Tax Season, Simplified: 5 Ways Square Helps You Stay Prepared

Tax season has a way of sneaking up on busy business owners. One minute you’re focused on serving customers and growing revenue, and the next you’re digging through spreadsheets, receipts, and reports trying to piece together everything your accountant needs.

Whether you run a retail shop or a bustling restaurant, tax prep shouldn’t feel like a fire drill. It should be organized, predictable, and manageable. That belief shows up in how Square builds products, designs workflows, and supports businesses of all sizes year-round. Not just in March and April.

Here’s how you can prepare for tax season with confidence by saving ahead, keeping records clean, and pulling the right information when it matters most.

1. Keep your books clean with the Square Connector by QuickBooks

Clean books make tax prep faster for business operators and accountants alike. That’s where the new Square Connector by QuickBooks comes in. With easy reconciliation, you can get a clearer picture of income, refunds, payouts, and fees in one place.

Key benefits:

• Automatically import transactions from Square: Enjoy seamless integration with Square, enabling automatic imports of sales, refunds, payouts, adjustments, and other transactions directly into QuickBooks.
• Enhanced view for payouts: In the app, every individual sale and refund transaction is linked to its corresponding payout from Square. Conveniently view detailed payout information and easily add both the payout & included transactions with a click.
• Track fees separately: When adding transactions from Square, QuickBooks will automatically record the associated Square fees to an expense account of your choice. This means no more manual entry of fees, saving you time and ensuring accuracy.

Because transactions flow directly from Square into QuickBooks, you can stay synced in near real-time throughout the year, rather than catching up all at once in tax season.

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2. Pull accountant-ready tax reports in just a few clicks

When it’s time to file, accountants typically ask for the same core documents: Sales summaries, fee reports, payouts, and transaction details. Finding and exporting those reports shouldn’t take hours.

Square reporting tools are built to make that handoff easier. You can quickly access standardized reports that align with what tax professionals expect, without running custom calculations or exporting multiple spreadsheets.

Here are the common reports Square provides for tax filing:

• Annual Sales Summary
• Transaction Detail report
• Square Fees report
• Transfers report
• Inventory summary & valuation as of Dec 31
• Item sales report
• Invoices report if using Square Invoices
• Annual CSV exports of sales, transactions, and fees – simply select the export icon in the top right corner of each report
• 1099-K form issued by Square if applicable dollar thresholds are met

To find Reports, navigate to the Square Dashboard and select Reports on the left hand navigation. And if you aren’t sure which report you need, Square AI can help identify and surface the right data in whatever format required.

3. Simplify year-end inventory and COGS calculations

For product-based businesses, inventory plays a critical role in tax outcomes. Inaccurate inventory counts or missing cost data can distort cost of goods sold (COGS) and taxable income.

Square inventory management software helps you stay ahead of this by tracking inventory quantities and costs throughout the year, so year-end adjustments are smaller and more accurate. That means clearer tax calculations and fewer surprises at filing time.

With Square inventory tools, you can:

• Track inventory and item costs in real time, with adjustments for shrinkage, spoilage, and manual corrections
• Perform a physical inventory count and true up quantities. You have multiple options to conduct a full inventory count from the Square POS app with retail mode enabled, or from the Square Retail POS app. Manually count your inventory or speed things up by using the barcode scanner and multiple devices
• Export inventory on hand and valuation as of your business’ fiscal year end (December 31st for most businesses)
• Share inventory and item sales reports with your accountant to calculate COGS
• If you track unit costs with Square you can generate reliable COGS reports without rebuilding records from scratch

4. Save for taxes automatically with Square Savings

One of the biggest sources of tax stress is simple: not having cash set aside when it’s time to pay. That’s why Square Savings¹ was designed to help you save as you earn. Not after the fact.

With Square Savings not only do you earn 1% APY (more than 2x the national average), you can automatically set aside a percentage of your card sales into a dedicated tax folder — so you’re prepared for quarterly, payroll, and income taxes when the time comes. Every sale contributes a little, so there’s no need to guess how much to save or run last-minute calculations. Plus, you can adjust or pause your savings rules at any time.

For many business operators, this simple automation is a game-changer to keep tax money separate from everyday spending. Instead of wondering whether the money will be there, you can open your dashboard and see tax funds clearly labeled and ready to go.

With Square Savings, I just set it up to automatically deduct 10% of my daily sales. It made this last tax filing so easy, it was incredible.”

Doran Tomako → Owner of Haute Beauty

With no fees and no minimums to open an account, it’s no surprise Square Savings is the most loved product across the Square suite with a 90% satisfaction rate among users, according to Square 2024 internal data.

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5. Take payroll taxes off your plate with Square Payroll

Payroll taxes are one of the most complex and time-sensitive parts of tax compliance. Missing a filing deadline or miscalculating withholdings can create stress long after tax season ends.

Square Payroll is designed to reduce that risk by handling payroll tax calculations and filings automatically. This way you can focus on paying your teams accurately and on time, while Square manages the compliance details in the background.

Square Payroll takes all of my payroll stress away and frees my time up so that I can better manage my business. I sleep better knowing that my workers’ comp, payroll taxes, etc. are all managed for me.”

Kelly Aaron → CEO of Blueprint Lighting

Here’s how Square Payroll does the tax prep for you:

• Automatic payroll tax calculations and filings: Square calculates, withholds, and files federal and state payroll taxes on your behalf.
• W-2s and 1099-NECs: Square generates and files W-2s and Form 1099-NECs for your team in January for the prior tax year.
• Multiple tax jurisdiction support: For each state or tax jurisdiction in which you process payroll, Square will remit your tax payments and complete your tax filings to the applicable tax agency on your behalf.
• New-hire reporting: Square reports new hires according to the regulations for your state if requested to do so when adding an employee to payroll.

Check out the comprehensive guide on wrapping up payroll and benefits for the new year.

A calmer way to approach tax season

No one starts a business because they love taxes. But the right systems can make tax season feel far less disruptive. In addition to sales, inventory, and payroll data managed within Square, tax accountants will require a broader set of financial information. This typically includes items like operating expenses, fixed assets, and any significant business improvements.

By saving automatically, keeping books clean, managing payroll compliance, and pulling accurate reports on demand, you can approach filing with clarity instead of stress.

With Square, tax prep isn’t about scrambling at the last minute, it’s about building habits that support your business all year long.