Direct Deposit Authorization Form

Use a direct deposit authorization form so an employee can give permission to an employer to deposit money into their bank account.

Direct Deposit Authorization Form

Updated December 13, 2023
Written by Sara Hostelley | Reviewed by Brooke Davis

A direct deposit authorization form is a legal document letting an employee authorize their employer’s payroll representative to deposit funds directly into their account. It eliminates the need for paper checks that may be lost or stolen.

What Is a Direct Deposit Authorization?

A direct deposit authorization is a document an employee fills out to permit the direct deposit of their paycheck into their bank account by their employer.

Once an employee provides their information via an official form, an employer typically uses the Automated Clearing House (ACH) system to deposit employees’ wages into their bank accounts.

If an individual doesn’t submit this authorization to their employer, the employer will have no choice but to continue issuing paper checks.

The Most Common Bank Direct Authorization Forms

The type of direct deposit form you fill out will depend on the bank with which you’ve opened your account. Some common bank direct deposit forms include:

How Does Direct Deposit Work?

To get direct deposit set up for your employees:

  1. You can begin by collecting their personal and financial information during the onboarding process.
  2. Then, the employer determines the employees’ paydays. Some employers offer weekly paydays, while others make their paydays on the 15th and the last day of each month.
  3. The employer will send payroll instructions to its bank one or more business days before payday arrives.
  4. The employer’s bank will pass the information through the ACH, and this operator will organize the ACH records and deliver all the instructions to the proper bank for every employee’s paycheck.
  5. Once each financial institution obtains the ACH instructions, they will process the transactions and deliver the money accordingly.

What to Include on a Direct Deposit Authorization Form

Here are some essential elements to include on this form:

Once employees provide all this information, they can submit the completed form to their employer’s payroll representative or accounting department. If the form has a voided check attached, the employer will confirm the accuracy of the employee’s financial information.

How to Add an Employee to Your Payroll

Adding a new employee to your business’s payroll system is a relatively straightforward process, but it does require you to keep a few essential things in mind.

Step 1 – Obtain an Employer Identification Number

If you don’t already have an Employer Identification Number (EIN), the first step is to obtain one. You can complete Form SS-4 or apply online through the Internal Revenue Service.

Your EIN will act like a social security number for your business. It’s free to apply for as long as you establish your business within one of the 50 U.S. states or territories.

Online filing will give you an EIN within 20 minutes. If you fill out the form and mail it to the Department of Treasury, you can expect to get your EIN within 10 to 15 business days.

Step 2 – Obtain Forms from the Employee

The next step is to obtain forms from the employee to ensure they’re eligible to work in the U.S.

Some of these forms include:

Step 3 – Distribute Employment Forms

Once you confirm an employee’s eligibility, you should distribute employment forms as part of the onboarding process. For example, you can distribute an onboarding letter, an employment contract, and an employee handbook.

At this point, you can also give them the direct deposit authorization form to let them set up direct deposit. Have them provide their information and submit it back to you.

Step 4 – Add the Employee to Your Payroll Schedule

Add the individual to your payroll schedule, ensuring you account for deductions and withholdings. It’s possible to keep track of this information yourself, but you may also use a payroll provider like ADP or Gusto.

A payroll provider will eliminate the need to process payroll manually, which is helpful if you have a lot of employees.

Some of the deductions you must ensure to account for include:

Step 5 – File Form 941 with the IRS Every Quarter

You should file Form 941 with the Internal Revenue Service each quarter:

This form contains the following information:

Direct Deposit Authorization Sample

Below, you can download a direct deposit authorization form in PDF or Word: