When companies set up payroll schedules, they need authorization from their employees to deposit the money directly into their bank account. Legally, the form that allows this to happen is known as the direct deposit authorization form. Apart from serving payroll reasons, a company may also need to check if an employee’s account is active, for which they’ll need the same form as well. Such forms vary, to a certain degree, between banks. Essentially, the company will require ABA and routing numbers to insure deposits, and so, given the fact that each bank has its own unique numbers, each form varies slightly. This, however, is much less complicated than it sounds. To help you out, we’ve compiled a list of all the things you should know about direct deposit authorization forms!
Simply put, yes. Any employer will require such a form to ensure that they can set up a system of direct deposit. Direct deposits are scheduled, so that employee’s salaries are directly deposited into their account at regular intervals. This makes payroll management much easier for companies, while employees will be able to organize their finances much better, as they’ll know exactly when payday is. To set up payroll using direct deposit forms, companies will need to follow these steps;
- Employees will need to submit their EINs – EINS are a unique number used by the IRS to track tax-related information. This will have to be submitted to the company, as they track taxes using a form known as a W9. As a result, employee’s salaries will be tax-deducted, and they will not have to pay additional tax. Instead, they will be entitled to insurance and tax returns. To obtain an EIN, you need only apply through the IRS website.
- The employer will then have to collect all the relevant forms that need to be submitted to and vetted by the authorities. This includes w9 and w4 forms, as well as work authorization forms, such as I9 forms.
- Finally, the employer will have to collect the direct deposit authorization forms with employees’ bank information. This will allow payroll to be processed. Keep in mind that employers will have to file returns accordingly. This is typically done using the form 941 on a quarterly basis.
That’s pretty much all you need to know when setting up your payroll and your direct deposit!
Drafting a Direct Deposit Authorization Form
If you’re an employer and are having trouble finding out what you need from your employees, don’t worry – we’re here to help. A direct deposit authorization form is a simple piece of paperwork and doesn’t require a ton of effort, thought, or legal jargon! To help you out, we’ve compiled a sample direct deposit authorization form that can be used as-is or can be modified accordingly to best suit your needs. It can be found attached below;
Sample Direct Deposit Authorization Form
MAILING ADDRESS ____________________________________________
NAME OF BANK ________________________
BRANCH ADDRESS ________________________________________________
ACCOUNT # ___________________________________________________
ROUTING NO. __________________________________________________
PAYMENT DOLLAR VALUE __
PERCENTAGE OF SALARY __% or __ Entire. (check one.)
TYPE OF ACCOUNT __ Savings __ Checkings
EMPLOYEE SIGNATURE _______________________
Authorization Form Examples
Employees should remember that the routing number and account number can both be found on a check leaf. To find your routing number and bank account number, simply look at the bottom of your check leaf – the number to the far left, which is a nine-digit number, is your routing number. The number to it’s right, which is usually between 15 and 17 digits is your account number.
Typically, such forms have to be drafted by the employer. That being, it is a very straightforward form, and many banks use their own templates to make things that much easier. If that doesn’t help, our article above has a direct deposit authorization form attached, which may be used as-is, or modified for your own, unique use!
A direct deposit authorization form is a form submitted by an employee to his/her employer. This gives the employer the ability to deposit money into the employee’s account on a recurring basis directly.
Yes, you absolutely can! Many banks offer their own templates for direct deposit authorization forms. If that doesn’t help, our article above has a direct deposit authorization form attached, which may be used as-is, or modified to best suit your needs.