Bookkeeping, payroll, and CFO services for San Diego's small businesses.

Call or Text: (619) 417-8735

How do I set up direct deposit for employees?

Setting up direct deposit starts with choosing a payroll system that handles ACH transfers. Most small businesses use platforms like Gusto, QuickBooks Payroll, or similar services that manage the actual bank transfers for you. If you’re paying employees, you need a real payroll solution. Manually wiring money to employee accounts isn’t payroll and creates tax compliance issues.

Collect authorization forms from each employee before their first direct deposit. California law requires written consent before depositing wages into someone’s account. The form needs to include the employee’s name, bank name, routing number, account number, and their signature. Many payroll platforms let employees enter this information through an online portal, which cuts down on paperwork and reduces data entry mistakes.

Before running the first real payroll, verify the bank information works. Most systems send a prenote, a zero-dollar test transaction that confirms the routing and account numbers are valid. This takes 2-3 business days. Skipping this step risks failed deposits and scrambling to issue paper checks when payday arrives. A San Diego bookkeeper can help configure your payroll system correctly if you want to avoid learning through trial and error.

Configure each employee’s payment method in your payroll system. Select direct deposit as their pay type and enter their verified bank details. Some employees want to split deposits between accounts, like sending a fixed amount to savings and the rest to checking. Most payroll platforms handle splits without issue.

Plan for processing time. ACH transfers aren’t instant. You’ll need to submit payroll 2-4 business days before payday depending on your provider. Missing the submission deadline means employees don’t get paid on time. Build this lead time into your payroll calendar from the start.

Keep copies of all authorization forms stored securely. If an employee disputes a deposit or claims they never authorized direct deposit, you need documentation. These forms contain sensitive banking information so treat them accordingly.

Employees can change their direct deposit information whenever they need to. When someone switches banks or wants to update their allocation, they’ll provide new authorization. Update the information in your payroll system before the next pay run to avoid deposits going to closed accounts.

If you’re new to running payroll, payroll setup and training walks you through the entire process including direct deposit configuration, California compliance requirements, and how to handle ongoing payroll runs yourself.

San Diego's Small Business Bookkeeper

The Next Step:
A Short Conversation

A quick call to tell us about your business. We'll listen, answer your questions, and give you a clear price quote.

More Questions

What payroll taxes do I need to pay in California?

California employers pay four state-specific payroll taxes on top of federal requirements. Unemployment Insurance and Employment Training Tax come from your pocket, while SDI and Personal Income Tax get withheld from employees.

Read answer

What is a profit and loss statement?

A profit and loss statement shows your business revenue, expenses, and net income over a specific period. Also called an income statement or P&L, it tells you whether your business is actually making money or losing it.

Read answer

How much does catch-up bookkeeping cost?

Catch-up bookkeeping is priced per project, typically ranging from $750 to $5,000 or more depending on how far behind you are, transaction volume, and business complexity. The condition of existing records also affects the cost.

Read answer

How do I handle comp meals in accounting?

Track all comp meals in your POS and record them as expenses in your books. Staff meals go to employee benefits or labor costs. Manager comps for customer satisfaction go to promotions or marketing. Record everything at food cost, not menu price.

Read answer

How do I track business expenses properly?

Separate business and personal finances completely, record expenses promptly with the right category, and save receipts digitally. Reconcile your accounts weekly to catch mistakes while you still remember what happened.

Read answer

How do I account for in-kind donations?

Record donated goods at fair market value as both revenue and expense. Donated services can only be recorded if they require specialized skills you would have otherwise paid for. Document the value and how you determined it.

Read answer

Fresh Ledger provides full-service bookkeeping for San Diego County's small businesses. We handle monthly financials, payroll setup, and part-time CFO services for local business owners who want their numbers done right.

Client Reviews

5-Star Rated Firm
  • Intuit ProAdvisor Platinum Tier badge
  • QuickBooks Online Certification Level 1 badge
  • QuickBooks Online Payroll Certification badge

© 2026 Fresh Ledger LLC