Square Payroll Review 2020

Best for Contractors
out of overall
Supremely affordable plans
Easy integration with Square Point of Sale
Employer-facing app for on-the-go payroll
Fewer reports than other software
Last Updated: More than 6 months
We recently reviewed this piece to make sure our information was still up to date. Fortunately for its users, Square is super reliable; there aren’t any new changes to its pricing, plans, or features.

For better or worse, payroll costs more than the amount you pay your employees. Once you calculate the monthly base costs for payroll software and bank charges for direct deposit, you’re paying much more than just your employees’ salaries. But it doesn’t seem super fair that small-business owners—who, after all, employ 47.5% of the private workforce1—have to pay that much extra just to pay their own employees. Right?

Enter Square. Square is a recognizable name in the world of point-of-sale software; maybe you already use it to charge customers at your food truck or downtown bistro. But Square also offers payroll software. And if you’re a small-business owner who employs a handful of people and doesn’t need the bells and whistles of HR add-ons, Square Payroll is one of the most affordable payroll options out there.

But Square Payroll’s affordability comes with a price. In this case, it’s the lack of comprehensive add-on features that Gusto and QuickBooks users have come to expect. But if you’re just looking for the basics and want to put your business’s money toward something other than running payroll, Square Payroll is worth considering.

Plan typeBase feeAdditional cost per employee or contractorYear-end tax forms filed for youLearn more
Employees + contractors$29/mo.$5W-2 and 1099-MISCView Plan
Contractors onlyNone$51099-MISCView Plan
Data effective 1/2/2020. At publishing time, pricing and features are current but are subject to change. Offers may not be available in all areas.

What is Square Payroll?

Square Payroll is an online payroll service provider by Square, which also offers popular point-of-sale software. As a full-service payroll provider, Square Payroll runs payroll, calculates payroll taxes, and automatically files those taxes with the right state and federal agencies. It integrates easily with Square’s other products (more on that below), and with its mobile app for iOS and Android, you can pay employees on the go.

Square Payroll is best for contract work

Square Payroll is a bargain no matter how you slice it. At $29 per month, it’s cheaper than just about any full-service payroll plan out there except for SurePayroll, which recently added a similarly priced payroll plan.

But if you work mainly with contractors, Square Payroll offers next-level affordability: there’s no monthly base fee for employers who pay only contractors—there’s just a $5 fee for each contractor you pay, every time you pay them.

That’s it.

If you work with both W-2 employees and contractors, you’ll need to sign up for the $29-per-month plan; otherwise, you won’t get the tax help you need for deducting payroll taxes and filing tax forms at the end of the year. But you won’t pay more per employee than you do per contractor. No matter the employee type, you pay that same $5 fee.

Square Payroll pros and cons

  • No monthly base fee for contractor-only plans
  • Easy integration with other Square products, including Square Point of Sale
  • Workers compensation, healthcare, and 401(k) add-ons
  • Limited reporting features
  • Occasionally glitchy app and software

Full-featured affordability

Even with its low monthly base cost, Square Payroll offers most full-service features small-business owners need to save time on payroll:

  • Unlimited payroll runs in every state
  • Automatic state and federal payroll tax filing
  • Quarterly state and federal tax filing
  • W-2 and 1099 forms generated and mailed to your employees
  • Automated payroll runs

Although you’re primarily responsible for setting up payroll and having your employees add their own information, Square’s US-based customer service team can step in if you need assistance.

Plus, if you’re switching to Square Payroll from another provider (which you can do at any time—no need to wait for a new fiscal year), Square’s team will snag all the appropriate documents from your former payroll provider. They’ll also check that your previous payroll provider paid all your payroll taxes correctly so you don’t get dinged at the end of the year.

Which tax forms does Square Payroll file for you?

  • Form W-2, which reports employees’ net salaries and withheld payroll taxes
  • Form 1099-MISC, which reports how much you paid a self-employed contractor for their services
  • Form 940, which reports federal unemployment taxes
  • Form 941, which reports Medicare taxes, Social Security taxes, and income taxes withheld from employee paychecks and also reports the employer’s contribution to Medicare and Social Security taxes
  • Form 944, which the smallest of small businesses use to report annual employer taxes (as opposed to quarterly payroll taxes)
  • Form W-3, which lists the total Social Security and Medicare wages, total earnings, and total amount withheld in payroll taxes from all employees

Square integration

Just like QuickBooks Payroll works best for current QuickBooks Online customers, Square Payroll is a good fit for current Square users. Why? Because Square Payroll integrates with every other Square product, including Square Point of Sale and Square Capital.

If your employees or contractors use Square Point of Sale to clock in and out, that data transfers easily and immediately to Square Payroll. Neither you nor your employees have to automatically add or approve hours, and with the employee self-service portal, workers can check their pay stubs and add their bank account information to set up direct deposit.

