Payroll payment is another concerning issue that needs your attention before anything else. So, if you are starting a company, then know how you are going to pay employees. There are different ways, and the methods are continuously increasing in this digital age. Thus, we can say that it’s not less than a blessing. But before getting into anything, it is vital to know which option will perform best. Let’s start discussing this important topic in detail.
Payroll payment: How to pay employees?
Before getting into any problematic method, gather knowledge about availability and their performance. Moreover, there are specific steps that you have to fulfill before paying the employees. For instance, as a first step, you have to calculate gross wages, payroll by using paystub software, taxes (W-2 forms), and other deductions. However, after following all these steps, you will find the amount that you have to pay. Thus, by cutting all further detail, let’s move towards different available payments for payroll methods.
|Payment for payroll||Time & cost of using service|
|Paychecks||It takes time to print cheques|
|Direct deposit||Fee around $1.50/transaction|
|Payroll cards||Prices depend upon the state|
|Cash||It doesn’t require an immediate fee|
|Mobile wallets||Free but involve withdrawal fee|
The first method in our list is payment for payroll through a paycheck. However, due to ease of use, it is one of the most popular payment methods. Thus, you can make the payment by writing digital or handwritten paychecks. Like other methods, you don’t need to have bank accounts to receive the compensation. In this type of payroll payment, you can receive the wages without paying any service charges. But like other things, this method also has advantages and disadvantages. For instance, the pros are that you don’t have to share banking information with the employer. On the other hand, the main disadvantage is that your check could misplace or get stolen. So, it’s a risky method in this regard.
It is another common and most used method that employers are using in the USA. According to the stats, around 82% of US employers use direct deposits to pay their employees. However, one of the most common advantages of using this method is that you don’t have to deal with each other physically. If the employer and HR department are unavailable, you don’t have to wait for their availability.
Above all, by using direct deposit, the employer can pay the wages directly in the account. The transaction usually happens by using the electronic funds’ transfer. But if you are shortlisting this method, then do understand that the transaction will take a specific time. So, if you aren’t comfortable with the processing period, you can avoid it this way.
The other name of the payroll card is the payment card. However, employers can easily use this as payment for payroll. In this method, the employer recharges the card with an exact amount equal to the employee’s wages. Thus, the employee can use this card in any way in which they want. For instance, people can withdraw the amount by using an ATM or through the banking channel. Above all, you don’t need bank accounts to receive the payment. The payroll cards are perfect when it comes to saving time and additional costs.
Payroll payment: Cash:
It is the simplest and easiest way of payroll payment. But if you are using this payment mode, then you have to be extra cautious. If you are paying in cash, you will doubt that you aren’t paying proper taxes. In the case of the cash payments, you don’t have proof while attaching the W-2 form. Apart from this, cash deposits make it challenging during the audit.
It is another popular payment that most employers are using to pay the workers. When we talk about mobile wallets, we term it modes like Venmo and apple pay, etc. In this payment mode, the employer deposits the amount in the mobile wallet of employees. However, later they can use this amount anywhere to make direct purchases. If you are withdrawing money, then you have to pay a minimal amount as service charges. On the other hand, bank deposits and transfers are free.
What is the preferred payment mode?
After reading the above conversation, it is clear that you have many options to pay employees. Thus, any payment for the payroll method could be better if that goes best with your terms. But before deciding anything, it is vital to read federal and state laws. If you aren’t aware of the rules, then you could get into legal trouble. But it is good if you have more than one approved method for the workforce.
Note: It is also vital to mention here that regardless of the payment methods, keep a detailed record of the last three years. Moreover, don’t forget to keep track of dates, payment period, and the exact amount.
This section is vital to mention one other payment for payroll method that is “Consideration.” In this mode, you can write other payment methods like cashier cheque or money order. But before using this way, check the state laws and mandates. Moreover, you need the written consent of the employee before finalizing the payment method.
It is the employer’s responsibility to find alternative payment modes for the ease of employees. But ensure these methods aren’t affecting anything and it is suitable in all conditions. Thus, select any convenient form for employees, and don’t forget to take the signature on the paystub for proof.