Every business owner knows that payday isn’t a day where you can slack off as all of your employees have been eagerly waiting for it for quite some time. Streamlining the payment process during payday will make it very easy for your employees to receive their payments on time, without facing any unexpected complications that prolong the process. Figuring out the best payment method for you and your employees is something that you should discuss with them after doing some research on the best methods currently available.
One of the easiest and most used methods of payment is the direct deposit. Around 4 out of 5 American workers use this payment method because of how convenient it is. Using direct deposit requires the employer to acquire the banking information of their employees and then transfer the money via electronic funds transfer (EFT). Doing this sends the money to your employees’ bank accounts without requiring them to cash in a check or receive any physical form of payment. As per every other bank transaction, there’s an unavoidable processing period required to transfer the money, so employers need to be very punctual when using this method or the payments will be late. You can always pay a little bit extra to expedite the payments and have them reach your employees faster if you’re running a little late, but that adds extra costs to your business.
For any employees who haven’t set up their bank accounts, setting up prepaid payroll cards can help them receive their payments without requiring any physical interactions. This method works through setting up a payroll card that the employer fills up with the correct wages that their employees have earned throughout that payment period. This card can be used at banks or ATMs to withdraw cash, much like a debit card. Using this method requires the employer to pay the fees to set up the payroll cards as well as paying their employees’ withdrawal fees when they use their card.
When the time comes around where a business owner has to calculate their taxes, they’ll realize how good of a decision paying their employees using pay stubs was. While it may seem complicated to use them at first, you’ll quickly realize that you can use software that can generate pay stubs templates that you can easily fill out to quickly calculate your employees’ gross wages, taxes, deductions, contributions, and even net pay. This can be an extremely efficient way to keep track of everything you’ve paid your employees. Doing some research regarding your state’s requirements for pay stubs can help you avoid any legal complications.
Most employers have been making the shift towards paying their employees using mobile wallets as it’s very easy to set up and pay your employees with it. Since mobile wallets are quickly becoming a normalized way of paying for all types of things around the world, it has become a practical way to compensate your employees. While the fees that occur when transferring money from person-to-person are easily ignorable, the withdrawal fees from mobile wallets can slowly add up over time. This can make it inconvenient for some of your employees to use, so discussing the switch to mobile wallet payments beforehand is highly advised.
While this isn’t necessarily the most efficient way to keep track of payments that occur in your business, paying your employees with cash can still be a very convenient way for them. While this isn’t feasible for large businesses that generate a lot of money, it can easily work for small businesses that don’t pay very large amounts to their employees. Receiving cash payments can help your employees avoid any withdrawal fees from the bank, but it puts your business at risk of getting audited by the Internal Revenue Service (IRS). Since the IRS keeps a close eye on all cash-based businesses, it’s very important to keep accurate records of your payments or you’ll have a hard time proving them in an audit.
Keeping your employees happy highly depends on paying them using a convenient method that suits both your business and your employees. While some employees can be dissatisfied with receiving payments using a specific method, they’re still going to be happy that they received their payment on time. The most important aspect of paying your employees is to make sure that they received their payments at the time that was promised to them, as most people align their bills with the payment that they’ve been expecting.