Set up Square Payroll

About Square Payroll

Signing up for Square Payroll is quick and easy, even if you’re switching payroll services in the middle of the year. We do not require you to process payments or use any other services with Square to use Square Payroll.

Square Payroll subscribers have access to the free version of Square Shifts, which includes timecards, shift scheduling, and tip tracking. Square Payroll subscribers are also not limited to five team members to use the free features of Square Shifts — you can add as many team members as you need.

Before you begin

You can sign up for Square Payroll from a web browser.

To sign up for Square Payroll, you and your employee(s) will be required to provide personal information, such as an address and Social Security number, as well as tax withholding information required for Form W-4.

Square Payroll is currently only for businesses that file Form 941 or Form 944. Square Payroll does not support paying household employees or agricultural employees.

To sign up, we recommend having this information ready:

• Federal Employer Identification Number (EIN).

• State employer tax Information.

• Business type.

• Legal business name and address (as registered with your EIN).

• Bank account details for payroll withdrawals. 

If you’re switching payroll services midyear, we also need the following information:

• Your employees’ first and last name

• Your employees’ email address (used for direct deposit set up), Form W-4 (if paid by check or if you want to enter this information yourself), and state withholding form (if your state has employee income withholding).

• Employee details for former employees that you’ve paid this year

• Payroll reports from your previous payroll provider

If you update your business type, the IRS may issue your business a new Employer Identification Number (EIN). In this situation, you’ll need to create a new Square Payroll account to pay your team members. When your EIN is updated, tax caps will reset and Form W-2 will need to be filed for each of your W-2 employees through both EINs.

You can set up Square Payroll with no previous payroll history or by switching and uploading your previous payroll provider history. If you don’t have a Square account, create one first. Learn how to set up your Square account.

Set up Square Payroll

If you have no previous payroll history from another provider, you can add your tax information, verify an authorized signer, link a bank account, add your team, and set your pay schedule.

1. Sign up for Square Payroll from your Square Dashboard.

2. Navigate to Staff & payroll > Payroll > Setup.

3. Add your tax info. Enter your business information, including your business name and type, address, and business locations. If you process payroll across different states or multiple tax jurisdictions, provide your business’ tax account information for each location. Make sure your information is accurate and up to date. We may be unable to make tax payments or filings if the information you provided does not match what is on record with the IRS and/or your state employer tax agency. For assistance, visit our Square Payroll state tax resources.

4. Link the bank account you want to use for Square Payroll. If you are signing up with an existing Square account you can choose to use your existing linked bank account, link a separate bank account exclusively for Square Payroll, or use instant payments. With instant payments, you can choose to have your team member’s direct deposit debits come from your stored balance. You will still need to link a traditional bank account for tax debits.

5. If you manually link your bank account, Square Payroll will deposit and then withdraw two small amounts from your bank account as a security measure to ensure that the account you linked belongs to you after confirming your bank details. If using a traditional bank account, you are unable to process payroll until you have confirmed the security deposit amounts. Learn how to verify your Square Payroll bank account.

6. Authorize Square Payroll as your Reporting Agent and, if your state requires it, provide us with Power of Attorney (POA). This authorizes us to pay and file taxes on your behalf and will be submitted to the IRS. The information entered must match your EIN data. If you are switching payroll providers midyear, Square Payroll requires additional information regarding your previous payroll history.

7. If you’ve paid a team member this year, and they are a W-2 Employee, enter their year-to-date gross wages. If your team member was previously paid as an independent contractor, enter $0.00. Do not estimate this value — provide the exact amounts including any additional pay such as bonuses, commissions, and cash tips. This information is critical to ensure your employees’ taxes are calculated correctly.

8. If you have former W-2 employees who you paid within the current year, they will need to be created within Square Payroll to ensure accurate W-2 filings. We file W-2s for all employees paid within the current calendar year. Square Payroll does not contact employees who no longer work for your business.

9. Add previous payroll history. Provide your payroll history details from your prior provider. If you are switching from another provider, upload any filings and/or paycheck reports you have. Review the next section for more information on finding your previous payroll history.

Find payroll history from your previous provider

If you are switching payroll services midyear, Square Payroll requires an earnings report from you. The earnings report should include every paystub from this year for all current and former W-2 employees with the following details:

• Employee name

• Pay date

• Gross Pay

• Federal Income taxes withheld

• FICA/Social Security

• Medicare

• Any applicable state taxes

• Any deductions (pretax, post-tax and garnishments) withheld from employees

For tax reporting purposes, a pay date is different from a check date. The check date is the date when your employee was paid, but the pay date is the date when federal and state tax payments were recorded. When providing your prior payroll reports, Square Payroll will need payroll information based on the pay date.

Additionally, several states require payroll reports to include the hours worked by your employees. If your business is located in Massachusetts, Minnesota, Oregon, Rhode Island, South Carolina, Washington, Washington, D.C, or Vermont, include the hours your employees have worked prior to coming to Square Payroll.

If you are transitioning to Square Payroll from one of the providers below, review the steps to locate your employees’ earnings report.

Related articles

• Verify your Square Payroll bank account

• Square Payroll state tax guides

• Add and manage team members

• Add team members to Square Payroll