by Intuit•53• Updated 1 month ago
You can easily set up payroll direct deposit in QuickBooks Online. After the initial set up you can put each employee on direct deposit and also verify a test transaction.
In this article, you'll learn how to:
- Know what to be aware of
- Set up direct deposit
- Verify a direct deposit test transaction
- Set up each employee on direct deposit
- Check direct deposit limits and processing times
Things to be aware of
Here are some things to note about direct deposit:
- You must approve paycheques that are beingpaid through direct deposit based on your direct-deposit payment speed.
- Next-day model: Approve payroll by 5 PM PT (8PM ET) the day before payday.
- 2-day model: Approve payroll by 5 PM PT (8 PM ET) at least 2 business days before payday.
- 5-day model: Approve payroll by 5 PM PT (8 PM ET) at least 5 business days before payday.
- It can take up to 3 days to complete the risk analysis after setting up.
- Always confirm that all account numbers and information is correct. Incorrect information can cause a delayor result in funds not being sent to an employee.
- A best practice is to begin direct deposit set up the day after running a payroll with paper cheques to ensure you are not in a Pending state when it’s time to run your next payroll.
- Direct deposit set up and verificationcan sometimes take up to a week.
- The Principal Officer is the owner of the bank account being set up for direct deposit.
- Email communications for direct deposit will be sent to the Primary adminon file, but the ID verificationemail and the verify bank account email will go to boththe Principal Officer (bank owner) and the Primary admin.
- Most companieswill receive an ID verification email from [email protected] of identification and more information. The Principal Officermustrespond to this email with the appropriate documentationprior to using direct deposit; it can take up to 2 business days to approve oncethe identification is submitted. To learn more on how to upload your government identification, see this article.
Note: Review the direct deposit processing timelinefor information on how long the direct deposit process will take once you've submitted payroll.
Set up direct deposit
- Select the Settings ⚙️ icon, then Payroll settings.
- Select Bank Accounts.
- Complete the required fields for your Business, Principal Officer, and Bank account.
- Select Save.
You'llreceive a confirmation email prompting you to verify your informationby uploading a copy of your identification. Once the information is verified, you'll receive another email confirming your pre-authorized debits.
Verify a direct deposit test transaction
It is necessary to verify the direct deposit test transactions after the initial set up. Two small debits of less than $1.00 (CAD) each are charged to your account as a test within 2 - 3 business days.
To verify these amounts:
- Select the Settings ⚙️ icon, then Payroll settings.
- Select the edit icon next to Bank accounts, then select Verify your account. This option becomes available 24 - 48 hours after the bank account information is entered.
- Enter the two test transaction amounts in boxes (less than $1.00). Enter the cents only, without a dollar sign. (for example, 47 for $0.47)
- Select Verify.
After successful verification, you're ready to set up employees.
If youdon't see these transactions within 3 business days of entering direct deposit information into your Payroll settings, follow these steps to trigger the test transaction again:
- Select the Settings ⚙️ icon, then Payroll settings.
- Select the edit icon next to Bank accounts, then select Verify test transaction.
- To reset the test transaction, enter $0.01 in the boxes below and select verify 3 times. Doing this will fail the test transaction and let you add the banking information again.
- Go back to Payroll Settings and select theEdit button next to theBank Account field.
- Re-enter the correct bank account information.
- Select Continue to save changes.
This should trigger QuickBooks Online to send the test transaction to your bank. Please waitanother 3 business days for the transaction to appear in your bank account.
Set up each employee on direct deposit
After your direct deposit test transaction has been verified, you're ready to set up each employee:
1. Ensure the employee has completed the Direct Deposit Authorization Form.
2. Go to Payroll and select Employees (Take me there).
3. Select the employee that you would like to set up for direct deposit.
4. Edit the Payment method and select Direct Deposit from the dropdown menu.
5. Complete the fields using the information from the employee's authorization form.
6. Select Save.
This completes the set-up process. You're now ready to use direct deposit to pay your employees.
Check direct deposit limits and processing times
For more information on how to check your direct deposit limits and processing times, visit Get help if you’re over a direct deposit limit.
What if my account still isn't active for direct deposit?
This may be caused by one of the following situations:
- You entered an invalid bank account.
- We weren't able to initiate the test transaction because your bank account had a zero balance.
- You entered an incorrect test transaction amount.
Should one of these situations arise, we'll send you an email with instructions for resolving it. The sender will show up as [email protected]. Otherwise, contact Payroll Support for assistance.
