Square Payroll Review 2023: Is It the Right Software for You?
This article is part of a larger series on Payroll Services.
Square Payroll is built specifically for small business owners to simplify payroll processing. It is designed to work flawlessly with Square POS, making it an ideal payroll tool for retailers and restaurateurs who use its point-of-sale solution. Square Payroll also offers flat-rate pricing ($35 per month plus $5 per employee monthly) with a cancel-anytime account option. It earned an overall score of 4.51 out of 5 in our evaluation of the best payroll software for small business users.
- Easy to use
- Flat-rate pricing with a low-cost contractor-only payroll plan
- Seamless integration with Square POS
- Offers instant and next-day payment options via Square’s Instant Payments and Cash App
- Basic HR features only
- Lacks a dedicated payroll specialist
- Phone support is available only on weekdays; difficult to reach at times
- Standard direct deposit has a four-day processing timeline
Square Payroll Video Review
- Small businesses: Square Payroll is specifically intended for small businesses. It is affordable ($35 per month plus $5 per employee monthly) and makes providing employees with benefits like healthcare, workers’ compensation, and retirement plans easy.
- Contractor-only companies: Square Payroll has a contractor-only plan for managing and paying 1099 workers and is one of our recommended contractor payroll services for small businesses. At $5 per person monthly, it can pay contractors via direct deposit and file 1099-MISC forms for you. The per-contractor processing fees are also waived during months when you don’t have contract workers to pay.
- Square POS users, especially retailers and restaurants: If your business works with Square’s POS solution, simply add its payroll tool to your subscription to start running employee payments. The seamless integration between Square POS and Square Payroll allows you to track and capture employees’ actual hours worked and tips earned for easy pay processing.
Want to learn more about Square POS? Read our Square POS Ultimate Guide.
- Large businesses: Square Payroll is not designed for large operations with thousands of employees; the flexibility and customization needed aren’t available. If this describes your business, consider either ADP or Paychex since both offer flexible pricing plans and robust HR features.
- Companies looking for professional employer organization (PEO) services: While it provides efficient pay processing tools, Square doesn’t offer PEO services to help you manage day-to-day HR tasks. Read our guide to the best PEO companies to find a good option for your business.
Square Payroll’s solid pay processing tools and tax filing services make it a great choice for a wide variety of businesses and users. It is even featured in several of our buyer’s guides.
- Best Restaurant Payroll Software
- Best Payroll Apps
- Best Payroll Software for Mac
- Best Human Resources Payroll Software
- Best Payroll Services for Small Businesses
Square Payroll Deciding Factors
Supported Business Types
Small retail shops, restaurants, and contractor-only businesses needing online tools to manage payroll and benefits
None, but you can easily create a Square Payroll account online
Ease of Use
Relatively easy to learn and use, provided you have basic knowledge of how to run payroll
Looking for something different? If you need something even more low-cost than Square Payroll, check out our free payroll software guide.
How Square Payroll Compares With Top Alternatives
Starter Monthly Fees
Small retail and restaurants businesses
$35 base fee plus $6 per employee
Businesses needing full-service payroll and solid HR support
$40 base fee plus $6 per employee
Small companies that use QuickBooks accounting
$45 base fee plus $5 per employee
Companies looking for an all-in-one HR, payroll, and IT solution
$35 base fee plus $8 per employee**
*Gusto’s 30-day free trial is a special offer provided to Fit Small Business readers. Note that this promotion can change at any time.
**Pricing is based on a quote we received.
If you’re not sure if Square Payroll is right for you, see how it compares with other online payroll services.
Since Our Last Update:
Square Payroll has increased its per-employee fees, from $5 to $6 per month.
Square Payroll has a perfect mark in pricing, given its affordability and transparent monthly fees. Its unlimited pay runs and zero setup fees also contributed to its high score.
With Square Payroll, you get two payroll packages—a “Pay Employees and Contractors” plan and a “Pay Contractors Only” option. The “Pay Employees and Contractors” package costs $35 plus $6 per person paid monthly. It includes full access to all of its features—from full-service payroll and tax filing services to online time cards and multiple employee payment options (such as direct deposits, manual checks, and via the Square Cash App).
For businesses that only employ independent contractors, Square Payroll’s pricing for paying contract workers is only $6 monthly for each person paid. In addition to unlimited payroll and access to time tracking tools, Square will generate, file, and mail 1099 forms for you at year-end.
