In early September, Wal-Mart announced it would begin paying its 1.4 million employees electronically, rather than with paper paychecks. The move for Wal-Mart was designed to save an estimated 257,572 pounds of paper a year. But you don’t have to be a huge employer to see savings and other benefits by also using electronic paychecks.
Here’s how it works and the advantages for you and your staff.
How it works:
Instead of issuing paper checks, make direct deposits of payroll amounts into employees’ bank accounts. These accounts do not have to be at the same bank that you use for your business; they can be at any bank (although there may be cost savings if employees do use the same bank as you do).
For employees who do not have bank accounts, you issue them debit cards. Each pay period, you add their paycheck amount to the debit card. Workers can then access their paychecks via ATMs or any other place that debit cards are accepted. (Depending on which debit card service you use, employees may face fees for ATM transactions.)
Regardless of which payment method you use, be sure to issue or make available a payroll check statement showing the amount of each “check” as well as all withholdings for taxes, 401(k) contributions, and other purposes. This, too, can be done online to create electronic paystubs.
What you can save:
Besides saving reams of paper annually, electronic payroll can save you time, money, and ensure accuracy. It takes less time to make payments using electronic payroll. If you usually send checks to employees (e.g., they are off site), you also avoid having checks get lost in the mail. And there may be cost savings on banking and payroll service fees.
Work with your bank and, if applicable, payroll service, to determine how much money you can save with an electronic payroll. The savings can mount if employees bank (or choose to bank) with the bank you use for your business. For example, Bank of America’s Easy Online Payroll service designed for employers with fewer than 50 employees, provides full-service payroll solutions. In addition to calculating withholding, this service lets you make direct deposits to employees’ accounts and employees have access to view and print online paystubs. Cost: A 3-month free trial; thereafter about $20 per month.