Square Payroll also syncs with non-Square software, including accounting software like QuickBooks Online. If you want to use QuickBooks’ excellent bookkeeping services but don’t feel great about its pricey payroll plans (honestly, who could blame you?), Square pairs great with QuickBooks.

Health insurance, 401(k)s, and workers compensation insurance

Square Payroll definitely focuses on the basics, but it doesn’t leave employers who need a little more from their payroll software out to dry. If you’re looking for competitive benefits that make employees happy (plus cost-effective benefits that make you happy, like affordable workers compensation insurance plans), Square Payroll can help.

Square Payroll's employee benefit add-ons

  • Medical, dental, and vision plans starting at $190/month through SimplyInsured
  • 401(k) retirement plans starting at $39/month + $8/month per employee through Guideline
  • Workers compensation plans through AP Intego—contact for a quote

According to Square’s site, Guideline’s 401(k) plans have the lowest investment fees for employees. All of the benefits listed above integrate seamlessly with Square products, which means health insurance premiums and retirement plan funds are automatically deducted from your workers’ paychecks without you lifting a finger.

Square Payroll cons

If Square’s main upside is its low cost, its main downside is that, in Square’s case, lower cost means fewer features. When you compare Square Payroll’s limited features to Gusto’s add-on HR assistance or QuickBooks Payroll’s comprehensive reporting features, the low $29 base fee starts to make a bit more sense.

On the other hand, having fewer features isn’t always a bad thing. After all, Square Payroll is best for people who employ contractors—which is another way of saying it’s best for people who don’t need extensive reporting or HR support. After all, why pay extra for an expensive plan that gives you everything you don’t need?

Also, since Square Payroll is relatively new to the world of payroll software solutions, don’t be surprised if it’s a little buggy. In general, iOS and Android users like the Square Payroll app, but users on both the App Store and Google Play report glitches, issues with updates, and problems importing time cards or syncing with external time tracking software.2,3


What’s the difference between a 1099 contractor and a W-2 employee?

A 1099 contractor is an independent, self-employed worker who pays their own payroll taxes at the end of the year. You don’t provide benefits to 1099 contractors, and you don’t withhold any taxes from their paychecks either. At the end of the year, you (or your payroll service provider) will mail contractors a 1099-MISC tax form, which shows how much the contractor made while working with you.

A W-2 employee is someone who works directly for your company. Along with deducting the right amount of payroll taxes from their paycheck each pay period, you must offer them benefits like health insurance and cover them with workers compensation insurance. At the end of the year, you (or your payroll service provider) will mail employees a W-2 form that lists the employee’s gross wage, tax withholdings, and net wage after taxes.

Does Square Payroll sync with sick time and PTO?

Yes. Square Payroll lets you set accrual-based or fixed PTO and sick leave policies for your employees. Most importantly, PTO and sick time accruals easily sync with payroll; if an employee requests leave or PTO, they’ll automatically be paid out that amount in the next payroll run.

Even some of the best payroll services and companies, like Gusto, charge more for automatic PTO and sick leave payroll syncing. If easy PTO management is important for you, you’ll want to give Square Payroll a closer look.

Which pay schedules does Square Payroll support?

Square Payroll supports weekly, biweekly, semimonthly, and monthly pay schedules.

Does Square Payroll offer paper checks or payroll cards?

Yes. If an employee doesn’t have direct deposit or doesn’t want to set it up, Square will generate a PDF with the employee’s paycheck information that you can then print out on a personalized check. (Bear in mind that you’ll need to purchase and customize the check stock yourself.)

As far as we can tell, Square Payroll doesn’t support payroll cards as a method of paying your employees.

Does Square Payroll have good customer service?

Square Payroll has a US-based customer service team that’s available slightly outside regular business hours: 6 a.m. to 6 p.m. Pacific time, Monday through Friday. The SquareUp payroll help center also has a pretty comprehensive forum of how-tos and customer questions.

The takeaway

We’re just going to say it: if your publishing business works mainly with freelance editors, not in-house writers, or if your yoga studio hires teachers as contractors, you should probably be using Square Payroll.

In the expensive world of payroll runs, only paying $5 per contractor with no monthly base fee is an absolute steal. And if you set up automatic payroll runs and sync Square Payroll with your contractors’ timecards, you hardly have to do any heavy lifting to pay your contractors on time.

If you have more W-2 employees than you do contract workers, Square Payroll is still a good bargain—as long as you don’t need extensive reporting features and are happy to settle for the basics.

Looking for more comprehensive payroll providers? Check out our list of the year’s best online payroll software, which reviews more payroll solutions for businesses like yours.

At Business.org, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

1. U.S. Small Business Association, “2018 Small Business Profile
2. App Store, “Square Payroll
3. Google Play, “Square Payroll