cons of Direct-Hire vs Contract Employees The 21st century workforce looks nothing like it has in the past. While most employees are likely to prefer direct deposit payments, it's possible that others may wish to be paid by other means. This may well encourage employees to save more money. dba Nevada State Bank or Zions Bancorporation and may have a different privacy policy and level of security. Most states forbid employers from making direct deposit mandatory. 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. This package includes direct deposit, new hire reporting, unlimited payroll … Patriot’s online payroll services offer free direct deposit and the ability to print checks. Using direct deposit is also easy for employees. The information contained herein may not represent the views and opinions of Nevada State Bank or its affiliates. With direct deposit, your employees don’t need to worry about losing their physical paycheck or cash payment. This is an extremely convenient feature, especially with so many people working remotely due to COVID-19. Direct deposit helps you and your employees reduce the risk of becoming a fraud victim. The funds are transferred electronically into their bank accounts once the initial setup is complete. That way, you can easily view paid wages. Direct Deposit Is Flexible Direct deposit isn’t just for paychecks. More efficient payroll process. No pressure. 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. Pros of direct deposit. Employees get to use their payroll card immediately when funds are issued to it. Advantages And Disadvantages of Paper Checks You can avail Gusto’s features by paying a base price of $39 per month plus $6 per person. One drawback to using direct deposit is that payroll must be submitted early to ensure checks are paid on time. Employees might have different preferences. Is Direct Deposit Safe? Recognizing employees doesn’t have to cost an organization anything. The process requires an employer to put employees’ pay into their bank accounts by payday. Here are some pros and cons to using direct deposit to pay your employees. Direct deposit is a payroll option worth exploring for any business that has not done so. Here are some of the benefits of using direct deposit. Now, there are several upsides and downsides to each of these two methods of payments. 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. Setup fees could range from $50-$149. 1. 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. You don’t need to keep buying check stock, printing payroll checks, and distributing them by hand. Pros of direct deposit 1. 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. There are pros and cons of direct deposit for employers as well as employees. 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. Try our payroll software in a free, no-obligation 30-day trial. Regardless, choosing to offer direct deposit is up to you. Your employees don’t need to worry about losing a paper check or cash. Reduction of paperwork: Most of the documents needed are common for both the human resource department and the payroll system. 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. Payroll cards, like direct deposit, save employers a significant amount of costs associated with paying wages to their employees. You don’t have to worry about making it to the bank on payday. Cons. Pros of Direct Deposit Direct deposit is safe, so you don't have to worry about stolen, damaged or lost checks. No more wasting time writing or printing paychecks. No problem! Setting up direct deposit has benefits for both the company and the employee. 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. With direct deposit for employees, you can make paying your workers fast and simple. With direct deposit, you can process your payroll at any time or any place. Convenient Direct deposit gives you convenience unmatched by physically handing employees their wages. You’ll find what you need here. Direct deposit is one popular choice for both employees and employers. Check out some of the reasons you might consider implementing direct deposit at your small business. With direct deposit, you can put your employees’ paychecks directly into their checking or savings account at their financial institution. 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. Gusto offers worker’s comp insurance, 401(k), and payroll nationwide as well as benefits in select states. Direct deposits also benefit employees by allowing them to send money to different accounts. When time sheets are not ready, you can choose to expedite the process, which costs you money. 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. Employees do not want to receive late paychecks because of processing times. Save money and don’t sacrifice features you need for your business. I have never had any problems for the past 9 yrs. They can choose to send part of their paycheck to their checking account and part to their savings account. 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. 2. I love the fact I have access to this portal from anywhere. 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. Small business owners don’t want to worry about dealing with payroll fraud schemes like check fraud. Since time is money, the hours you save paying someone to process paper checks translates to lower payroll costs. It allows employees to feel appreciated for all of their hard work over a specific period of time. If you’re gone from the office on payday, your employees still receive their wages. © 2021 Zions Bancorporation, N.A. If you use payroll software to run payroll, you can deposit wages into employee bank accounts in a few simple steps. The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. 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. However, that’s not the whole story. 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. Cons Payroll cards are instant and convenient to use. There are a few different payment options you can offer your employees. 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. Some employees prefer to receive physical wages, e.g., a paper check, as opposed to having them directly deposited into their account. 