Setting up QuickBooks Payroll direct deposit is pretty easy, whether you use an online payroll plan or QuickBooks Desktop Payroll. You can finish the majority of the process (except account verification) in well under a day, depending on the number of employees you have and if all required bank account information is handy. You can also send both same-day and next-day direct deposits, depending on the plan you choose.
How Setting Up QuickBooks Payroll Direct Deposit Works
You can set up direct deposit with most payroll services, but the setup process for QuickBooks Payroll direct deposit is pretty intuitive. You’ll enter your business bank account information within the software, so the system knows where to pull the money when it’s time process employee paychecks. While it’s verifying your banking data, you can enter your employees’ bank information, including account and routing numbers, so it sends funds to the right place.
The first steps to setting up QuickBooks Payroll direct deposit depend on where you are in the process of setting up your payroll account. If you’re just starting to do payroll, you’ll be prompted to finish the setup process before you can go directly to setting up the direct deposit feature, although it will require you to connect your bank. If your payroll account is already in use and you’ve been processing paper checks, you can go directly to “Settings” and then “Payroll Settings” to get started.
Here are the steps you should follow to complete the QuickBooks direct deposit setup process if you’re a new QuickBooks Payroll user:
1. Set Up Your QuickBooks Payroll Account
As a new QuickBooks Payroll user, you’ll need to follow the steps on the Overview screen to finish setting up your account. To make it easy, follow the to-do task list in order. You’ll have to enter payroll tax information and data about any existing employees, such as name, address, and pay rate, before you have the option to enter your bank account details.
2. Connect Your Bank Account to QuickBooks Payroll
When you’re ready to set up your QuickBooks direct deposit feature, click “Let’s go” beside the “Connect your bank” task (shown in the screenshot above). Then select “Get started” (as shown below).
You’ll have the opportunity to review the information you previously entered about your business, like contact details, website, and your tax ID number. You’ll also check that the name, date of birth, and Social Security number of your principal officer is correct. The principal officer is the person who is legally in charge of the bank account you want to use. And finally, you’ll have the opportunity to enter or review your bank account and routing number, along with any online banking sign-in details.
To add your bank account details, you can either enter the information manually or search for your bank and sign in with your online banking credentials. It’s usually quicker to sign into your bank account; manually entering the information can delay the process for a few days. If you’re worried about providing your log in information online, keep in mind that QuickBooks Payroll uses a secure system for all of its processes.
Once your bank account is connected to your payroll account, QuickBooks will send two small pre-authorized debits (both less than $1) to your bank account; don’t worry, they’ll disappear within a few days. You’ll also receive an email requesting you to verify the debit amounts. Once you verify the amounts, you’ll receive an email confirmation stating your account has been verified.
If, for some reason, you don’t receive the email prompting you to verify the debit amounts, click the “Settings” button on your home screen, “Payroll settings,” “Direct Deposit,” and “Verify Test Transaction.” If you don’t see this option, it means the test amount hasn’t been debited, and you need to trace your steps back to Step 2, “Connect Your Bank Account,” so you can restart.
3. Print Direct Deposit Authorization Form & Give to Employees
Once your bank account is connected, you’ll need to ensure your employees’ bank account information is set up in the system. Before entering anything, though, you need to print Intuit’s direct deposit authorization form and have each participating employee sign it. This will protect you, because legally, you’re not allowed to send a paycheck to an employee’s bank account unless they give you their approval.
To access the direct deposit authorization form within the software, go to the “Tax and Forms” menu, “Employee and Contractor Setup,” “Authorization for Direct Deposit,” and “Bank Verification.” Then, you’ll select “View,” and print enough copies so each employee who wants to opt in to the direct deposit option can.
In addition to signing the form, have each employee attach a voided check linked to the bank account they want their paychecks deposited into. The bank name and routing and account numbers should show on the check; you’ll need to enter this into the QuickBooks Payroll software. Employees also have the option of depositing their checks into two separate bank accounts; if this is their preference, have them attach a voided check for both accounts.
4. Enter Employees’ Bank Account Information
To enter your employees’ bank account information, you’ll need to go to the “Employees” tab and set them up. If their payroll records are already set up, just select each individually from the list and enter their corresponding bank details.
You’ll then enter the routing and account numbers listed on the employee’s voided check(s) before clicking “OK.” Be sure you double-check the numbers, or they could experience a delay in receiving their first deposit.
5. Send Your First QuickBooks Direct Deposit
After your business bank information is confirmed and your employees’ data has been entered, you can start sending electronic payroll deposits.
One small business owner we spoke to recommends processing payroll the day before you finish the direct deposit set up to avoid delays with employees receiving their paychecks:
Direct Deposit With QuickBooks Desktop Payroll
If you’re a QuickBooks Desktop Payroll user, the overall process to set up direct deposit for your business is the same as online QuickBooks Payroll users follow; the logistics are just a little different, and there are few extra steps. For instance, you’ll go through the “Employees” menu, “My Payroll Services,” and then to “Activate Deposit.” You’ll need to review your company information, including bank account details, in the “Verify Your Company Information” section. Use the “Edit” button if you need to enter any information or make changes.
Next, you’ll select “View Agreement” so you can review the details of the direct deposit service. Once you agree to the terms, you’ll answer questions in the “Check Security Limits” section and submit. Similar to how it’s handled with QuickBooks Payroll’s online service, Intuit will send two small withdrawals to your account for verification purposes.
While your account is being verified, you can set up each employee for direct deposit by opening each record through the Employee Center. There’s a “Payroll Info” tab within it that will have a “Direct Deposit” button. This is where you’ll select “Use Direct Deposit for (employee name)” and enter the bank account information for where the money should be deposited.
What’s Different About QuickBooks Payroll Direct Deposit?
Most payroll software offer a direct deposit feature, but they usually have a standard two- to four-day processing period, meaning you have to initiate the payment two to four days before the employee will actually receive it. QuickBooks Payroll users, however, are able to send same- and next-day direct deposits at no extra cost, depending on the plan they choose. There’s no prior approval needed.
To send a same-day direct deposit, you must submit payroll by 7 a.m. Pacific Time on the date you want the employee to receive payment. For next-day payroll services, you have to process payroll by 5 p.m. Pacific Time on the day before payday.
You can set up QuickBooks direct deposit by following a few simple steps. Just be sure to have your company and bank account information along with your employees’ bank account information nearby to prevent processing delays. Once your direct deposit setup is complete, you can start sending same- or next-day paychecks as often as you needed.
Although having payroll software makes paying your employees the right way much easier, you still need to know the basics. Check out our tips on how to get the best payroll training to help.