At year end, a small restaurant owner using Square should export a full-year Sales summary, Payment methods, Category and item sales, Discounts, comps and voids, sales tax, tips and fees information, plus Form 1099-K if Square issued one, and give them to an accountant together with bank statements and expense records. Square does not file your income taxes for you, but its reports give your accountant most of the sales side of the picture.
This guide is about which reports to pull and how to check them. For setting up sales tax in Square during the year, see how to use Square for tax reporting in the US. For tip income rules, see taxes and tips in the restaurant business.
This article is general information, not tax advice. Tax rules vary by country, state and city. Work with a qualified accountant or tax professional.
Before you export: two settings to check
- Date range. Set the full calendar year (or your fiscal year, if your accountant uses one), and select all locations unless your accountant wants them separately.
- Reporting hours. If you created custom reporting hours under Reports, Settings, Reporting timeframe, totals near midnight on December 31 can shift by a day. Square's help center explains that to reconcile with your Form 1099-K, you should run the Payment methods report with reporting hours set to UTC. Mention this to your accountant if numbers do not match exactly.
The year-end report checklist
Most Square reports have an export icon that downloads a CSV file. Save each one in a single folder named for the tax year.
| Report | What it shows | Why your accountant wants it |
|---|---|---|
| Sales summary | Gross sales, returns, discounts and comps, net sales, taxes, tips | The headline revenue numbers for the year |
| Payment methods | Sales split by card, cash, gift card and other tenders | Reconciling deposits and the 1099-K, which covers card sales |
| Sales taxes (Reports, Accounting) | Taxable and non-taxable sales and tax collected, filterable by date and location | Checking against the sales tax returns you filed during the year |
| Category and item sales | What sold, by category and item | Separating food, drinks, retail and alcohol if they are taxed or reported differently |
| Discounts, comps and voids | Value given away or removed from bills | Explaining the gap between gross and net sales |
| Fees and transfers | Square processing fees and deposits to your bank | Processing fees are generally a business expense, and deposits tie to your bank statements |
| Tips | Card tips collected, by team member if you track it | Payroll and tip reporting |
| Gift card activity | Gift cards sold and redeemed | Gift card sales are often handled differently from regular sales |
If you run payroll through Square, also download your payroll summaries and the year-end forms for your team. See using Square for payroll management.
About Form 1099-K
In the US, Square issues Form 1099-K to sellers whose card payments meet the IRS and state reporting thresholds, and makes it available in Square Dashboard by January 31 of the following year. Thresholds have changed in recent years and some states have their own, so check Square's 1099-K help article for the tax year you are filing. A few things that often confuse owners:
- The 1099-K shows gross card payments. It includes sales tax and tips collected on card sales, and does not subtract refunds, chargebacks or Square fees.
- It does not include cash sales, which still need to be reported as income.
- The 1099-K number will almost never match your net sales. That is expected. Your accountant reconciles the two using the reports above.
A simple year-end routine
- First week of January: export the reports in the checklist for the full year.
- Reconcile: compare total Square deposits with your bank statements, and sales tax collected with what you filed.
- Add the rest: expense receipts, supplier invoices, rent, utilities, loan statements and any non-Square income.
- Once available: download your 1099-K from Square Dashboard and add it to the folder.
- Send one package to your accountant, with a short note on anything unusual (a new location, a closure, a large catering contract).
Example: a two-location cafe
An owner exports each report twice: once for all locations and once per location. Her accountant uses the combined numbers for the return and the per-location reports to see which cafe is more profitable. Because she checked sales tax totals each quarter during the year, the year-end reconciliation takes an afternoon instead of a week.
Common mistakes to avoid
- Treating the 1099-K as your revenue. It includes tax and tips and leaves out cash.
- Forgetting cash sales and cash tips. Both still count.
- Messy item data. "Custom amount" sales make it hard to split taxable and non-taxable sales. Clean data during the year makes tax time easier. See using Square POS for accurate sales reporting.
- Waiting until April. Export in January while questions are still easy to answer.
Where Orda fits
If you take orders through your own app, ordering website or self-ordering kiosk with Orda, those orders and payments are processed in your Square account and flow into Square POS. That means they appear in the same Square reports as your counter sales, so there is no separate ordering platform to reconcile at year end. Learn more about Orda.