Automatically register payroll payments for direct deposit
Set up your direct deposit payroll payments automatically with one of Xero’s authorized banking partners. Once registered, your employees will receive their salary and wage payments within five working days of the pay run.
Xero will only enable a bank account for direct deposit payments if it meets our set of security standards. Each account owner must be verified through their login credentials and the contact information held at the banking institution. Payments can only be made from that account after that verification is established.
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Make sure you:
- Set up the bank you want to use for direct deposit in your chart of accounts. The bank account number should be accurate and the bank account should be one of the accounts supported by Xero for automatic registration when you register for direct deposit.
- Use a standard business checking account for your direct deposit funding account
- Have your company’s Tax ID number
- Your legal filing name exactly as it is registered with the IRS
Automatically register your payroll payments
- In the Settings menu, select General Settings.
- Under Features, click Payroll Settings.
- From the Electronic Services tab, click Direct Deposit.
- Click Get Started.
Select a business bank account, and click Next.You'll only see accounts that are set up as bank accounts, and that Xero supports for automatic registration.
- Confirm your company information. This includes information like:
- Company Tax ID number
- Business account owner (This should be the same as the bank account owner name)
- Verify your identity by completing your business bank account login:
- User ID
- Click Continue. Xero will connect to your business bank account.
- Choose a mobile phone number listed (that you previously supplied to your bank for that account) for Xero to text.
- Click Send Text or click Call me to verify my account.
- Once you have received your verification code by text or voice messaging, enter it in the text fields and click Verify.
Your setup is now complete.
What happens next?
Direct deposit payments will be made for each employee after you process your next pay run and will appear as separate entries on your business bank account statement.
Direct deposit payments generally take five banking days to appear in your employees' accounts after you approve your pay run. Funds must also be available in your company bank account no later than 5pm at least five banking days before the pay date. For example, if you want your staff to receive their pay on Friday you'll need to approve this on Monday and also allow for any bank holidays.
If you approve a direct deposit after the cutoff time for a pay run, the transaction will be processed on the following business banking day.