Square Payroll is Square's payroll service for US businesses that file Form 941 or Form 944: you sign up from your Square Dashboard, add your tax details, bank account and team, then run each pay period from the Payroll tab. You don't have to take card payments or use any other Square service to use it, but only the account owner can set it up and run payroll.
Here's the catch. Direct deposit employees get paid on payday only if you process payroll by 8 PM PT on your due date, and with a traditional bank account the pay day is five business days after the pay period ends. Two-day payroll shortens that, but it's an application, not a switch, and you can lose it if your Plaid bank connection lapses.
Square Payroll doesn't support household employees or agricultural employees. Subscribers also get the free version of Square Shifts, with timecards, shift scheduling and tip tracking, and they aren't limited to five team members on its free features.
What to have ready before you sign up
| You need | Why, as of October 2026 |
|---|---|
| Federal Employer Identification Number (EIN) | Square pays and files your taxes under it, so it must match IRS records |
| State employer tax information | Needed for each location if you run payroll across states or tax jurisdictions |
| Legal business name and address, as registered with your EIN | A mismatch can stop Square making tax payments or filings |
| Bank account details | Payroll and tax withdrawals come from this account |
| Employee details | Address, Social Security number and the tax withholding information for Form W-4 |
One trap I wouldn't have guessed: if you change your business type, the IRS may issue a new EIN. You'd then need a new Square Payroll account, tax caps reset, and W-2s have to be filed for each W-2 employee through both EINs.
How to set up Square Payroll
- Sign up from your Square Dashboard in a web browser.
- Add your tax info: business name and type, address and business locations, plus tax account details for each location if you pay across states.
- Link a bank account. Plaid is recommended because it verifies instantly. If you enter your details manually, you can't run payroll until micro-deposit verification is done, which takes 1 to 2 business days.
- Authorize Square Payroll as your Reporting Agent and, if your state requires it, give Power of Attorney, so it can pay and file taxes for you.
- Add your team and set your pay schedule.
- If you're switching providers midyear, add your previous payroll history.
Instant payments can take direct deposit debits from your Square Balance, but you still need a linked bank account for tax debits, and a Square Checking account if you want the balance to cover tax and benefit payments too.
Switching from another provider midyear
This is where most of the work is. Square needs an earnings report with every paystub from this year for all current and former W-2 employees: legal names, hours and gross pay by type, state taxes, deductions and benefit contributions. For anyone you've paid this year, enter exact year-to-date gross wages including bonuses, commissions and cash tips. Never estimate. Someone you previously paid as a contractor goes in at $0.00.
Two details people miss. Square wants the figures by pay date, the date tax payments were recorded, not the check date your employee was paid. And businesses in Delaware, Massachusetts, Minnesota, Oregon, Rhode Island, South Carolina, Washington, Washington, D.C. and Vermont must include hours worked before the switch. Former employees you paid this year have to be created in Square Payroll too, because it files W-2s for everyone paid in the calendar year, though it won't contact people who've left.
Square's help shows where to find that report in Intuit and QuickBooks payroll, RUN Powered by ADP, Paychex Flex, Gusto, SurePayroll and Heartland.
How to run payroll for W-2 employees
- From the Square Dashboard, go to Pay employees, then Regular payroll, then Start run.
- Confirm the pay period and pay date.
- Choose the payment method: each employee's own method, or pay everyone by check.
- Select Import time and wages if you use Square Shifts timecards, a supported third-party timecard app, tip importing or commission importing. Otherwise type in rate, regular hours, overtime and any additional wages.
- Use the plus icon next to Gross Pay to add lines such as double time, paycheck tips, PTO, sick leave or commissions.
- On Adjustments, check deductions and contributions, and add any reimbursements, which aren't taxed.
- Review the breakdown and the bank withdrawal, then select Confirm Withdrawal. On your first run you'll also confirm pricing.
Overtime is paid at 1.5x the hourly wage and double time at twice it. Tips Already Paid is for cash tips you've already handed over, so they aren't sent again, while Paycheck Tips are paid through payroll. You can run the same pay run from the Square Team App, contractors have their own run, and employees with a login get an email linking to their pay stubs.
Pay schedules and when people get paid
There are four pay periods: weekly, bi-weekly, semi-monthly and monthly. You set the frequency, day of the week, next pay date and deadline to run payroll from your Square Dashboard.
| How you pay | When your team gets paid, as of October 2026 |
|---|---|
| Traditional bank account | Five business days after the pay period ends, if payroll is processed on time |
| Instant payments from your Square balance | Same pay date, but you can process as late as the business day before payday |
| Cash App instant deposit | Eligible team members can get paid two calendar days early; not available in CA, MA, NJ, NM, NY, PA, VT or WV |
| Debit card early access | Team members without Cash App pay a fee of 1.75 cents on every dollar of net pay |
| Manual check | As soon as you process payroll |
| Two-day payroll | Submit up to two business days before payday, or pay your team up to two days early |
Direct deposits don't process on federal banking holidays. That only affects you if you're paying contractors or using two-day payroll: if a holiday falls on the pay date or between your run and the pay date, submit one day early. On four-day payroll or instant payments, holidays don't change your due dates.
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Two-day payroll
Two-day payroll gives you more time to run payroll and off-cycle payments, and off-cycle and contractor payments arrive two business days after you submit them. To apply from your Square Dashboard, go to Running payroll, find Deadline to run payroll, select Change, choose Two days before pay date and select Apply for a two-day payroll deadline. Linking your bank through Plaid is the recommended route. If Plaid doesn't support your bank, you can apply after manual verification.
Approval can take up to 2 business days, and until then the four business day processing time applies. If you're turned down, you can reapply three months after your first application by contacting Square Support. Keep the Plaid connection alive: some banks need it reauthorized every 12 months, and if it expires your account may drop back to four-day processing until you relink.
My verdict on Square Payroll
I'd use Square Payroll if you already run your business through Square, because timecards, tips and commissions flow straight into the pay run and Square Shifts comes with it. I'd skip it if you employ household or farm workers, or if your midyear history is a mess you can't turn into exact figures, since Square won't take estimates. Whichever you choose, apply for two-day payroll early and put the 8 PM PT deadline in your calendar. For the costs, see the breakdown of Square Payroll pricing, and if you're still comparing, here are some Gusto alternatives worth a look.
Payroll is one of those jobs that eats an afternoon every pay period, and automating the admin around jobs like that is what I help teams with. I run AI training and workshops for teams, and help businesses with AI enablement, AI automation and GEO, which is about getting your business seen and cited in AI answers. Most of that work is with SaaS marketing teams and small businesses. Here's how we can work together.
Frequently asked questions
Do I need to take card payments with Square to use Square Payroll?
No. Square doesn't require you to process payments or use any other Square service to use Square Payroll.
Who can run payroll in Square Payroll?
Only account owners can set up Square Payroll, run payroll, edit the payment schedule and apply for two-day payroll.
What is the deadline to run Square Payroll?
To get direct deposit recipients paid on payday, process payroll by 8 PM PT on your due date.
Can Square Payroll pay household employees?
No. Square Payroll is only for businesses that file Form 941 or Form 944, and it doesn't support household or agricultural employees.
How long does Square two-day payroll approval take?
Approval can take up to 2 business days. If your application is denied, you can reapply three months after the first application date.
