Add Employees to Square Payroll
Add a New Employee
Click Add Team Member.
Click Create New Team Member or select an existing team member.
Enter your employee’s First and Last name.
Provide your employee’s email address. Employees will receive an email instructing them to create an account where they will be able to fill in their W-4 information and, if paid by direct deposit, add their bank account details. If you do not provide the employee’s email address, you will need to input the employee’s personal information from Form W-4. You will not be able to save the employee to Square Payroll or run payroll for them until their personal information has been provided. Note: Square Payroll does not retain a copy of Form W-4.
Select the Employee employment type. Note: If the team member is also classified as an Independent Contractor, additionally select the Contractor type.
If applicable, check the Overtime Exemption and Tip Pool Eligibility options.
Provide us with the employee’s start date. If the employee is a new hire, please check the box File a New Hire Report on my behalf so we may file this for you.
If the employee is not a new hire, please provide us with their year to date gross pay (if they have already been paid by your business with payroll taxes applied).
Select the employee’s Work Address for tax purposes.
Select the employee’s Compensation information.
If you select Hourly, enter your employee’s hourly rate.
If you select Salaried, enter your employee’s annual salary and the number of hours in their standard workweek.
For employees who only earn commissions, choose “Hourly” and enter a rate of $0. You can get started with setting up commission tracking to have Square automatically calculate these. Alternatively, you can manually enter the commission amounts when running payroll.
Enable the Paid Time Off (PTO) and/or Sick Leave option if you would like to set up a PTO and/or Sick Leave policy for the employee.
Click Generate Point of Sale Passcode if you would like to use Timecards through Square Payroll.
Add any applicable Benefits or Garnishments and Other Post-Tax Deductions.
If applicable, enter the employee’s personal, taxpayer information and bank account information. This is only required if an email address is not provided for the employee to fill out this information themselves.
After you click Save, your employee will appear on your payroll roster.
You cannot pay an employee until their personal information has been entered. You have the ability to change an employee’s payment method at any time.
Note: For overtime-exempt employees with a standard workweek of more than 40 hours, an hourly rate for salaried employees is calculated based on the annual salary divided by the hours the employee works in a year (hourly rate = annual salary / (weekly hours * 52)). For non-exempt salaried employees, if the work week is greater than 40 hours, all hours beyond 40 hours will be paid at the overtime rate of 1.5x hourly rate. This means that the sum of the employees’ paychecks for the year will be greater than their annual salary. Click here for a reference guide.
Converting a 1099 Contractor to a W-2 Employee
Square Payroll allows your team members to be classified as both a W-2 employee and a 1099 contractor. If you would like to switch an individual’s employment type, click the applicable box on the Team Member’s payroll profile in the Payroll Team section of your online Payroll dashboard or Square Payroll app.
Not sure if you have an employee who should receive a Form W-2 or an independent contractor who should receive Form 1099-NEC? Read our Town Square Blog post on 1099 vs. W-2 to learn more.
Click here for instructions on how to Add Independent Contractors to Square Payroll.
Reactivate an Employee in Square Payroll
To reactivate an individual who has been removed from Square Payroll:
Go to Payroll Team in the Payroll section of your online Square Dashboard.
Select the individual you would like to add back to Square Payroll. Their status should be listed as Inactive.
Check the Employee and/or Contractor Employment Type box. Note: The individual’s payment method will default to the previous payment method. Team members who previously had an online account enabled will have their account reactivated with the same email address.