Square Payroll is an affordable, effective payroll option for small businesses, especially those that employ just a handful of people and don’t need loads of HR add-ons. Square Payroll is even more affordable for small-business owners who mostly employ contractors—there’s no monthly base fee for contractor-only Square Payroll plans, just a $5 charge per person paid. Interested? Read our Square Payroll review to see if Square’s simple, straightforward payroll software is right for your business.
Square Payroll Review 2021
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.
Square Payroll plans and pricing 2021
Data effective 11/30/20. 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's, which costs a similar $29.99 per month.
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.
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
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.
Square Payroll's tax form filing
Square Payroll may not have the best reporting in the world, but it can automatically file nearly all of the most important end-of-year tax documents 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
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.
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.
With unlimited payroll runs and automatic tax filing, Gusto helps small-business owners worry less about payroll and put more time into growing their business.
- Get automatic payroll tax filing, including end-of-year tax forms
- Manage workers compensation insurance
- Track paid time off, sick leave, and holiday pay
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, both iOS and Android users like the Square Payroll app—it's ranked at nearly 5 out of 5 stars on both sites—but users also report glitches, issues with updates, and problems importing time cards or syncing with external time tracking software.1,2
In the expensive world of payroll runs, paying only $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. In other words, if your publishing business works mainly with freelance editors or your yoga studio hires teachers as contractors, you should probably be using Square Payroll.
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.