Direct deposit is an easy and efficient way to pay your employees using QuickBooks. It allows you to transfer funds directly into your employees' bank accounts, removing the need for paper checks and ensuring they get paid on time. QuickBooks simplifies the setup process, letting you configure direct deposit and collect your employees' banking information quickly. Let’s look at how to set up direct deposit for employees in QuickBooks Online.

Steps to Set up Direct Deposit in QuickBooks Online

To set up direct deposit for employees, follow the below steps.

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Things to Keep in Mind

Here are some key points:

• Approval Deadlines: 
• Next day: Approve by 5 PM PT (8 PM ET) the day before payday.
• 2-day: Approve by 5 PM PT (8 PM ET) at least two business days before payday.
• 5-day: Approve by 5 PM PT (8 PM ET) at least five business days before payday.
• Risk Analysis: It may take up to 3 days after setup.
• Verify Information: Check all account details to avoid payment delays.
• Setup Timing: Start setup the day after processing paper checks to avoid delays.
• Verification Time: This can take up to a week.
• Principal Officer: Owns the bank account for direct deposit.
• Emails: Direct deposit emails go to the Primary admin. ID verification emails also go to the Principal Officer.
• ID Verification: Respond to the verification email from notify@Quickbase.com with the required documents. Approval may take 2 business days.

Note: Improper changes made in direct deposit can trigger QuickBooks error code 2501. 

Step 1: Set Up Direct Deposit

• Click the Settings icon.
• Then, go to Payroll settings.
• Choose Bank Accounts.
• Fill in the necessary details for your Business, Principal Officer, and Bank account.
• Click Save.

Step 2: Verify a Direct Deposit Test Transaction

After setting up direct deposit, verify the test transactions. You will see two small debits (less than $1.00 CAD each).

To verify these amounts:

• Click the Settings icon.
• Go to Payroll settings.
• Click the edit icon next to Bank accounts.
• Select Verify your account. This option appears 24-48 hours after entering your bank account info.
• Enter the two test amounts (in cents only, e.g., 47 for $0.47).
• Click Verify.

Once verified, you can set up employees.

If you don’t see the test transactions within three days, reset the test transaction:

• Click Settings.
• Select Payroll settings.
• Click the Edit icon next to Bank accounts.
• Select Verify test transaction.
• Enter $0.01 in the boxes and click Verify three times to reset.
• Go back to Payroll Settings, click the Edit button next to Bank Account, re-enter the correct information, and click Continue to save.

Step 3: Set Up Each Employee on Direct Deposit

• Ensure the employee has filled out the Direct Deposit Authorization Form.
• Go to Payroll.
• Select Employees.
• Choose the employee you want to set up for direct deposit.
• Edit the Payment method.
• Select Direct Deposit.
• Fill in the fields using the details from the employee’s authorization form.
• Click Save.

Conclusion

After following the steps in this guide, you can set up direct deposit for employees in QuickBooks Online and can pay through it.

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