Nov 01, 2020 Direct deposit is the deposit of funds electronically into a bank account rather than through a physical, paper check. It requires the use of an electronic network that allows deposits to take.
A direct deposit authorization form is a document that authorizes a third (3rd) party, usually an employer for payroll, to send money to a bank account by simply using the ABA routing and account numbers. Sometimes the employer will require a voided check to ensure that the account is valid. Once the form has been completed by the account holder it will need to be signed and returned to the employer, in which afterward, payroll funds will typically follow suit.
An employer will need an individual’s personal and banking information to add them to their payroll service. This will allow the employer to pay the employee while deducting federal, State, and any local taxes directly from their gross pay.
This is often referred to as the ‘Social Security Number’ for businesses. Like a social security number, it’s nine (9) numbers although is presented in this format xx-xxxxxxx. This is free to obtain for a business entity that is created in any of the 50 States and territories. The IRS will ask generic questions about the status of the entity and its functions and after 10-15 minutes the EIN number will be provided in a completed Form SS-4 at the end of the session.
If the applicant applies through the mail, it will take approximately 10-15 business days.
The employer will need to collect the necessary government required forms to ensure the individual is allowed to work in the United States. These include:
The aforementioned forms are required for the employer to keep on file.
The employer should give the following forms to the employee:
The employee will be required to complete and return the Direct Deposit Authorization Form for the employer to add the information to their payroll and begin depositing their pay into their account.
When adding an employee to an employer’s payroll schedule, they will be responsible for withholdings and deductions. An employer can choose to deduct these items on their own or elect to pay for a payroll service that does this automatically.
The employer will have two (2) choices.
The deductions the employer is required to make are as follows:
IRS Form 941 must be filed with the Internal Revenue Service on a quarterly basis.
The form details the following quarterly information:
The form should be filed in accordance with the following periods:
At this time the accounting of the business is complete with the employee successfully added to their payroll system.
Step 1 – Complete the Account Holder’s Name and Address.
Step 2 – You will need to report the Name of your Bank on the first line. Then, enter your Account Number on the appropriately labeled blank line. Finally, locate the 9 Digit Routing Number on your personal check and enter it on the blank line labeled “9-Digit Routing #.”
Step 3 – Select the type of Account you would like the deposit to be made to by filling in one of the check boxes. You may choose “Checking” or “Savings.” You will need to attach a voided check for each Account being linked to the Direct Deposit action.
Step 4 – On the blank line preceding the words “Company Name,” report the Name of the Company you are authorizing to make deposits to your account.
Step 5 – Sign your Name after the words “Employee’s Signature,” then provide the Date you signed this on the blank line directly below this.
Step 6 – Submit this form to your Employer’s Payroll or Human Resources Department. Make sure, you are submitting it to the proper office.
Save
Save