Pay Employees and Contractors
Pay Contractors Only
$35 plus $6 per employee/contractor
$6 per contractor
Unlimited Pay Runs
Automatic Payroll for On-time Payments
Pay via Check, Direct Deposit, and Square’s Instant Payments/Cash App
Via manual checks and direct deposits only
Direct Deposit Timelines
4 days; next-day and instantly with Square’s Instant Payments and via the Cash App
Federal, State, and Local Tax Payments and Filings
Year-end Tax Reports
Time Tracking via the Square Team App
Tip Calculations and Imports
Benefits Deductions and Contributions
New Hire Reporting
Online Employee Accounts
Square Payroll Pricing Calculator
Need a quick way to compute costs? Use our online calculator to get the estimated monthly and annual fees based on your employee count.
Square Payroll Subscription Management
One of the things I like about Square Payroll is that you’re not required to sign an annual contract to use its platform. The provider will bill you monthly based on the number of employees and contractors paid. And while you can pause and cancel your Square Payroll account at any time, there is some important information you should note.
If you decide to temporarily close your business but plan to pay employees again after several months, you can directly pause your Square Payroll account by going to the “Payroll Settings” in your online dashboard. However, expect to receive a “final bill” the month after you pause your account. This is mainly because of Square’s billing schedule in which it bills clients every first day of the month for the previous month’s actual payroll fees.
For example: If you run payroll every week and paused your account on Sept. 18, you will receive a bill for your actual weekly payroll during the Sept. 1–18 period on Oct. 1.
If you have enabled its automatic pay run feature on your account, Square won’t process payroll if you pause your account. Although, the provider will continue to file the necessary tax forms on your behalf.
Note that you can only keep your Square Payroll account on pause for up to 12 months. At the end of this period, Square will automatically resume your subscription billing. If you’re still not ready to pay employees using Square, go to your “Payroll Settings” to pause your account again.
This option is for Square Payroll users who don’t need to use its pay processing tools and are switching providers. The process is similar to pausing your account—simply go to the “Payroll Settings” in your online dashboard and close your account. You will also receive the final billing following the same timelines. However, with this option, you need to provide Square Payroll with accurate employee and pay information so it can ensure that all your tax payments and filings are accounted for.
Note that canceling your Square Payroll account is an irreversible process. If you decide to use its services again in the future, you have to create a new account using a different email address. Plus, there may be some restrictions to a few features, like tip splitting, time card imports, and business banking, especially if you plan to use the same banking information associated with your old account.
Whether you employ hourly workers, monthly paid staff, or contractors, finding a payroll service to manage wage payments is critical for small businesses. With Square Payroll, you can pay employees and contractors through direct deposits, manual paychecks, and the Square Cash App (note that this option is limited only to employees). It also helps you accurately calculate the prorated salaries of both new hires and resigning staff, especially if they’re joining or leaving outside of your company’s pay periods.
In our evaluation of its payroll features, this provider earned nearly perfect marks (4.5 out of 5) given its solid pay processing tools. In addition to unlimited pay runs, Square Payroll can handle multi-state payroll, custom pay schedules, PTO tracking, and multiple pay rates. If you’re a Square POS user, its employee tip and commission data are automatically imported into Square Payroll for easy pay processing.
While Square Payroll’s standard direct deposit processing time is four days, Square’s Instant Payments feature lets you pay employees the next business day and even instantly through its Cash App—provided you have available funds in your Square balance. This is ideal for businesses that accept customer payments through Square and maintain funds in their Square account.
Square Payroll provides automated tax calculations, payments, and filings for federal, state, and local taxes. At the end of the year, it generates and files W-2 and 1099 MISC forms. Your employees can also download the tax forms and view their pay stubs via the Square Team app (for iOS and Android devices).
Square Payroll has a mobile payroll app designed specifically for employers and payroll administrators. It allows you to run payroll, track PTO, manage pre- and post-deductions, and view benefits plans on iOS and Android devices—provided an internet connection is available.
While Square Payroll may have limited HR features, the solutions it offers are sufficient enough to help you handle essential employee management processes with ease. Its new hire reporting, benefits plan options, and online employee accounts with self-onboarding tools are just some of the functionalities that contributed to this provider’s 4.25 out of 5 rating for HR features.
Square would have received a higher rating in this criterion if it had its own team of HR professionals who can provide expert advice in handling compliance issues. As of this writing, its HR advisory services are available via its partner, Bambee. It also doesn’t offer advanced HR solutions for managing recruitment, learning programs, performance reviews, and compensation plans.
