Apply a Service Charge with Square for Restaurants
Note: Service charges 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, you can enable a fixed percentage service charge or a manual amount to apply to bills manually, automatically or based on party size. You can also set up the tax for the service charge as nontaxable, tax assigned or tax apportioned.
Note: Applying automatic service charges 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 Service Charges
To enable service charges from your online Square Dashboard:
Go to Settings > Business Information > Service Charges.
Enable a fixed percentage service charge or a manual service charge.
Click Save.
Service Charge Type
| Service Charge | Description |
|---|---|
| Manual Service Charge | Can be percentage based or a fixed amount. Service charges are 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 a manual service charge added to the bill. |
| Variable Service Charge |
Exact amount is decided at checkout. Once a service charge is added to the bill, you can select the value or percentage used for this particular fee. |
Taxes
| Tax | Description |
|---|---|
| Non-taxable | The amount of the service charge is not impacted by any tax rates. |
| Tax Assigned | These service charges are taxable, and the entire service charge will be taxed at the assigned rate. |
| Tax Apportioned | The service charge 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 service charge will be taxed in proportion to the value of the two items and their respective tax rates. |
Important Notes About Service Charges
If you use service charges at your business, here are a few things to keep in mind:
Merchants are responsible for adhering to all regulations regarding imposing service charges on consumers when a card is used for payment.
Service charges are allowed but must not be excessive.
When deciding on the prices for your products and services, consider all of your operational costs and ensure you have a sustainable profit margin.
Learn more about applying a service charge with Square.
Service Charge Fees
Square's feeis taken out of the total amount of the transaction, including tax, tips and any added service charges.
Service Charge Reporting
To view and export a report of transactions with service charges applied:
Go to Reporting > Reports in your online Square Dashboard.
Click Service charges.
Select your date range.
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.