Setting Up Direct Deposit for Your Company
How Do I...
As a method of paying employees, direct deposit
has distinct advantages over traditional paychecks and is widely preferred
by both employers and employees. Among the advantages are that direct
deposit
- reduces the time spent
processing and reconciling traditional paychecks
- eliminates the need for
check cashing services, which cost employees additional money and effort
- reduces the time employees
take to cash or deposit their checks, even at conventional banks
- is flexible, because employees
can choose more than one account into which funds are deposited
Funds are available on payday; the employee
doesn't need to wait for the check to clear or wait in bank lines thereafter.
What's more, since funds are deposited directly into employees' bank accounts,
cash shows up in the account even if the employees are sick or on vacation,
and the risk of stolen or misplaced paychecks is totally eliminated. Finally,
record keeping is improved for the employee, since the employer can issue
a non-negotiable notice of direct deposit complete with an earnings statement.
Sage's direct deposit function was
designed so that payroll is handled essentially as it's always been: You
pay direct deposit employees using the customary Payroll Entry and Select Employees to Pay
windows. And setting up your company and employees for direct deposit
is easy as well; the setup process is brief and uses the automated WebSync wizard to streamline
direct deposit approval for your company.
Direct Deposit Setup—A
Bird's Eye View
The following steps outline the process of setting up direct deposit
for your company and employees.
- Your company signs up
with Sage for direct deposit, and Sage issues an authorization
code. Next, using this code, you set up direct deposit account information
for your company. Once you save this information, Sage
automatically creates a pre-note,
a zero-sum transaction used to verify the accuracy of your company's direct
deposit account information.
- Each employee who wants
direct deposit should next fill out an Employee Authorization Agreement.
The Agreement includes information about the bank account(s) into which
the employee's payroll funds will be deposited. You enter this account
information in the Maintain Employees/Sales Reps window. You also specify what percentage of the employee's paycheck to allocate to each
of the direct deposit accounts. When you save account information for
an employee, the software automatically creates an employee pre-note.
- Using the Direct
Deposit Confirmation window of the wizard,
you synchronize both the company and employee pre-notes. They are transmitted
to Sage via ACH,
a special network that connects financial institutions. Sage, in
turn, sends the company pre-note information to your company's financial
institution for approval. Sage sends the employee pre-note information
to your employees' financial institutions for approval. In both cases,
the approval process takes five banking days.
Get step-by-step instructions for synchronizing
pre-notes.
- Following approval,
use the WebSync wizard to sync
the approval status to your Sage 50 desktop application. At the
same time, download a record of payment of the fee that is charged
for processing pre-notes. This record appears as a general journal entry
in Sage 50.
Once you have
received approval of all company and employee pre-notes, you are ready
to process
paychecks for direct deposit employees.
What do you want to do next?