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Important COVID-19 Updates and Resources for Square Payroll Employers

This time is as unpredictable for you as it is for your employees. This page will serve as your resource for Square Payroll product updates and communication highlighting what you can do today to manage your Square Payroll account. We will be sharing new features as they become available and resources to support business owners as they navigate these unique challenges.

As we work through this together, we encourage you to ask questions, voice your concerns, and provide feedback to Square on the resources you need. The Square Seller Community serves as your forum for these conversations, directly with Square and other Square sellers like yourself. Our Support Center will continue to provide useful information, as well as instructions regarding Square Payroll and other Square products.

Paycheck Protection Program (PPP)

The Paycheck Protection Program (PPP), a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides loans to small businesses to help cover the costs of retaining employees during COVID-19. The money can be used for payroll, rent, mortgage interest, or utilities and can be forgiven if all employees are kept on payroll at their full rate for eight weeks. You are welcome to apply for PPP funds through Square Capital or any other approved PPP lender.

Find payroll reports and tax filings for PPP applications outside of Square

For more information on PPP and how to gather relevant payroll reports and tax filings for the application process outside of Square, please see Square Payroll: Paycheck Protection Program (PPP).

Apply for PPP funds through Square Capital

If you would like to apply for PPP funds through Square Capital, please see the Paycheck Protection Program Resource Page. Should you apply for and be approved for a PPP through Square Capital, our banking partner Celtic Bank will issue your loan and Square Capital will service your loan.

We also have additional information on our Paycheck Protection Program FAQ.

Employee Retention Credit

The Employee Retention Credit (ERC) under the CARES Act encourages businesses to keep employees on their payroll and minimizes employees having to file for unemployment. The Consolidated Appropriations Act which was passed in December 2020 and the American Rescue Plan Act was passed in March 2021 made a number of changes to the tax credits which eased the eligibility requirements and extended them through the end 2021. 

Claim the Employee Retention Credit through Square Payroll

In order to opt-in to Square Payroll claiming and reporting the ERC on your behalf, you must email or call the Square Payroll Support team by 4/21/21 for Q1 2021 filings. The deadlines for the remainder of the year are as follows: 6/30/21 for Q2 2021, 9/30/21 for Q3 2021, 12/31/21 for Q4 2021.

When contacting the Square Payroll Support team, please include the following information in your request to claim the ERC for Q1 2021:

  • Step 1: Confirm your business eligibility. Square Payroll does not have the ability to calculate your business eligibility based on your reduction in gross receipts.

  • Step 2: Calculate your ERC amount. You can use the formula above or consult with a tax professional or accountant for guidance. Note: Square Payroll handles filing for ERC from Q1 2021 and onwards. Claiming the ERC for quarters in 2019, requires an amendment.

  • Step 3: Confirm if you received advance credits through filing Form 7200 outside of Square Payroll. Filing Form 7200 is optional. If you do not report any amounts from Form 7200 to Square Payroll, we will assume you did not file this form. Advance credits from Form 7200 must be reported based on the date you receive the advance credit from the IRS, not the date in which you filed the request. Learn more about Form 7200 in our Support Center.

You can read more about the Employee Retention Program and how to determine eligibility and calculate qualified wages in our Support Center.

Emergency Leave Pay

The Families First Coronavirus Response Act (FFCRA) helps mitigate the workplace effects of COVID-19 by requiring employers to pay employees for up to 80 hours (two weeks) of emergency paid sick leave and up to 10 weeks of paid family leave. Eligible employers who pay qualifying leave can earn payroll tax credits equal to the amount of leave wages paid.

Learn more about Emergency Leave Pay through Square Payroll

An overview of the FFCRA and how Square Payroll can support employers in processing emergency leave pay can be found in our Support Center. The following websites also provide answers to commonly asked questions:

Process Emergency Leave Pay

You can send emergency leave payments by clicking Pay Employees > Add emergency sick leave on the Payroll section of your Square Dashboard or Square Payroll app. You will be prompted to select the employee(s) and the type of leave, along with the number of hours, days and the effective rate of pay. Square Payroll will automatically apply a portion of the tax credits when the run is processed.

Step by step instructions on how to process an FFCRA payment, and more details on tax credits and timing, can be found in our Support Center.

Square Payroll Settings

Here are some ways you can update your payroll settings to reflect potential changes to your business:

Pause your Square Payroll subscription

We are waiving the March and April subscription fees for Square Payroll so you will not receive a subscription bill on April 1 or May

  1. You don’t have to do anything—we’ll manage the process for you.

You can also pause your Square Payroll account by going to Payroll > Payroll Settings in Square Dashboard. When your Square Payroll account is paused, you will not get billed for months when you do not process payroll. We recommend pausing your Square Payroll account, and not cancelling your subscription, if you plan on using Square Payroll in the future.

If you do not plan on using Square Payroll in the future and would like to close your Square Payroll account completely, head over to the Payroll > Settings > Close Payroll Account in Square Dashboard. We’ll send a confirmation email advising of the final filings that we’ll handle for your business. It’s important to note – closing your Square Payroll account is irreversible. After your Square Payroll account is closed, you will not be able to pay employees or contractors with this account again.

