How does Payroll work?

Question

I am working for a small business and am always worried my check is going to bounce because my boss complains about money issues often. We get our checks through a payroll company (no direct deposit-just physical checks) and then have to deposit them ourselves. Does payroll deduct the funds from the companies account for my paycheck when the check is sent out? So before I deposit the check. Or does it take it out of the companies account when I deposit the check? I am just worried about it not clearing. Thanks for the help!!

Answer 1

Favorite Answer

The payroll company makes your boss sign a contract that says he will have the amount necessary for payroll available 3 days before the checks are issued. Then 3 days before the checks are issued, the payroll company places a HOLD on those funds. That means if any one tries to take so much money out of the account that there will not be enough for both payroll and payroll taxes, they will be turned down. That includes not clearing checks to other vendors.

If your boss is having money problems, then you are lucky that he is using a payroll company.

Perhaps...very quietly...look for another job.

Answer 2

I’m not sure how it works never used it

Answer 3

If its a third party check, like from the Payroll Processing Company, then it will clear. If its a company check, its subject to the available funds.

Sounds like you use a third party for this...but its weird they don't direct deposit...most of the payroll companies prefer this and it actually costs more to your employer to cut checks weekly....

Answer 4

The funds are not deducted until you deposit your check. If you are worried about it, change to direct deposit.

Answer 5

Not any faster than anywhere else.

Answer 6

A payroll check is just like any other check. It's a draft against an account. It doesn't matter what the check is for (in your case, payroll), it processes thru the banking system just like any other check. Writing a check where insufficient funds exist is actually a crime in every state of the United States ... though prosecution is only for serial offenders. If you have a problem with a paycheck not clearing, the FLSA has provisions regarding paychecks. Those provisions are enforced by BOLI, which has at least one office in every county.

Answer 7

no. works just like any other check, clears after it's deposited

Answer 8

Just deposit your check and stop worrying.