How to reconcile Square Income
This help guide article covers how to reconcile Square Income. Square is similar to SumUp and Zettle in that as well as enabling organisations to accept income payment by card, it's also possible to be used as a till system, with both cash and card transactions being recorded.
TOP TIP: when choosing a payment processor, in addition to looking at transaction fees, we'd recommend you consider the reporting that is available. Square (unlike all other payment processors) doesn't provide a report detailing each transaction along with the transaction fee deducted (even though they do charge a fee per transaction).
Within ExpensePlus there are 2 choices for how to reconcile Square Income (you will need to pick the one that will work best for you):
- Option 1: Splitting payouts manually using the 'mixed income' option - This can be a good option where you have only a small number of Square Transactions or all transactions are typically either just card donations or relate to just one event (and you wish to bulk together similar income transactions and do the same with fees).
NOTE: Option 1 can't be used if you are using Square as a till system through which you are also recording cash income.
- Option 2: Adding Square as an account and uploading and reconciling transactions - this option enables you to upload and reconcile the transactions that form part of your Square payouts in a highly automated and efficient way using the quick-match feature in ExpensePlus and avoiding the need to try to manually split payouts into gross income and fees manually.
IMPORTANT: You should not reconcile payouts from Square as 'Income Received'. Square charges transaction fees, so recording the net amount that arrives in your bank account simply as income is incorrect from an accounting perspective. Instead, choose one of the above options - both of which enable you to ensure the gross amount of income collected via Square is recorded as income, and the Square transaction fees are correctly recorded as expenditure.
Option 1: Splitting payouts manually using the 'mixed income' option
Reconciling Square payouts appearing on your main bank account statement
When you reconcile your uploaded bank transactions, select the Square payout on the left-hand table of your match transactions screen, click the + button, and then, in the popup that appears, select the transaction type as 'mixed income'.
Within the 'Enter Mixed Income' screen, enter the details for the transactions in the Square payout:
- GASDS Donations - for any contactless card donations where the amount given is £30 or less
- Income (other) - for all other income, such as ticket / book / cafe sales (along with contactless card donations greater than £30 which are not eligible for GASDS)
- Less Expenditure - for the total of the fees deducted (typically grouped into a single expenditure line)
NOTE: Typically, the named donation option isn't used, since most donations will be contactless card donations which can be claimed under GASDS (removing the need to try and manually track at the point of donation which donor with which card number gave which amount).
Any card donations over £30 are not eligible for GASDS and should be entered instead in the 'Income (other)' section.
Note: if you are finding the process of splitting payouts as described above tedious or time-consuming, then we'd recommend you consider option 2 which is far quicker and doesn't require manual data entry.
Option 2: Adding Square as an account, and uploading and reconciling transactions
Reconciling Square payouts appearing on your main bank account statement
When you reconcile your uploaded bank transactions, select the Square payout on the left-hand table of your match transactions screen, click the + button, then, in the popup that appears, select the transaction type as 'Payout from Payment Processor', and then select your Square account.
Note: you will need to set up Square as a payment processor account before you can do this - click here to find out how to do this.
Note: This first step may temporarily make your account balance of your Square account balance in ExpensePlus go negative (until you upload your Square transactions).
Downloading Square transactions
Importing Square transactions
Within the bank reconciliation screen, select your Square account and click 'upload transactions'.
The upload process works similarly to a regular bank account, except that, each line on the statement will show as two transactions within ExpensePlus - one relating to the income and the other to the transaction fee deducted.
NOTE: If you are using Square as a till system, ExpensePlus can cope with the transactions you import being both cash income and card income.
Manually Uploading the Square transaction fees for each period
Unlike all other providers, Square does not include fees they deduct per transaction in their transaction reports (and they deliberately make it hard to find out fee information).
Therefore, you have to find this within a different report within Square, and then once you know the total fee amount for the period, you have to manually upload it.
(You will find it in the sales summary report at the very bottom if you set the month in the date range at the top and keep the view selected as 'summary'. For more help, please contact Square, not ExpensePlus).
By Square not providing a transaction report, which includes the transaction fee they charge, this not only requires you to manually upload the fee amount; it makes splitting the fee amount, if you wish to do this, more complicated, and it introduces a very real risk of you making a mistake, which is highly likely you won't easily spot.
IMPORTANT: To minimise the risk of errors, we'd strongly recommend that:
- You are consistent with how you add fees (we'd recommend you add the total of the fees PER CALENDER MONTH and manually add one outgoing transaction for this amount).
- You carefully enter this amount correctly and select the date as the end of the calendar month the fees relate to each time (as this will make checking for errors easier).
TOP TIP: if you are consistent with the 'description' you enter when manually uploading this transaction each time (e.g. 'Monthly Square Fee Total'), this will enable the Square transaction fee transaction to auto-match.
Reconciling Square transactions
The bank matching process for Square transactions works similarly to a regular bank account - with the ability to remember and quick match transactions.
This means that once you have reconciled Square transactions for the first month, you won't need to manually enter these transactions for future months. Instead, you can simply click the 'quick match income' button at the top of the match transactions screen.
Where transactions haven't been previously reconciled and auto-remembered:
GASDS Donations
To reconcile contactless card donations that are £30 or under:
(1) select the transaction in the left-hand table of the match transactions screen;
(2) click the '+' button to the right of the transaction;
(3) select the 'GASDS Donation' option in the popup and enter the details.
NOTE: Contactless card donations over £30 are not eligible for GASDS and should be entered instead as 'Income Received'.
Income Received
To reconcile income for an event or sales income:
(1) select the transaction in the left-hand table of the match transactions screen
(2) click the '+' button to the right of the transaction
(3) select the 'Income Received' option in the popup and enter the details
TOP TIP: shorten the 'Description to Remember' field to just the first part of the description as this will enable all future sales / event income to auto-match!
Card/Payment Process Fee
To reconcile Square transaction fee:
(1) select the transaction in the left-hand table of the match transactions screen
(2) click the '+' button to the right of the transaction
(3) select the 'Card/Payment Processor Fee' option in the popup and enter the details
Recording Square CASH that is banked (not relevant for most organisations)
NOTE: This is only applicable where Square is being used as a till system through which cash is being recorded.
If you are using Square as a till system where both cash and card sales are being recorded, then your Square balance will be made up of both cash held and card transactions that have been collected and awaiting payout to your bank account.
If you wish to bank cash from your till, then to record this within ExpensePlus, you need to go to the Bank Deposit screen, and record the cash being banked in the 'Plus Cash Added from Petty Cash / Till System' section.
This will automatically create an entry in your Square account in ExpensePlus, causing your Square balance to reduce - reflecting that the money has been banked.
Why is my Square statement not uploading?
- Category (each transaction should contain this)
- Item (each transaction should contain this)
- Qty (each transaction should contain this)
- Net Sales (each transaction must contain an income amount)
- Date (each transaction must contain a date)
- Payment Method (each transaction should contain this)
(Additional columns can be present but won't be imported).
To better understand the Bank Reconciliation functionality, please watch the module overview video here.