Using direct deposit to pay myself from the business.

[fuzzybabybunny]

I'm a little bit confused on direct deposit.

I have a business, a LLC.

I have 4 contractors that I routinely use, and I pay all of them with direct deposit.

Is Direct Deposit only for paying employees, or can I pay contractors with it? And what's the difference between it and wiring money, besides the fact that DD is free and wire costs money?

I currently automatically transfer money from my Chase business bank account to Chase personal bank account. I can avoid checking account fees if I have direct deposits going into my checking account, so can I pay myself by using direct deposit to deposit money from my business account to my personal account to avoid the fees?

 

[Mark R]

I'm a little bit confused on direct deposit.
Is Direct Deposit only for paying employees, or can I pay contractors with it? And what's the difference between it and wiring money, besides the fact that DD is free and wire costs money?
?

Direct deposit takes 3 days from the day of the payment request is made. If money needs to be delivered on a specific day, the transfer needs to be pre-arranged at least 3 days in advance.

(Basically, with DD - the bank waits till the end of the day, when they run a batch script for all outgoing payments. The result of the batch is sent to a central clearing house. Once the clearing house has got the batches from all banks in, it runs a batch script to work out the results of the transactions (which transactions go through, and which fail due to insufficient funds, etc.). Once the script is done (usually end of the next day), the results of the batch are sent back to the banks. Finally, each bank runs an import script on the data from the clearing house.)

Wire transfers are "special" transfers which are handled immediately (or as soon as possible) by both the sending and receiving banks. Generally wire transfers are received same day, often within minutes or hours of the request being made.

 

[Tweak155]

Do you have a lot of $$ in the bank? If so I'd just work with a manager at the local branch and get fees waved. They won't want to lose a good account. Chase is known for this.

 

[Andrew111]

Wow, you run an LLC? I'm surprised you made it out of your parent's basement after reading some of your threads here.

 

[fuzzybabybunny]

Direct deposit takes 3 days from the day of the payment request is made. If money needs to be delivered on a specific day, the transfer needs to be pre-arranged at least 3 days in advance.

(Basically, with DD - the bank waits till the end of the day, when they run a batch script for all outgoing payments. The result of the batch is sent to a central clearing house. Once the clearing house has got the batches from all banks in, it runs a batch script to work out the results of the transactions (which transactions go through, and which fail due to insufficient funds, etc.). Once the script is done (usually end of the next day), the results of the batch are sent back to the banks. Finally, each bank runs an import script on the data from the clearing house.)

Wire transfers are "special" transfers which are handled immediately (or as soon as possible) by both the sending and receiving banks. Generally wire transfers are received same day, often within minutes or hours of the request being made.

Ah, thanks!

So DD is purely a method of transferring money, and has absolutely nothing to do with tax classifications, employees vs contractors, etc?

 

[fuzzybabybunny]

Wow, you run an LLC? I'm surprised you made it out of your parent's basement after reading some of your threads here.

The hell? I've owned my own business since graduating from college. I lived in Hawaii for half a year and traveled China for 4 months while managing it remotely.

 

[Mark R]

Ah, thanks!

So DD is purely a method of transferring money, and has absolutely nothing to do with tax classifications, employees vs contractors, etc?

Correct. Nothing to do with taxes, etc. It's just a way of paying money.

DD is just the cheap way of paying money into someone else's account. It is batch processed by the banks for minimum cost (but at the cost of delay), and only works when transferring funds between banks that subscribe to the same central clearing system. (All US banks for transfers made within the US).

Wire transfers are used when a premium service is needed (e.g. an urgent payment is needed or where the sum being transferred is sufficiently large that the interest "lost" while the money is "in-transit" is significant). Wire transfers are also needed if the banks do not subscribe to the same clearing system (e.g. international transfers) or where the transaction is not compatible with the clearing system (e.g. transfers in a foreign currency).