Custom Payroll Reports

Beyond the quarterly and annual tax forms Square Payroll files on your behalf, you have the ability to create and download custom payroll reports. These reports can be found by going to Payroll > History & Reports in Square Dashboard. When creating a report, you can select the date range, employees (all or a specific employee), and the report type: company totals, employee totals, paycheck details, and paystubs. Learn more >

Paid Time Off and/or Sick Leave

Square Payroll allows you to set up a paid time off (PTO) and/or paid sick leave policy for your employees. This can be used to calculate accruals and track the PTO balance for vacation and sick leave policies. These policies can be set up for employees from their Payroll Team profile or from Payroll Settings for all employees without a current PTO or Sick Leave policy, and for all future employees. Learn more >

Change Pay Schedules Accordingly

Square Payroll offers four pay period schedules: monthly, weekly, semi-monthly (2 pay periods per month), and bi-weekly (every two weeks). If you prefer to pay your employees on a more frequent cadence due to uncertainty about future cash flow, you can update your pay cadence from Payroll Settings. If a set pay schedule does not fit your current business operations, you can also opt to process an off-cycle payment. There are no additional fees for processing payroll on a more frequent cadence. Learn more >

Payment Options for Team Members

If your employees circumstances have changed, you have the option to process payroll as direct deposit or manual check. Direct Deposit takes four business days. Alternatively, if you need to provide your employees immediately after processing payroll, you can opt to issue a manual check. When running payroll, you will want to select the payment option to “Pay all Employees by Check.” You can write checks or print on custom stock type DLT-104. Square Payroll will still handle the tax payments on your behalf. Learn more >

Update Pay Rates

If your team member’s pay rates have changed, you can update their hourly pay rate or annual salary by going to their Payroll Team profile. Changes to the pay rate will go into effect on the next pay run. If an employee is working multiple jobs at different pay rates, this can also be updated from their profile in Square Payroll.

Deactivate Team Members

If you are not paying an employee through Square Payroll you are not required to remove them as you will not be charged for anyone you do not pay in a given month. Alternatively, If you need to temporarily or permanently remove a team member from Square Payroll, you can do so through their Payroll Team profile. These individuals will no longer appear on the Run Payroll screen. If they return to your business, you can simply reactivate their employee or contractor profile. Learn more >

Issue a Final Paycheck

You may need to issue a last paycheck to any employees you lay off. You can process this by running an off cycle payment. You’ll want to run this as a regular payment, not as Bonus Pay or Other Supplemental Pay. Be sure to include any outstanding reimbursements as well as sick leave and paid time off that the employee had accrued. Learn more >

Disable Automatic Payroll

If you previously had automatic payroll enabled, you may want to turn this feature off for the period of time you are not paying employees. This step is optional as payroll will not be processed if you do not have employees with current timecards or salaried employees. The automatic payroll feature can be managed by going to Payroll > Payroll Settings in Square Dashboard.

Managing and Communicating with Employees

Take steps to keep employees healthy

To help employees reduce contact with one another or enable remote work, you can have them clock-in and out from the Square Team app on their phones. Additionally, there are new federal laws when it comes to dealing with sick leave so be sure that your current sick leave policy is compliant and you communicate this change to your employees.

In the event you stop paying employees

If you have not done so yet, we recommend enabling an online account for all employees before you remove them from payroll. This will give them access to their pay stubs and Form W-2s which they may need to apply for unemployment or other government services. Learn more >

Unemployment Insurance

Due to the coronavirus (COVID-19), the federal government has provided states with flexibility in providing and updating their benefits. The Unemployment Benefits Finder, sponsored by the U.S. Department of Labor, has a directory of state unemployment offices and information on benefits, eligibility and filing a claim. Unemployment benefits are not filed through Square Payroll and the rules vary per state. Employees will need to file their claims directly through their state agency and may need the following information which can be found on Square Payroll:

  • Paystubs: Employers have the ability to download paystubs from the Payroll > History in Square Dashboard. Employees with online account access can also view and download paystubs through their Payroll Employee Dashboard.
  • Hire date: If you opted to have Square Payroll file a New Hire Report on your behalf, you can find these forms by going to Payroll > Tax Forms in Square Dashboard.
  • Business Information: View your Federal EIN and state tax IDs by going to Payroll Settings > Tax Info in Square Dashboard. You can find your business’ taxpayer name, DBA (if applicable), and primary tax address in the Business Info tab.

You can read additional information on how to apply for state unemployment insurance benefits in our Support Center.

Additional Resources

Town Square Business Resource Center

With challenging times making it difficult for businesses to stay open, we want to provide you with resources that can help you to continue to grow. Head over to our Town Square Business Resource Center to read up on different topics for small businesses and browse through industry-specific blog posts about current trends, growth strategies, immediate support, and more. These may be of particular interest now:

Government websites