Add team members to Square Payroll
About Square Payroll team members
You can add two types of team members to your Square Payroll account: 1099 contractors and W-2 employees.
An independent contractor is self-employed. You enter into a contract with an independent contractor to perform a specific role or complete a specific task. Since they are self-employed, you do not withhold taxes from their paychecks; they pay their own taxes and provide their own benefits. Contractors receive a 1099-NEC during tax season unlike a W-2 employee.
With Square Payroll, contractors can clock in and out from the Square Team App, import their hours, and view their payment histories in their online Square Payroll accounts.
A W-2 employee is hired by your business under an employment agreement. You withhold taxes from their wages, pay employment taxes for them, and may provide benefits.
Employees receive a W-2 tax form. A W-2 is a tax form where businesses report annual compensation paid to their employees and the payroll taxes withheld from that compensation. Employees who receive a W-2 are paid through their employer’s payroll and have their payroll taxes withheld throughout the year.
Before you begin
You can add a salaried employee to your team through your Square Dashboard.
To save time, you can invite your employees to set up their own accounts. This will automatically send them an email or SMS notification containing a link to create a Square Payroll account.
Once you create team members, you can run background checks with our partner Checkr. You need to sign up for a Checkr account to be able to conduct background checks through Square. Learn how to create a Checkr account and access Checkr’s services with Square Payroll pricing.
If you deactivate employees or contractors, you may need to issue a final paycheck to your employee. Depending on the circumstances, you may be responsible for providing your employees with a check for their final wages on their last day of work. Read more about final wages from your state labor office. Learn more about how to add and manage team members.
Add an independent contractor
Sign in to Square Dashboard and go to Staff > Team > Team members.
Select the team member you want to add to payroll.
When the team member panel opens, select Payroll > Add to Payroll.
Select Contractor as the employment type.
Select a payment method from the drop-down menu and select Next.
To finish adding a contractor, add their payment and tax information. Select Ask team member to provide this information to send your contractor an email or SMS and have them provide this information, or select Fill this out on this team member’s behalf and enter payment and tax information.
Select Next.
Select if you want to Automatically file Form 1099-NEC for this contractor and select Next.
Review your information and select Done.
Transfer historical contractor payment information
Once you add a contractor, you can add any past payments you made them outside of Square Payroll to your Square Payroll account. If you paid your contractor within this year outside of Square Payroll, add the total year-to-date contractor compensation to Square Payroll to make sure the compensation will be correct on their Form 1099-NEC. You cannot add payments for previous years.
Sign in to Square Dashboard and go to Staff > Payroll.
Select Run payroll > Pay Contractors.
Set the Pay Period for the past payments and set the Payment Method as Pay All by Check. Selecting this option makes sure the contractor is not paid for additional time and the amount is only recorded in Square Payroll for tax reporting purposes.
From the Name drop-down menu, select the contractor you want to capture a payment for.
Enter the total amount you paid the contractor outside of Square Payroll in the Amount column, or enter the total number of hours and hourly rate you paid them.
Select Continue.
Review and select Confirm.
Add a W-2 employee
Sign in to Square Dashboard and go to Staff > Team > Team members.
Select the team member you want to add to payroll.
When the team member panel opens, select Payroll > Add to Payroll.
Select Employee as the employment type.
Select a payment method from the drop-down menu.
For the Employment details, select a Work address from the drop-down menu.
To track paid time off, toggle on Track paid time off.
To track sick leave, toggle on Track sick leave.
Select Next.
To finish adding an employee, add their payment and tax information. Select Ask team member to provide this information to send your contractor an email or SMS and have them provide this information, or select Fill this out on this team member’s behalf and enter payment and tax information.
Select Next.
For Payroll History, select whether you’ve already paid this employee for the calendar year from the drop-down menu. If you have paid them, enter their Total gross paid.
Select a Hire date from the calendar and select Next.
To apply benefits to the employee, select Add benefit. Learn more about how to add employee benefits with Square Payroll.
To add garnishments or other post-tax deductions, select Add garnishment.
Select Next to review your information, then select Done.
If you select Ask team members to provide their payment and tax information, as the employer you may still be required to provide some tax information. In some states the employer may be required to always fill out specific tax information for team members, such as occupational code.
If you select Ask team members to provide their payment and tax information, as the employer you may still be required to provide some tax information. In some states the employer may be required to always fill out specific tax information for team members, such as occupational code or tax exemptions.
Holders of J-1, F-1, and M-1 visas, as well as employees who are the spouse, parent, or child of a business owner, may qualify for certain federal and state tax exemptions due to their status. These exemptions most commonly include Social Security, Medicare, Federal Unemployment, and State Unemployment taxes. If you have questions about an employee's eligibility for these exemptions, consult your CPA or tax advisor.
Learn more about taxation by immigration status and tax treatment for family members working in a family business.
You can change a team member’s employment type by editing their team member profile. Learn more about how to add and manage team members.