An employer obtains a payroll card from a financial institution or another bank. The payroll card contains all employee information and is used to calculate the employee's gross income and take it to the bank for deposit. The employee's pay is then loaded directly onto the payroll card instead of directly credited to the employee's bank account electronically or paid by check. The employer can use this payroll card for any purpose that the employer and employee agree upon, including paying the employees rent and utilities, paying the employee's cell phone bill, and other general expenses, click here to learn more now.
The bank that issued the pay card for employees will ensure that the funds are available to the employees on the given date. In many cases, the bank will provide the employer with an ATM card and the employer's debit card. If the bank does not have these, then the employer will need to visit the financial institution and obtain this from them. Many employers prefer to use their credit card for convenience and ease of access. However, there are a number of risks to using your credit card for payroll purposes, including unauthorized charges to your account.
Some companies mistakenly believe that they can deduct the amount of their payroll card debt from their tax return. This is not true. Only certain types of pay cards are tax deductible and only if you have a tax return. Other types of payroll cards are not tax deductible.
Many employers have also been hit with fines and penalties for not having these types of payroll cards in their payroll system. When an employer offers payroll cards to their employees, they often fail to submit the forms to the IRS for processing. The IRS will then detect the discrepancy and will try to contact the employer. It is up to the employer to ensure that they submit the appropriate forms and IRS will process them accordingly. The penalties and fines for not submitting the payroll forms on time are severe.
Most credit card providers charge a flat fee per month or per year. The fees may fluctuate depending on which service provider you select. The fees and rate may be based on whether you pay for the card monthly, quarterly, annually or even not at all. In addition to the flat rate fee, some providers also charge late fees if the payroll card is not processed within the allotted time period.
Some payroll card providers charge by the transaction while others allow prepaid Visa or MasterCard transactions. Most employers choose to allow the transactions to take place through the credit card processor. If you choose to use a prepaid debit card, it must be returned within the designated time period. If an employee does not possess a payroll card, then they can only cash their paycheck. Cash is the only accepted means of payment within most businesses. If cash is not available, the employer must cover the cost of the cash transaction.
For more information associated with the article above, see this post: https://en.wikipedia.org/wiki/Payroll.