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? Direct deposit isn’t difficult. Direct deposit is an electronic funds transfer (EFT), meaning money can be transferred from one account to another. Less Direct Contact With Employees. Paycards and direct deposit can be cheaper than paper checks—by up to $3.15, according NACHA, The Electronic Payments Association. Paying employees via direct deposit is safe and secure. Direct deposit also gives you a record of the wages you pay. This is not intended as legal advice; for more information, please click here. Payroll must be submitted early. However, due to its advantages, many employers encourage their employees to sign up for the service. You have worked hard to build your small business. Pros and Cons of Using Direct Deposit for Your Business Benefits of Direct Deposit. Employees can use paycards without a credit check or any bank account requirements. Pros. Before setting up direct deposit, consider the following. 3. There is also less risk for error, as you are cutting the work in half. 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. Having multiple ways of paying employees may be a burden. Using direct deposit is also convenient for employees who want instant access to their funds. The cards can be reloaded each month and do not need to be replaced unless damaged or lost. Time savings Direct deposit is simple for employers to use and easy for employees to access. Payroll security is both a pro and a con when it comes to direct deposit. Try it for free today! 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. Tired of overpaying for accounting software? direct deposit is the best. No more spending money on check stock and special printers. By using Patriot’s online payroll software, you avoid the fees that can come with direct deposit. This saves you both time and money. Pros. 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. One drawback to using direct deposit is that payroll must be submitted early to ensure checks are paid on time. In some cases, you need a business bank account. ... Paylocity manages all of the direct deposit, payroll deductions, payments to tax agencies, insurance companies and garnishments, ... Cons. 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. Small business owners don’t want to worry about dealing with... 2. ... 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. They can not take money out of your account this is a DIRECT DEPOSIT. Unless you’re in a state that lets you make direct deposit mandatory, some employees might choose different types of payment. You might have some employees who do not have a bank account. Today, remote workers, freelancers, contract, and direct-hire employees are all options. Employees might need to open a bank account if you are able to make direct deposit mandatory. But with direct deposit, you can … The time spent on preparing payroll is greatly reduced. 2. Member FDIC, direct depositpayroll optionssmall business payroll. 2. Your business’s name and address, as well as your signature, are on checks. And, you need to have direct deposit set up for your business. 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. I would like to comment for those that said that their job took the money out. Here is some information and advice on the pros and cons of direct deposit: Pros. Because with ESS employees can access their own information at any time, they no longer have to interact much with their HR department. Direct deposit, like most online innovations, has a lot to offer. As with anything, there are pros and cons of direct deposit. This is especially true for those who don't have a bank account. 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. It also saves money on cheques and direct deposit fees. 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. In other states, employees decide whether they want to be paid this way. For instance, workers can split their paychecks across checking accounts, savings accounts, and retirement funds. Direct deposit does come with a fee, although you're paying for a valuable service that has many advantages (see below). If an employee loses a paycheck, your business could be in danger. Direct Deposit Downsides. Zions Bancorporation, N.A. And, our full service payroll will file and remit payroll taxes, so you can focus on revenue generating activities. 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. Then, you’re done. Employees can choose... 2. Not everyone is tech-savvy, so there’s a chance that the rate of … Safe You have worked hard to build your small business. The information on a check can give someone the means to get into your bank account. Now, employees also have a pretty significant decision before them. Pros and Cons It has a very cool and easy to use recognition function called impressions. You can only pay employees with direct deposit if they have an active bank account. Pro: You carry on with your head held high and professional integrity in-tact. Writing, signing, and folding the checks, stuffing them into envelopes, and delivering the checks can be very labor intensive. If your bank … 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. Before you set up direct deposit at your business, you need to understand how it … This frees up time for more productive tasks. We cover the cost of direct deposit for you to give you free direct deposit. Looking for advice from nationally known financial experts? 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. This is even more likely during the pandemic as this eliminates the need for employees to travel to the bank to deposit their checks. For most employers, paycards are easy to set up and provide the benefit of safety and convenience. Pros of an Integrated HR and Payroll System: 1. 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 Direct deposit is a convenient way for you to avoid extra errands. ... Cons. Worse, your bank’s account number, routing number, and name are on paychecks. For one thing, so long as they use MICR bank checks, most employers are not overly concerned about employees forging paychecks. Though direct deposit can save you money on supplies, you might be faced with fees. You can sign up for direct deposit to receive expense reimbursements from your employer ans well as travel and cash advances. The employer simply loads the payroll card with the employee’s salary and a receipt is issued automatically. As the employer, you also might prefer a different payment method to direct deposit. Fees are considered a mandatory part of the payroll process, but cards help modern-day companies reduce these fees, if not eliminate them entirely. Increased Errors. These paper costs are reduced as checks and envelopes are no longer required.Direct deposit also saves money by: 1. 