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Apply Auto Gratuity with Square for Restaurants

Note: Auto gratuity may be considered taxable. For specific tax questions related to your business, be sure to consult with a tax professional.

With Square for Restaurants Plus on iOS devices, you can enable a fixed percentage or a manual amount of auto gratuity applied to bills manually, automatically, or based on party size.

Note: Auto Gratuity is not available with Square for Restaurants on Android devices, Square Terminal, or Square Register at this time. Applying auto gratuity to all bills will only apply to Square for Restaurants Point of Sale version 5.35 and higher. Be sure to update your Square for Restaurants POS

Enable Auto Gratuity

To enable auto gratuity from your online Square Dashboard:

  1. Go to Settings > Business Information > Auto Gratuity.

  2. Enable a fixed percentage or manual auto gratuity.

  3. Click Save.

Type

Auto Gratuity Description
Manual Auto Gratuity Can be percentage based or a fixed amount. Auto gratuity is created in your Square Dashboard and applied on the POS. For example, if a delivery fee is always 3%, that percentage would be set as manual auto gratuity added to the check.
Variable Auto Gratuity Exact amount is decided at checkout. Once auto gratuity is added
to the bill, you can select the value or percentage used for this particular fee.

Taxes

Tax Description
Nontaxable The amount of auto gratuity is not impacted by any tax rates.
Tax Assigned The auto gratuity is taxable, and the entire auto gratuity will be taxed at the assigned rate.
Tax Apportioned Auto gratuity inherits the tax rate from the items in the cart. If there are two items in the cart and one has a tax rate of 0% and the other has a tax rate of 4%, the auto gratuity will be taxed in proportion to the value of the two items and their respective tax rates.

Important Notes About Surcharges

If you surcharge at your business, here are a few things to keep in mind:

Merchants in Australia are responsible for adhering to all regulations regarding imposing a surcharge on consumers when a card is used for payment. New regulations set out by the ACCC have banned businesses from applying excessive surcharges for accepting different payment types.

  • Surcharging is allowed, but must not be excessive.

  • Service or handling fees are not a workaround.

    • A business is not able to bypass the new ban by instead charging a “service” or “handling” fee on some card payments. This is still effectively applying a surcharge.

  • The ban does not prevent you from changing your prices.

    • When deciding on the prices for your products and services, consider all of your operational costs and ensure you have a sustainable profit margin. Just like any business expense (including rent, storage or staff costs), payment processing fees should be taken into account when determining the best pricing model for your business.

Learn more about applying a surcharge with Square.

Fees

Square's feeis taken out of the total amount of the transaction, including tax, tips, and any added auto gratuity.

Reporting

To view and export a report of transactions with auto gratuity is applied:

  1. Go to Reporting > Reports in your online Square Dashboard.

  2. Click Auto Gratuity.

  3. Select your date range.

  4. Click Export.


Disclaimer: Please note that this guidance is general in nature and does not constitute legal, tax or any other type of professional advice. If you are unsure about your tax obligations or where to find the relevant information, we suggest you consult with a professional.

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