You’re now able to set up employee benefit deductions and contributions like Health Insurance and 401(k) with Square Payroll!
I’m excited to announce that Square Payroll now supports employers with pre-tax benefits like 401(k), HSA/FSA, Health Insurance, and more!
Here’s how it works. Set up employee benefits from your Square Payroll dashboard, where you’ll specify the type of benefit, the amount or percentage to be deducted from the employee’s paycheck, yearly limits, and any contribution rates on your part as an employer. Once you run payroll with active benefits, a new screen detailing the amounts to be deducted and/or contributed will appear, where you can confirm and make any final edits.
Get started by creating your first benefit:
- Log in to the Payroll section of your online Square Dashboard.
- Click Employees > select an employee who will have a pre-tax deduction.
- Click Add Benefit. If you’re creating a benefit for the first time, click Create New.
- Enter a plan name as you’d like it to appear in your employee’s pay stubs. For example, “Health Insurance” or “401(k)”. Note: The benefit name entered is final and can’t be edited retroactively.
- Click Select > choose which type of benefit you’d like to enable for this employee.
Note: It’s very important that the benefit type and deduction/contribution amount set are correct, since this determines how your employee’s deductions and employer contributions are taxed and reported on tax forms like the W-2.
- Specify the details for your employee’s deductions and your company’s contributions.
- Deduction per pay period: If you choose to deduct a percent of the employee’s paycheck, the amount will be calculated from the employee’s pre-tax gross pay.
- Deduction to date: If you’re switching payroll providers, it’s important that you provide the correct deducted-to-date amount for each employee.
- Deduction limit: Enter the annual limit for the total amount that can be deducted / contributed per employee.
- Specify the details for your company’s contributions towards this benefit.
- Company Contribution Per Pay Period: Enter the per-period amount or percentage to be contributed by you as the employer.
- Contributions to Date: Total amount the employer has contributed to this employee’s benefit to date.
- Contribution Limit: The annual limit for the total amount the employer can contribute for this employee.
- Click Save.
Once you’ve created a benefit for one employee, you’ll be able to apply this pre-tax deduction to the rest of your employees.
Learn more about setting up employee benefits in our Support Center.
Thanks for reading this update. As always, this feature was made possible thanks to the feedback we receive from sellers like you. Keep it coming and let me know if you have any questions about setting up and using benefits with Square Payroll!