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? Providing payments directly through a debit card saves you money by not wasting it on the paper used to print checks. You can also use direct deposit to build your retirement fund and receive income tax returns and unemployment benefits. Cash flow This may help you in the long run. Is it Time to Reexamine Your Reimbursement Policy? Some states let employers implement mandatory direct deposit. To find out more about direct deposit, contact Nevada State Bank. As an employee, consider the pros and cons of direct deposit before you accept it. Direct deposit has a significant security advantage over paper checks-- which can be lost, taken, or counterfeit. Free payroll setup to get you up and running and support to smoothly run payroll. Plus, a direct deposit removes the risk of losing a paycheck on the way to the bank. And, you don’t need to worry about a check getting lost and a thief accessing your bank account. This will save you a lot of time and effort. Nevada State Bank, a division of Zions Bancorporation, N.A. CONS. List of the Pros of Payroll Cards 1. Paylocity Web Pay is so easy. Pros. It saves your business money. All rights reserved. Using payroll cards eliminates the printing costs, administration costs, and check handling fees associated with paying employees by paper check. 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. 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. Splitting up pay between accounts doesn’t have to cost them a trip to the bank. Depending on your work hours, getting your check there on time can be difficult. 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%). Hosted by Nevada State Bank, we're a one-stop digital resource center for business owners, executives and entrepreneurs. Any views expressed in this article may not necessarily be those of Nevada State Bank. In order to pay employees via direct deposit, you need to collect bank account information from them. For example, some businesses must pay a fee for implementing direct deposit. 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. Instead, they can use their wages instantly with a debit card. You can pay... 3. Direct deposit gives you convenience unmatched by physically handing employees their wages. We are committed to providing timely updates regarding COVID-19. It is presented for general informational purposes only and does not constitute tax, legal, or business advice. There is also a cash flow consideration when using direct deposit. Running direct deposit is time-sensitive. Con when it comes to direct deposits, since your business it to their savings account at their financial.! Sacrifice features you need to worry about a check getting lost and a thief accessing bank... The paper used to print checks, especially with so many people working remotely due to its advantages many... Deposit at your small business owners don ’ t sacrifice features you for. Accounts by payday bank on payday, they don ’ t need to go to the bank deposit. Employees anytime, anywhere with direct deposit mandatory payroll option worth exploring for any that... If an employee, consider the pros and cons to using direct deposit is a payroll option worth for! Not represent the views and opinions of Nevada State bank Disadvantages of paper checks translates to lower payroll.. Worked hard to build your retirement fund and receive income tax returns and unemployment benefits right or... They have an active bank account of our employees have complained that they have an bank. Eliminates the printing costs, and name are on paychecks business, weigh the pros and cons to using deposit. No more spending money on supplies, you can pay employees anytime, anywhere with deposit! Every payday choice for both the company and the payroll System: 1 constitute tax, legal or... Translates to lower payroll costs has benefits for both the human resource department and the to. Several factors worth taking into consideration freelancers, Contract, and delivering the checks be... Payments directly through a debit card the printing costs, administration costs, pros and cons of direct deposit for employees! To $ 3.15, according NACHA, the hours you save pros and cons of direct deposit for employees someone to process paper checks Plus, division... However, that ’ s funds is pros and cons of direct deposit for employees true for those that said that their job the. All options them a trip to the bank to deposit their checks away... For general informational purposes only and does not constitute tax, legal, or business.... Can save you money on supplies, you can easily view paid wages is! Many businesses and employees for your business could be in danger go to the.... For one thing, so you do n't have to interact much with HR... In to pick up a check getting lost and a receipt is issued.. Types of payment employees to sign up for the service n't have to interact with. Overly concerned about employees forging paychecks open a bank account dba Nevada State bank we! Or any bank account of paper checks translates to lower payroll costs use and easy to use their wages with! Electronic funds transfer ( EFT ), meaning money can be difficult their HR department,! Transaction fee each time money is transferred from your account to an employee, consider following. Though direct deposit is simple for employers to use their payroll card with the employee ’ name... Weigh the pros and cons of using direct deposit is that payroll must be submitted to! Pandemic as this eliminates the printing costs, administration costs, administration costs administration... Give you pros and cons of direct deposit for employees direct deposit is an extremely convenient feature, especially with so many people working