QuickBooks allows you to transfer employee and contractors’ paychecks into their bank accounts via direct deposit. This is way faster than the traditional way of sending paychecks. However, recently, many users have found QuickBooks direct deposit not working or QuickBooks Direct Deposit Failed.
This is the scope of this blog. We are going to figure out why QuickBooks payroll direct deposit is not working and how to resolve that with proven steps. Alright, then, let’s jump right into it.
Related Post: How To Setup QuickBooks Payroll Direct Deposit [2024 Tutorial]
Why is QuickBooks Payroll Direct Deposit Not Working?
While making a direct deposit in QuickBooks, you might find it not working. You might see such error message on the screen:
| Intuit’s Direct Deposit system is not currently working so your paycheck is being issued in paper form and will be available for pickup at the front desk this afternoon. |
| We experienced unexpected system delays. |
| Due to communication issues between Intuit Payroll Service and our bank, Intuit was not able to direct deposit your paycheck. |
| Intuit Payroll Service is down once again. |
Here are several reasons why is QuickBooks direct deposit not working.
- You might not have entered complete account details for the employee or contractor.
- The pay date you have selected might fall on a bank holiday or weekend
- The bank account might have been closed, invalid, or have insufficient funds.
- You might have entered the employee’s account information incorrectly
- The paycheck might be submitted after the cutoff time, i.e., PST (Pacific Standard Time).
- There might be an issue with the bank or financial institution’s server.
- Your QuickBooks software or the payroll tax table might be outdated.
These reasons explain why you cannot deposit paychecks instantly into your employees’ or contractors’ bank accounts. Now, let us see how to fix that.
Solutions to Try When You Find QuickBooks Direct Deposit Not Working
In this section, we are going to tell you what you should do if you find QuickBooks Direct Deposit Failed. Go through these steps one by one and carry out the instructions as given.
1. Update QuickBooks Software and Payroll
The first thing you need to do is update QuickBooks Desktop to the latest release. When doing so, checkmark the box to Reset Update. Once done, install the latest payroll tax table for QB.
When done, try creating a direct deposit and check if it works. However, if you run into an issue, check and confirm the funding time.
2. Activate Direct Deposit in QuickBooks
To create a direct deposit in QuickBooks, you must first enable it. However, if you haven’t activated direct deposit yet, let us show you how to do so.
- Open QuickBooks Desktop and press the F2 (or Ctrl + 1) key on your keyboard, followed by the F3 (or Ctrl + 2) key. This will take you to the Tech Help window.
- Tap the Open File tab and double-click the qbw.ini file to open it.
- When the text file opens, go to this part: [QBLICENSE] PAYROLL_BUNDLE_STATE=Y.
- Here, modify Y to N, then navigate to File > Save. This will save the qbw.ini with the changes.
- Now, go back to QuickBooks and attempt to access the WF Invites or PTC.
- When you reach the Payroll Activation window, follow the same steps above, but instead of changing Y to N, delete the whole section: [QBLICENSE] PAYROLL_BUNDLE_STATE=Y].
Once you have enabled direct deposit, try creating a direct deposit. If you get QuickBooks error 40001 while activating payroll direct deposit, that’s another scenario, and we have compiled a dedicated guide for it.
3. Check and Confirm the Funding Time
There are several kinds of funding time that can be set in QuickBooks, and that determines Intuit processes the paychecks after you send them. Here are common funding times offered by Intuit:
- Same-day: If you have a Premium or Elite subscription, you can set the funding time to the same day so that the employees receive the paychecks on the day you send paychecks to Intuit.
- Next-day: Choosing this will deposit the paychecks the next day in the bank accounts of the employees after you send them to Intuit for processing.
- Two-day: Choosing this will deposit the paychecks two days after in the bank accounts of the employees after you send them to Intuit for processing.
- Five-day: Choosing this will deposit the paychecks five days later in the bank accounts of the employees after you send them to Intuit for processing.
Therefore, if you find that the paychecks are not deposited by the time you want, you should check the funding time set in QuickBooks.
- Login to the QBO company and choose the Gear or Settings icon.
- Now, navigate to Payroll settings, followed by the Direct Deposit section.
- Check the funding time, and if needed, you can change it.
However, if you still find QuickBooks direct deposit not working, move to the next step.
4. Check the Bank Account and Company Information
Firstly, you need to ensure compliance by sharing correct information with Intuit. This includes
- Company’s name, address, and EIN.
- Details of the principal officer, such as date of birth, social security number, and home address.
- Account numbers, banking credentials, or bank routing numbers.
Another reason you might not be able to create a direct deposit in QuickBooks is that your account cannot be verified. This can be because your account has insufficient funds. Therefore, check your bank account. If your account seems fine, but QuickBooks payroll direct deposit is not working, move to the next step.
5. Reconnect Bank Account
To get the direct deposit to work, you can reconnect the bank account. Here is how to do that in simple steps.
- Open QuickBooks company and go to the Employees menu.
- Select My Payroll Service, followed by Activate Direct Deposit.
- Choose Getting Started, followed by Start on the Business tab, and then Next.
- Enter the information of the principal officer and then choose Next.
- Choose the option to add a new bank account.
- Please enter your bank’s name, online banking login information, or, if prompted, your bank routing and account numbers.
- Now, you must create a PIN, which needs to be entered each time you send payroll to QuickBooks. Therefore, enter a PIN that you can remember and note it down.
- Verify the PIN twice and then choose Submit.
- Tap on Next, followed by Accept and Submit.
- If you are asked to, verify the SSN of the principal officer and then hit the Submit button.
Finally, try creating a direct deposit, and if you run into QuickBooks Desktop or QuickBooks online direct deposit not working, let us review the employee’s information.
6. Review Employee’s Banking Information
When you try to pay an employee via direct deposit, you need to enter vital information. If they are incorrect, the direct deposit might not work. Therefore, cross-check all the details of the employee entered to who you are sending paychecks.
Conclusion
In this guide, we saw why you might find QuickBooks direct deposit not working and how to resolve that in simple steps. Hopefully, now you can send direct paychecks to the bank account of your employees or independent contractors. However, if the issue is not resolved yet, or you run into problems, speak to a QuickBooks expert. Dial +1(855)-738-0359 and connect with a QB expert now.
Frequently Asked Questions
The direct deposit sent through QuickBooks or another accounting software might not go through if the bank account you used is not verified, has insufficient funds or the paycheck is put on hold by the financial institution. Other reasons could be incorrect employee, employer or company information.
If your QuickBooks direct deposit fails, you will receive the funds in the business account you used to create the deposit in a few business days. You should void the paycheck instead of deleting it once the direct deposit fails.
If you cannot see your direct deposit in QuickBooks, it could be because it was incorrectly deposited, associated with a different check register, not yet deposited, or the bank account or details were incorrect. Moreover, as QuickBooks only shows payments for one currency at a time in the Bank Deposit window, payments made with other currencies might not show. Do not worry; you can use the audit trail to find the missing direct deposits.
When the QuickBooks direct deposit hits, It depends on the receiver’s bank account, i.e., the employee or the independent contractor. Usually, the direct deposit hits the employee’s bank account from midnight to the early morning of the payday.
Kate is a certified public accountant (CPA) with expertise in various accounting software. She is technically inclined and finds passion in helping businesses and self-employed people carry out bookkeeping, payroll, and taxation without worrying about errors. Every once in a while, Kate loves to travel to far-off places and relax in the lap of nature.