Currently, technology brings new payment options to help businesses grow. Employers have different choices concerning compensating their employees. The most widely recognized payment techniques include cash, check, and direct deposit. Every payment option has advantages and disadvantages and should be appropriately administered.
Apart from simplifying payment options, Otto is the ideal company that provides cash advances for a business. The best approach to choosing the perfect payment method is learning everything you can about the advantages and disadvantages of every technique. Below are the three best payment methods you should consider when paying your workers.
Direct Deposit
Direct deposit is among the most widely recognized and most ideal approaches to pay workers. Payroll processing is entirely electronic. Cash moves from the bank to your workers. You are only required to audit and approve it.
Once you get your employees’ financial data, you can deposit their income via electronic funds transfer. Direct deposit is an appropriate and more secure way of transferring money. It eradicates any chances of theft or loss of cash or a check since the transaction is completed electronically.
Eventually, the most significant potential security issue with direct deposit happens when you are establishing the platform. Verifying that your financial details go to the appropriate party in a company you trust through a protected channel can assist with guaranteeing the security of your money.
Before choosing to utilize direct deposit, comprehend the period for processing. If you do not run the payroll on a specific day, your workers will not get their income as anticipated.
Pros
- Safe
- Suitable for workers
Cons
- Payment processing may take days
- Works are required to have bank accounts
Paper Checks
Checks might appear to be an old method for particular businesses. However, it is as yet a safe method to pay workers. It’s pretty straightforward, contingent upon how you’re handling the check. You can choose to print them using payroll software or write them personally. Writing is a cheaper option. However, it can be more tedious, particularly for larger businesses. Before picking this payment alternative, think about the merits and demerits. For instance, some workers may prefer the privacy of getting checks since they do not want to share their banking details.
Contrary to other payment ways that include electronic funds transfers such as direct deposit, workers might not need to own bank accounts to get their income. Alternatively, workers can sign up with a check-cashing service to access their wages.
Pros
- Less expensive than electronic alternatives
- Leaves a paper trail
Cons
- It can get lost.
- It makes it easier to pay unbanked workers.
- Needs you to follow when or if each check goes through with the bank.
Pay Cards
Pay cards are among the latest methods that managers use to pay their employees. Prepaid debit cards are used to deposit the wages. It permits both the employer and the employee to enjoy the rewards of direct deposit while doing away with the disadvantages.
There are payroll services that provide payroll cards at no cost, apart from the cost of the actual service itself. In case you want to know more about this alternative, enquire with your bank. Most banks provide pay cards.
Pros
- Quick
- Reliable
- Entirely electronic
Employees do not have to own a bank account.
Cons
- Workers cannot access the money if the card gets lost or stolen.
- Other services charge expensive fees for workers
- Highly regulate in some places
Irrespective of the payment methods you select to pay your workers, ensure that you save the payment records for at least three years. Additionally, ensure that you set up a solid system that tracks all your payments.
Conclusion
Regarding paying your workers or contractors, you ought to select an ideal method for your business. Some ways might appear to be simpler initially but bring you trouble in the long run. Keep in mind that you are answerable for withholding payroll taxes of every check and tracking all income.
Therefore, ensure that you pay your part of employment taxes to stay out of trouble. Do not stress about making payments when things are not working for you. Allow Otto to handle all your payment duties. Contact OTTO Customer support service today to enjoy their payment services.