Square’s partnership with SimplyInsured, Guideline401(k), and AP Intego enable you to access and offer benefits plans to your employees. The options include health insurance, retirement plans, and pay-as-you-go workers’ compensation. If you’re already offering benefits, you can add the applicable benefits deductions and contributions into its system. As of this writing, Square Payroll supports the following benefits types:
- Health savings account (HSA)
- Flexible spending account (FSA)
- Dependent care FSA
- Health insurance (Section 125 plan)
- Simple IRA
- 401(k) and 403(b) retirement plans
- Roth 401(k) and 403(b) retirement plans
- 457(b) deferred compensation plan
- Roth 457(b) deferred compensation plan
Employees can even enroll in benefits online—saving you from having to manage the entire enrollment process by yourself. You also don’t have to manually track benefits deductions since Square Payroll automatically syncs all deduction and contribution data every pay run. Note, however, that if you choose not to use Square’s insurance partners, you have to manage premium payments yourself.
With Square, you can capture employee work hours through its “Timecard” feature, which allows workers to clock in/out via the Square POS and Square Team apps. Both solutions sync directly with Square Payroll, so you don’t have to manually import employee time cards.
The system also automatically creates online timecards based on your employees’ actual clock-ins/outs. Aside from viewing, editing, and deleting timecards, you can create new ones for your team members.
Setting up overtime and break rules in the system is very easy. Aside from helping you track overtime and shift breaks, you can use these settings to identify the pay rates (such as the employee’s hourly rate X 1.5) for overtime work. The system will even notify you of time entries that violated your overtime and break rules.
Note, however, that the system will not compute overtime for contractor payments. You also can’t use the overtime settings to include commissions and bonuses in pay calculations. You have to manually add that information into Square Payroll.
Aside from tracking time, you can set up PTO and sick leave policies in Square Payroll. This allows you to calculate accruals and track the available balance for vacation and sick leaves. Employees can also view their PTO and sick leave balances through their online accounts or via their paystubs.
System administrators can create online profiles for new employees that contain basic information, such as full name, email address, job title, hire date, and compensation details. You can manually input all the information needed, using data from paper forms submitted by employees. Or, you can have Square send an email to your new hires so they can create their online accounts and complete the onboarding process, which includes providing their bank account details (for direct deposit payments), W-4 information, and additional personal data (like birthdays and addresses).
Square will also handle new hire reporting for you based on the regulations of the state where your business is located. To enable this feature, select the “File a New Hire Report on my behalf” option when you add a new employee into the system.
Many business owners find that using fully integrated solutions saves them a lot of time and stress compared to integrating products from different software providers. One of the biggest appeals of Square Payroll is that it connects seamlessly with other Square products, not just its POS solution. It works with Cash App, a mobile tool for accepting and sending payments, and Square Capital, which provides business loans that could be used to help manage payroll if needed.
Spas, salons, and groomers can use its appointments tool, Square Appointments, with its POS solution to track tips that clients may leave after booking multiple services for a single appointment. Then, tip payments to employees can be processed easily and accurately through Square Payroll.
Given that Square’s product suite integrates with several third-party software, in this Square Payroll review, we’ve listed systems that its payroll module automatically syncs with.
- Accounting: QuickBooks Online
- Time and attendance: Deputy, Homebase, Humanity, When I Work
Square Payroll earned a perfect score in reporting, given its built-in payroll and employee-related reports. It also allows you to create custom payroll reports by selecting the information you want and filtering specific data points (like date ranges). While Square Payroll reports may be exported to partner systems (such as labor cost data into an accounting program), you can easily download these to your computer as CSV files.
One of the things you’ll notice highlighted in our Square Payroll review article is the software’s ease of use. Although it didn’t get perfect marks on this factor due to limited customizability, its intuitive and simple-to-learn interface makes paying employees and even tracking time easy. Apart from automated tax filings, Square Payroll has advanced features that enable you to track tips, manage workers’ compensation, and handle deductions for healthcare.
- User-friendly interface
- Mobile payroll processing
- Live support for account setup
- Helpful how-to guides
- US-based onboarding and customer support
- Integrates with other Square business solutions
Square Payroll is also simple to set up. Getting the software up and running takes very little time, provided you have all of your business and staff information on hand and only need to add a few employees to the system. If you need setup assistance, Square offers live support for new clients.
If you have questions about its features, Square has a library of how-to guides that you can access online. You may contact the Square Payroll customer service team via email and phone for assistance—although the estimated wait time for an email reply is from 24–48 hours, while phone support is available only from Mondays to Fridays, 6 a.m.–6 p.m. Pacific time. Another help option is Square’s automated online assistant, which is a chatbot that provides links to FAQs and guides but can also connect you to a customer rep if you want live support.
