Published on September 25th, 2021 | by Ali Dino


Types of Payment Method I Can Use For Payroll

 An employer has different payment methods for employees at his disposal. It can be either Cash, check, direct deposit to the account, by using global payroll services, and so on. While some of the methods will work better for your business and your employee, some might not.

 In this article, I will shed light upon different payment methods for employees that you might find useful for your business. 


 Paying an employee with cash is an efficient method to opt for because you don’t need to deal with papers, printers, or any digital devices. But cash payroll is often avoided as it is regarded as an under-the-table payment. However, it is legal and you won’t face any trouble if you keep a thorough record of the payment as well as follow all the employment laws. In doing so, you have to withhold taxes and other necessary deductions from the employees’ wages, not to mention you also need to pay your share of taxes to the government to avoid any problems. 

 While paying your employee with cash it is mandatory for you to issue 1099 forms to your employee. The IRS requires a company to give their employees a 1099 form if the payment is more than $600 during a fiscal year. Failing to comply with the requirement will result in an IRS audit and possibly pay penalties for unpaid payroll taxes. 


 Issuing a check while paying an employee is the most popular and traditional method of payment. The most common reason for using this method is that the checks are traceable and it completely abolishes the need for cash transactions between you and your employee. After you issue a check to them, they can easily go to the bank and withdraw the amount Using a Check-cashing service paying a certain amount of fee to get their wages.

 You can either give your employee a handwritten check or a printed check. The former one consumes a considerable amount of time. so, it’s beneficial if your company is small and you have only a few handfuls of employees under your control. The latter one is much more efficient and easy to issue. But, it needs special equipment to take care of. While printing your banking information you must do it by using magnetic ink. Because most of the banks use Magnetic readers to process a check nowadays. 

Direct Deposit

With direct deposit, the payroll manager Transfers the wages from your accounts to the employee’s accounts at a certain date of every month. The payroll managers take the required banking details and create a link with the company’s bank account, which enables them to make transfers with ease and without the occurrence of any error. Even if this method is an efficient one, the bank can impose an amount fee to the employer for rendering this service. However, engaging payroll services can sometimes cover this expense by making this service free of cost. 

 According to a survey, about 82% of employees are getting their wages through this method in the US. But to use this method it is a must to have a bank account for the employee too, if they don’t have an account, you should consider using different modes of payment. 

Global Payroll Services

 Nowadays most employers borrow the service of Professional Employers organization to handle all the administrative tasks. A PEO acts as an employer to the employees while giving out their wages. They will also take care of all the tax-related work of your company. By engaging a PEO, You can focus yourself as well as your human resources for the higher productivity of your company. 

Pay Card

 You can provide individual employees with different payment cards, it is kind of a debit card linked to the individual account. This can be a hurdle-free method to pay your employees. You don’t have to take any banking details from them, you just lend out this card during their working period. And pay them by simply depositing the wage to those accounts on a particular date. They can use it as a debit card while purchasing a service or they can even use it to withdraw money. 

 Using this service will save a lot of valuable time. but, it comes with A few numbers of fees that need to be paid off during the process. 

Time Rate System

 A time rate system can be defined as a system where you pay your employees on the basis of the time they had worked for you. This period can be hours, days, weeks, or months. That said, the wages may be paid per hour, day, week, or month. The amount of wage is determined by multiplying the time with the wages per unit of time. This is a good method to ensure quality work. 

Commission Plus Salary in Sales

In sales-related businesses and companies, the employer usually sets up a fixed quota That needs to be achieved by the employee during a certain work period. While the salary is given to the Employee when he succeeds in completing the quota. And the commission is paid when he exceeds the estimated quota. This methodology ensures direct salary as well as it works as a motivational factor for the Employee, which Is helpful for the growth of the company. 

Piece Rate System

It is a system that is applicable mostly in the industrial sector. Here, you will be paying your employee according to the number of units he has produced within a certain time frame. These units can be measured in terms of numbers and weight. Wages are determined by the rate of a unit multiplied by the number of units produced. 

For example, if the rate of producing a single unit is 5, and your employee has produced 10 units the wage he will be getting is 50. 

 This method provides incentives for producing more units, thus it can be a motivational factor for the employee to work with more efficiency and extra effort. 

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