How To Use Square Payroll In 5 Steps

Running Square Payroll for the first time? Whether you’re new to the Square platform or are taking over payroll for your business, odds are that you’ll find Square Payroll software straightforward and easy to use.

You’ll know Square for its ubiquitous POS system solutions. The company has carved out a significant presence within the business sector by offering a wide variety of financial tools and services businesses need, from mobile card readers to digital registers. As Square’s popularity has grown, it’s not surprising that businesses have begun to implement other Square business solutions, like Square Payroll.

Square Payroll is full-service payroll software for businesses of all sizes. The software offers robust payroll automation and tools that will save your business time when it comes to paying employees and contractors. This guide will walk you through the process of running payroll with Square Payroll.

How To Run Square Payroll

After getting your Square account set up, you can complete your first payroll with Square Payroll in just four simple steps.  The following walkthrough will guide you through the step-by-step process of running payroll with Square Payroll. Start by logging into your Square Payroll Dashboard.

1. Select Your Payment Method

From your Square Dashboard, head to the far right of the screen and click Payroll and then select the option to Run Payroll (alternatively Pay My Team).

On the next page, you’ll be asked to select the payment method you would like to use. Choose from either Direct Deposit or Manual Check.

Through the Square Payroll Team mobile app or desktop site, team members can add and onboard themselves by creating a Team Member account and inputting their direct deposit information. Once they’ve completed the setup process, you’ll be able to pay them via direct deposit according to their preferences. Your payment method selection options will include: Employee’s Payment Method or Pay All Employees by Check.

For employees or contractors who prefer to be paid by check, you can simply select a team member and pick Manual Check from the payment method drop-down menu. At the end of each pay run, you’ll receive an email reminder listing all employees and contractors who need to be paid via check and the dollar amount they are to be paid.

You can check the pay date for each payroll run by glancing at the top left corner of the Run Payroll screen. This date is typically five days after the last pay period has ended. This is true whether you set a semi-monthly or bi-weekly payroll, or use a different pay schedule.

Want to learn more about setting up a payment schedule? Check out our guide How Often Should You Pay Your Employees? to learn about the different pay schedules and determine which one is best for your business.

2. Input Employee Hours Or Timecards

Once you’ve selected the correct payment method, you can move on to editing employee hours.

Staying within the Square software ecosystem may save you a lot of time. When you use Square Timecards, employees can use the Square Team app or your Square POS system to clock in and out.

In Square Payroll, simply hit Import Timecards on the top-right corner of your screen. When you import timecards from Square Timecards, all your employees’ hours tracked for that pay period will automatically populate in the correct fields. You can edit them as needed. Keep in mind that timecards can only be imported once the last pay period has ended.

If you prefer to manually input your employee hours, you also have the option to do so. Start by clicking on the Regular Hours column and editing each individual employee’s hours as needed.

3. Include Additional Earnings

As anyone who runs a restaurant or pays employee commissions knows, not all earnings are hourly. Luckily, Square Payroll offers the flexibility to support businesses that provide additional or alternative earnings, such as overtime pay, tips, bonuses, commissions, or reimbursements.

Head to the Plus (+) symbol to the right of Gross Pay and check the relevant boxes.

Once you’ve checked the relevant boxes, you can edit each element to reflect your employee’s additional earnings. Here’s a look at the additional earnings options and what they mean:

• Overtime: Any employee that works over 40 hours in a single workweek will qualify for overtime hours paid at no less than 1.5x the employee’s regular pay rate. For example, an employee earning $20 for regular work hours will be paid $30 for every overtime hour worked.
• Double: Double overtime wages are calculated as 2x an employee’s hourly wage. For example, an employee earning $20 an hour, will earn $40 an hour in double overtime pay.
• Paycheck Tips: Paycheck tips are those that come from credit card tips and have not been paid out to your employees yet. These tips are both reported and paid out during your payroll run and are automatically taxed at the correct rate. You may control how tips are doled out in Square Payroll, including tip pooling, excluding certain employees from tips, splitting tips by pay period or workday, and more.
• Cash Tips: This allows you to report cash tips that have already been paid out to your employees. As these amounts have already been paid out, they will not be included in your payroll run and are solely for tax reporting purposes.
• PTO and/or Sick Leave: If you offer PTO or sick leave, you can enter these hours for your employee. If you use Square Timecards and have set up these benefits, this information will be entered automatically when you import the timecards.
• Commissions: Commissions may be earned through sales as a percentage of the sale’s value or at a flat rate. If your business offers commissions to employees, you can include these payments via Square Payroll. You can set up and manage commission earnings from your Square Dashboard.

If you hit the “…” symbol next to Gross Pay, you can add a memo that will show up on your employee’s paycheck.

Be sure to double-check employee hours, wages, and additional earnings before you hit Continue to move onto the Adjustments page.

4. Make Payment Adjustments

On the Adjustments Page, you’ll be able to make any necessary adjustments to your employees’ paychecks. Paycheck adjustments include the following:

• Benefits Deductions: Some employee benefits can be deducted directly from employees’ paychecks. For example, direct-to-employee benefits, such as health insurance or tax withholding assistance may be deducted from employee paychecks at no cost to the employer.
• Wage Garnishments: If any employee has a court-ordered garnishment, such as child support payments or alimony, these garnishments will be withheld after taxes.
• Post-Tax Deductions: Sometimes paycheck deductions may occur after taxes have been levied. For example, if an employee wants to contribute funds to their Roth 401(k) account, they can set a percentage or set amount to come out of their post-tax paycheck.

For a quick refresher on payroll taxes, check out our in-depth guide: What Are Payroll Taxes? How Do You Calculate Them?

Once you have finished editing the page and have confirmed all paycheck adjustments, hit Continue in the top right corner of the screen.

5. Confirm Your Withdrawal Submission Request

On the next screen, you’ll be taken to the Review Page where you can see a summary of all the payroll details you’ve entered, including the total amount that will be withdrawn from your business bank account. You can edit any payroll details before moving forward, so be sure to thoroughly review them to avoid any errors.

Once you’re sure that the payroll run is accurate, hit Confirm Withdrawal. Your employee payments will automatically be withdrawn from your business bank account by 8 pm (PT). That’s it! You’re officially a Square Payroll expert with a full payroll run under your belt.

If in the pursuit of a perfect payroll run, you find that you’ve made a mistake or that something needs editing, you can still cancel the payroll run. If you do need to cancel a payroll run, return to your Square Payroll Dashboard and select History & Reports. Click on your most recent payroll run record and hit Cancel. After your payroll run submission, you’ll have until 7 pm (PT) to cancel the withdrawal.

Final Tips On How To Use Square Payroll

As Square Payroll makes heavy use of automation, it’s important to ensure that you and your employees have submitted the information necessary to take advantage of all the software’s time-saving benefits. During the setup process, you’ll be asked to submit your business’s tax information, add all your team members (ie. employees you will be paying), and link your business’s bank account. You are required to complete these steps before running your first payroll, but you can take it a step further by having all employees select their preferred payment methods, complete their direct deposit documentation, and select applicable deductions through the Square Team app.

By asking your employees to download the Square Team app, you can take advantage of Square Timecards integrations with Square Payroll. You can leave the manual time-tracking and hours input behind, by allowing Square to import all employee tracked hours with the click of a button. The Square Team app also allows new employees to onboard themselves, so you can even more time when managing your team and running payroll.

FAQs About Square Payroll