Further, you can easily connect with other Square users through its online community forum. This is great for those who want to get insights from business owners who are using the same Square products. You can even post your queries about the platform’s functionalities in the forum, and Square users who are willing to help can share tips about how to use the system.
Square Payroll scored fairly well (4.38 out of 5) in our expert evaluation of its pricing, overall features, and whether it can meet the HR and payroll needs of most small and medium businesses (SMBs). While it doesn’t have multiple plans that can cater to the HR needs of growing companies, the monthly cost of Square Payroll makes it one of the most budget-friendly payroll packages in the market. It’s even more affordable than popular small business payroll software like Gusto (which has a starter monthly fee of $40 plus $6 per employee vs Square Payroll’s $35 plus $6 per employee, per month rate).
Features-wise, you get all of the essential tools for processing employee and contractor payments. It even has time-tracking functionalities—a solution that similar payroll providers offer either in their higher tiers or as a paid add-on.
However, if you need other HR tools like job postings, applicant tracking, and performance reviews, consider other HR software. Most of these providers, such as TriNet Zenefits and BambooHR, include payroll in their suite of solutions. Rippling even offers basic IT tools to help you monitor company-assigned computers and handle software provisioning processes in addition to managing HR and payroll.
While a majority of the Square Payroll reviews on third-party sites are positive, this provider only scored 3.75 out of 5 in our user popularity criterion. Mainly because its average number of user reviews on G2 and Capterra didn’t reach 1,000.
|Users Like||Users Don’t Like|
|Easy to use||Can get expensive if you use other Square products|
|Affordably priced||Support team isn’t always responsive; phone support is difficult to reach at times|
|Simplifies payroll processing and payroll tax filings||Limited report options|
Users who left Square Payroll reviews online like its ease of use, adding that it helps simplify payroll and payroll tax processing. They also appreciate its seamless integration with Square products (such as its POS solution), including the automatic imports of tips and employee time data into its system.
Some commented that while Square Payroll is affordably priced, it can get expensive as you use other Square products. Several reviewers said that one-on-one customer support can be challenging to reach and that its support team’s response time is less than ideal.
At the time of publication, Square Payroll earned the following scores on popular user review sites:
- Capterra: 4.7 out of 5 based on 550+ reviews
- G2: 4.2 out of 5 based on nearly 30 reviews
How We Evaluated Square Payroll
When we evaluate payroll software for small businesses, we look at pricing and ease of use. We also check the provider’s customer support and whether it offers unlimited pay runs, multiple pay options, full-service payroll, and tax filing services.
Access to third-party integrations and basic HR tools like employee benefits and onboarding are also important. We even consider the feedback that actual users posted on popular user review sites.
Click through the tabs below for a more detailed breakdown of our evaluation criteria:
20% of Overall Score
We checked to see if the provider has transparent pricing, zero setup fees, and multiple plan options with unlimited pay runs. Providers priced at $50 or less per employee monthly were also given extra points.
20% of Overall Score
We gave priority to those that offer multiple pay options, two-day direct deposits, tax payments and filings, year-end reporting (W-2s and 1099s), and a penalty-free tax guarantee.
20% of Overall Score
Payroll service and software should be simple to set up, customizable, and have a user-friendly interface. We also looked at whether the provider offers live support and integration options with online tools that most small and medium businesses (SMBs) use.
15% of Overall Score
Online onboarding, which means giving employees the option to fill out forms like W-4s electronically, is the top criterion, followed by state new hire reporting and the availability of a self-service portal where employees can view pay stubs, edit information, and access forms. Extra points were also given to providers who offer expert HR support, benefits options, and health insurance plans that cover all US states.
15% of Overall Score
In this criterion, we assess whether the software’s ease of use, pricing, and the width and depth of its payroll and HR tools are ideal for SMBs.
5% of Overall Score
We considered user reviews, including those of our competitors, based on a 5-star scale; any option with an average of 4-plus stars is ideal. Also, any software with 1,000-plus reviews on any third-party site is preferred.
5% of Overall Score
Preference was given to software with built-in basic payroll reports and customization options.
Square Payroll is simple to use, and you don’t need a lot of accounting or HR experience to figure out how to set it up—making it ideal for small business owners. If you are already using Square POS, it makes sense to add this payroll service to help you efficiently manage employees’ hours worked, PTO, deductions, and tax obligations. Square Payroll pricing is also affordable, with flat rates to help you manage your business’ budget. Sign up for a Square Payroll plan today.