Payroll is something your business must take very seriously. Not only does it affect the lives of your employees, but the type of payroll method you select can make a difference to your business as well. However, each option has different levels of convenience and costs. You can help make the right choice for your business and employees by researching the common methods of payment. Let’s review a few payroll methods options below.
Direct deposit is the most popular payroll method. You can set up an automated clearing house (ACH) transfer to have your employees’ paychecks placed right into their bank account of choice. Part of the setup is to acquire each staff member’s banking info. That can be done with a voided personal check or deposit form.
As long as you meet processing deadlines, it is a quick, easy process. However, there is a cost for this type of convenience. In addition to setup costs, you may have to pay a small monthly or transactional fee.
Another common payroll method to pay your employees is a good, old-fashioned paycheck. However, writing or printing paychecks can be much more time-consuming than direct deposit. Employees have pros and cons associated with paychecks, as well. They won’t need to have a bank account to process their payment. However, they must physically pick up their check each payment period. That often means coming in on their day off and risking misplacing it.
There’s a saying that cash is king, but there are some risks to using cash as your primary payroll method. Payday will be very easy, straightforward, and fee-free. However, you must be cautious when it comes to taxes. The IRS is more likely to audit companies that pay cash. IRS audits can be time-consuming and expensive for your business. To pass through an audit, you will need detailed records of your payroll. That must include amounts paid and taxes withheld.
Payroll cards are fairly uncommon but are still worth learning about as a possible payroll method. You give each employee a card that will be credited their wage each payday. The cards function similarly to debit cards and can be used directly. Funds can also be withdrawn from a bank or ATM. Benefits include quick payments and no need for staff to have a bank account. The drawback is that the cards often come with fees for the business and user.
You should weigh the pros and cons of each payroll method of payment before deciding which one is best for your company. It’s important to find a middle ground that will keep your business and employees happy.