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Chapter 20. Paying Employees and Contrac... > CPA Tip: Benefits of Direct Deposit

CPA Tip: Benefits of Direct Deposit

Are you considering offering direct deposit to your employees? If you’re uncertain about the benefits of this service, consider these facts:

  • The paycheck is in the employee’s bank account at the start of business on payday. This is especially convenient if an employee is on vacation, sick, or working out of the office on payday.

  • There’s no chance of losing a paycheck or of theft. The employee receives only a pay stub—a nonnegotiable paper copy of the actual paycheck.

  • Employees don’t have to set aside time to go to the bank to deposit paychecks.

  • Money can be directed to more than one account, including investment accounts. Some plans allow for up to four accounts to which money can be distributed. This is a great savings vehicle. It’s also convenient for divorced employees who are making regular alimony or child support payments. Parents can even choose to have a child’s allowance automatically deposited in the child’s bank account—this is handy for children who are away at school.


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