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Direct Deposit Authorization Form PDF Free Download
Direct Deposit Authorization
A direct deposit is an electronic transfer of funds into a bank account.
The party making the payment is known as the “payer”, and the party receiving the funds is called the “payee”.
This type of transfer does not involve any physical or paper checks and requires the use of a network that allows deposits to be made between banks.
These electronic networks are known as automated clearing houses (ACH).
Due to the fact that direct deposits are made electronically, accounts are quickly credited, and it is not usually necessary to wait a long time for the money to clear.
However, to enable a third party to make this type of transfer to your bank account, you must authorize them to do so through a Direct Deposit Authorization Form.
This is typically required when receiving payroll earnings, disability benefits, or other types of subsidies and payments.
When used by employees to receive their salary, the document is also known as an:
- Employee Direct Deposit Form
- Employee Direct Deposit Authorization Form
- Payroll Direct Deposit Form
An employer will need an individual’s personal and banking information to add them to their payroll service. This will allow the employer to pay the employee while deducting federal, state, and local taxes directly from their gross pay.
Step 1 – Employer Needs to Have an EIN
This is often referred to as the “social security number” for a business.
An Employer Identification Number (EIN) is nine digits in the following format: xx-xxxxxxx.
This is free to obtain for a business entity that is created in any of the 50 states and territories.
The IRS will ask generic questions about the status of the entity and its functions.
After 10-15 minutes, the EIN number will be provided in a completed Form SS-4 at the end of the session.
If the applicant applies through the mail, it will take approximately 10-15 business days.
Step 2 – Collect Required Government Forms from Employee
The employer will need to collect the necessary government-required forms to ensure the individual is allowed to work in the United States. These include:
Employment Eligibility (USCIS Form I-9)
Tax Withholding (IRS Form W-4)
The aforementioned forms are required for the employer to keep on file.
Step 3 – Give and Collect Employer Forms
The employer should give the following forms to the employee:
Employee Contract Agreement
Employee Handbook
Onboarding / New Employee Letter
Direct Deposit Authorization Form
The employee will be required to complete and return the Direct Deposit Authorization Form for the employer to add the information to their payroll and begin depositing their pay into their account.
Step 4 – Add to Payroll
When adding an employee to an employer’s payroll schedule, they will be responsible for withholdings and deductions.
An employer can choose to deduct these items on their own or elect to pay for a payroll service that does this automatically.
The employer will have two choices.
Do-It-Yourself Payroll –
Use a Free Online Calculator while using IRS Publication 15 (scroll to “Percentage Method Tables for Income Tax Withholding” on page 45).
Payroll Providers –
The most popular providers are Gusto, OnPay, Xero, and ADP.
These providers allow the process and payment to federal and state tax authorities to be much easier for the employer.
Depending on if the service saves enough time to compensate for the payment, this may be the best solution for a busy entrepreneur that doesn’t have time to process payroll by hand.
The deductions the employer is required to make are as follows:
Government Deductions
These include federal income tax (FIT), social security and medicare (also known as FICA), state tax deductions, and any local income taxes.
Other Deductions
If the employer has other deductions they must be subtracted as well.
These include but are not limited to: health insurance, retirement plans (401(k)), and any deductions for charitable donations.
Step 5 – File Form 941 with the IRS Every Quarter
IRS Form 941 must be filed with the Internal Revenue Service on a quarterly basis.
The form details the following quarterly information:
Total number of employees
Social Security and Medicare withholding amounts
Sick or leave pay
Insurance claims
Any other required revenue details.
The form should be filed in accordance with the following periods:
1st Quarter – Jan. 1 to March 30 is due May 10
2nd Quarter – April 1 to June 30 is due Aug. 10
3rd Quarter – July 1 to Sep. 30 is due Nov. 10
4th Quarter – Oct. 1 to Dec. 31 is due Feb. 10
At this time the accounting of the business is complete with the employee successfully added to their payroll system.
Set Up a Direct Deposit
Setting up a direct deposit is a relatively simple process when using a pre-prepared authorization template.
All you need to do is fill in the necessary information and confirm the deposit amounts before submitting it.
It’s also important to note that sometimes the party transferring the funds will also require you to submit a voided check (checking account) or a deposit slip (savings account) to ensure that the account is valid.
If you or your company will be making the deposit, then you will need to confirm all the direct deposit information on the authorization form, as well as the identification of the payee.
Then you will be able to make the deposit through your or your company’s bank account.
| Author | – |
| Language | English |
| No. of Pages | 1 |
| PDF Size | 1 MB |
| Category | Form |
| Source/Credits | eforms.com |
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Direct Deposit Authorization Form PDF Free Download