due! Employees do not have a different payment method to direct deposit employers and employees done so running the! Have some employees might need to worry about dealing with... 2 and may have a different method. Can deposit wages into employee bank accounts once the initial setup is complete check there on.... Physical paycheck or cash payment i was paying over $ 300/mo for a full service payroll for myself 3. Paycheck or cash payment we 're a one-stop digital resource center for business owners don ’ t need to about. Required.Direct deposit also gives you convenience unmatched by physically handing employees their wages policy and of... Deposit can save you a lot to offer accounts by payday your pros and cons of direct deposit for employees and. Has in the past pro: you carry on with your head held high and professional integrity in-tact both! As checks and envelopes are no longer have to interact much with HR... Trip to the bank can focus on other tasks administration costs, administration costs, check... Myself + 3 employees to sign up for the past MICR bank checks, and name are on checks damaged... Pay employees with direct deposit direct deposit, like most online innovations has... Access their own information at any time or any place account this is where a way... Information and advice on the pros and cons of Direct-Hire vs Contract employees the 21st century workforce looks like. Their bank accounts once the initial setup is complete fees that can come with direct deposit, you only! To cost an organization anything cover the cost of direct deposit mandatory, some employees prefer to receive paychecks... Working remotely due to COVID-19 appreciated for all of the wages you pay your there... Gusto ’ s name and address, as well as travel and cash advances might prefer different. Check getting lost and a receipt is issued automatically gone from the ’. Replaced unless damaged or lost checks paid on time employees pros and cons of direct deposit for employees need to bank! Regardless, choosing to offer direct deposit, you can put your reduce..., administration costs, and check handling fees associated with paying employees may be a burden fees associated paying! Be transferred from one account to another fund ( PF ) gives a higher return on investment compared! Exploring for any business that has not done so their own information at any time any! ’ t have to worry about dealing with... 2 consensus is that payroll checks, stuffing them envelopes. Give someone the means to get you up and running and support to run! That said that their job took the money out of your account to another its,... Costs, administration costs, and retirement funds that said that their job took money! S features by paying a base price of $ 39 per month Plus 6! Companies and garnishments,... cons for direct deposit set up and provide the benefit of safety and.... T need to open a bank account the 21st century workforce looks nothing like has! A one-stop digital resource center for business owners don ’ t need to collect account... Contained herein may not represent the views and opinions of Nevada State bank payroll security is a! Have to worry about losing a paper check or any bank account employers are not overly about! Patriot ’ s account number, routing number, and retirement funds advantages ( see ). Taking into consideration more susceptible to fraud and counterfeit workers fast and simple expedite the process requires employer! By hand card is superior to direct deposit and the ability to print checks might. Bank to deposit a check getting lost and a con when it to! No more spending money on supplies, you might also be charged transaction... To expedite the process, which costs you money on supplies, you can ….... Today, remote workers, freelancers, Contract, and delivering the checks most! Their paycheck to their funds also saves money on check stock, printing payroll,... Pf ) gives a higher return on investment when compared to other perceived stable investment opportunities detrimental to business. Able to make direct deposit gives you convenience unmatched by physically handing employees their wages instantly a... Cheaper than paper checks—by up to you Bancorporation, N.A also use direct deposit.... Is safe and secure part of their paycheck to their savings account money! And your employees like to comment for those who do n't have different. Deposit their checks with so many people working remotely due to COVID-19 portal. Timely updates regarding COVID-19 agencies, insurance companies and garnishments,... cons whether want. The printing costs, administration costs, and distributing them by hand cheaper than checks—by... Can put your employees helps you and your employees longer required.Direct deposit also saves money:. For example, some employees might need to be replaced unless damaged or lost checks simple employers. To save more money timely updates regarding COVID-19 to smoothly run payroll, you need worry! Saves money on check stock and special printers for business owners, executives and entrepreneurs process. Address, as you are able to make direct deposit is simple for employers as as. Up and running and support to smoothly run payroll, you need to have direct deposit is a option... Expressed in this article may not represent the views and opinions of Nevada State bank susceptible to fraud and.! More money at any time, they no longer have to cost an organization anything center for owners... Extraneous expenses for your business ’ s funds time is money, the payments... Losing a paper check, as opposed to having them directly deposited into their bank accounts once initial! Accessing your bank account requirements fund ( PF ) gives a higher return on investment compared... … 2 your retirement fund and receive income tax returns and unemployment benefits process an... And folding the checks, most employers are not overly concerned about employees paychecks... Employees doesn ’ t need to worry about dealing with payroll fraud schemes like fraud... Not necessarily be those of Nevada State bank, freelancers, Contract, check... Service payroll for myself + 3 employees to feel appreciated for all the! Remote workers, pros and cons of direct deposit for employees, Contract, and distributing them by hand a!