Direct deposit isn’t something you set up on its own. It’s a payment method within your payroll system. If you don’t have payroll software or a payroll provider yet, that’s the first step. QuickBooks Payroll, Gusto, ADP, and similar services all include direct deposit as a standard feature.

Once your payroll system is in place, connect your business bank account. The payroll provider needs to pull funds from your account to distribute to employees. This usually involves entering your routing and account numbers and verifying ownership through small test deposits or instant bank verification.

Collect a direct deposit authorization form from each employee. This form includes their bank name, routing number, account number, and whether it’s checking or savings. The employee signs it, giving you permission to deposit wages into that account. Most payroll software provides a template, or employees can enter their information directly through an employee portal.

Enter the banking details into your payroll system. Double-check routing and account numbers because a wrong digit means the deposit fails and the employee doesn’t get paid on time. Some systems verify account validity before the first payroll runs. Others don’t, so accuracy matters.

Plan for lead time. Most payroll providers require you to submit payroll two to four business days before the pay date for direct deposits to process. If you run payroll on Friday and expect employees to see money that same day, you’ll be disappointed. Know your provider’s cutoff times.

The first pay period with direct deposit sometimes involves a test deposit. Some providers send a small amount to verify the account works before processing full wages. Others run the first payroll as a live test. Either way, have a backup plan for that first check in case something goes wrong with an employee’s bank information.

Not every employee wants direct deposit. Some prefer paper checks, and in New Mexico employers generally can’t require direct deposit. Offer it but be prepared to cut checks for employees who opt out.

If the setup process feels like more than you want to handle, payroll system setup is something you can get help with. Configuring everything correctly from the start prevents headaches later. A QuickBooks bookkeeper in Santa Fe who handles payroll regularly can get your system running and train you to manage it going forward.