How to set up direct deposit for your employees in the US

Payday shouldn’t be a pain — for you or your team. If you’re still printing checks, coordinating manual transfers, or asking employees to chase down payments, it might be time to level up.

Direct deposit is the gold standard for modern, reliable, and seamless employee payments, and setting it up is easier than you think.

In this article, we’ll walk you through the process of setting up direct deposits for your US-based employees — and show you how an automated payroll platform can make the process faster, safer, and fully compliant from day one. So let’s begin.

How does payroll direct deposit work in the US?

In the US, direct deposits run on the Automated Clearing House (ACH) network. This is an electronic system that moves money between financial institutions, allowing employers to deposit wages directly into employee accounts.

According to the National Automated Clearing House Association (NACHA), over 90% of US workers are paid via direct deposit, with this number only increasing.

Global Payroll —

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Payroll ACH: What is it, and how do you set it up?

The ACH network allows you to pay your US-based employees quickly and securely. Understand the benefits of using it, and learn how to set it up.

Setting up payroll direct deposit in the US: Step by step

If you're using a traditional payroll provider or managing things manually, here’s what setting up direct deposit usually involves:

1. Choose a payroll provider or bank that supports ACH

You’ll need access to the ACH network to send direct deposits. This can happen in a few ways:

• Through a local payroll provider

• Through your business bank, which may offer ACH services for payroll

• Through a global payroll platform like Remote

Top tip: If you're intending to scale, and/or hire across states (or international borders), it’s highly advisable to use a provider like Remote that manages tax compliance, filings, and payment logistics as well.

2. Collect your employees’ banking information

You’re responsible for gathering and protecting sensitive employee data. Specifically, you’ll need each employee’s:

• Full name (matching their bank records)

• Bank name

• Routing number (this should be a 9-digit ABA code)

• Account number

• Account type (checking or savings)

• Signed direct deposit authorization form

It’s a good idea to request a voided check or bank document to confirm the account details. It’s crucial that you store all forms securely, and follow best practices for data protection.

3. Add your employees’ information to your payroll system

Once collected, you’ll need to input the bank account details into your chosen payroll platform. Most systems will verify the information through one of two methods:

• Instant verification via third-party tools (like Plaid or Trustly)

• A pre-note test (a $0 transaction sent a few days before the first payroll to confirm the account works)

Be sure to double-check the information for errors, as a single incorrect digit can delay or misroute pay.

4. Schedule and process payroll

Submit your payroll run based on your chosen schedule (weekly, bi-weekly, semi-monthly, or monthly). In most systems, payroll must be approved 2–3 business days before payday to ensure your ACH transfers are completed on time.

You’ll receive confirmation that the payments were sent and processed. Note that you’ll need to keep a record of every payroll run for compliance and auditing purposes.

5. Stay compliant with state laws

Direct deposit is allowed in all 50 states, but some states restrict employers from requiring it. For example:

• In California, employees must agree voluntarily to direct deposit.

• In some states, employers must offer at least one alternative payment method.

Always check local laws and ensure your payroll setup aligns with both federal and state regulations.

Simplifying setup with Remote Payroll

If you handle payroll direct deposits in-house or through a local provider, this process can be pretty manual and time-consuming.

But if you use an automated platform like Remote Payroll, the entire process is simple, quick, and straightforward.

Remote supports ACH direct debit, meaning we automatically pull funds from your company bank account and transfer the payments to your employees. This means no manual uploads, and no banking headaches.

To give you an idea, here’s how simple the setup process is:

1. Log into your Remote account and navigate to ‘Add payment method’ for your US entity. Choose ‘ACH direct debit’, which is the standard method for direct deposits in the US.

2. Instantly verify your business bank account through Trustly, or do it manually by entering your routing and account number. Note that, if you opt to verify manually, this can take up to two days.

3. Once your account is verified, you’ll be asked to authorize Remote to debit your account for payroll. This enables fully automated, on-time direct deposit for every payroll run.

That’s it. With direct deposit enabled, your employees are paid directly into their bank accounts on time, every time.

To see a full, in-depth breakdown of the setup process with Remote, check out our step-by-step support guide.

How long does direct deposit take in the US?

During payroll runs, ACH payments typically take one to two business days to settle. To mitigate this, Remote ensures payments are scheduled ahead of time, so your team is always paid on schedule.

Can I use direct deposit for contractors in the US?

Yes, you can. However, keep in mind that contractor payments are handled differently for tax purposes (i.e., there is no tax withholding or W-2 reporting). Remote makes it easy to pay both contractors and employees from one dashboard.

What happens if an employee changes banks?

Employees can securely update their own banking info through the Remote platform. You’ll be notified, and Remote will verify the new account before processing payments.

How else can Remote help?

A simplified direct deposit setup process isn’t the only benefit of using a centralized payroll platform like Remote. 

You also get:

• Automated calculations, reducing the risk of human errors and ensuring your people are getting paid the right amount.

• Full compliance with all local, state, and federal payroll tax laws, even when they change.

• The ability to scale compliantly across states (and countries) without adding complexity.

• Bank-grade security for your employee and financial data.

To learn more about how we can remove your payroll headaches, simplify the process, and provide a seamless payroll experience, speak to one of our friendly experts today.

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