Square already records most of what your books need: every sale, discount, refund, tax, tip and processing fee. Streamlining your restaurant's accounting means getting that data into your accounting software automatically, reconciling it against your bank on a schedule, and fixing small issues daily instead of at year end. A simple routine of a few minutes a day, half an hour a week and an hour or two a month is enough for most small restaurants.
This is general bookkeeping guidance, not tax or legal advice. Rules vary by state and country, so work with an accountant or bookkeeper on how to set up your books.
Understand the numbers Square gives you
Square's Sales Summary report builds up in a specific order. Knowing the terms prevents most reconciliation headaches:
- Gross sales: your sales before returns and discounts.
- Net sales: gross sales minus returns, discounts and comps.
- Taxes: sales tax collected, which you owe to the tax authority and is not your revenue.
- Tips: tips recorded through Square. Cash tips are not included because they are not recorded in the POS.
- Fees: payment processing fees Square collected.
- Net total: what is left after fees and other withholdings.
In your books, these usually map to different accounts: sales revenue, sales tax payable, tips payable (owed to staff), and processing fees as an expense. Ask your accountant how they want each one categorized.
Connect Square to your accounting software
Typing daily totals into a spreadsheet is where most errors come from. Square's App Marketplace lists accounting integrations, including options that sync Square sales to QuickBooks and Xero, often as a daily summary posted to the right accounts. If you prefer to work manually, you can export transactions from Square Dashboard as a spreadsheet.
Whichever route you choose, agree with your accountant on:
- Which accounts sales, tax, tips, discounts, refunds and fees post to.
- Whether sales post as one daily summary or by category (food, beverage, alcohol).
- How gift card sales are handled, since they are usually a liability until redeemed.
Daily: a five-minute close
- Count the cash drawer and compare it with what Square expects. Write down any difference and the reason.
- Glance at the day's sales summary. Large refunds, unusual comps or a sudden drop in card sales are easiest to explain the same day.
- Record cash tips however your accountant and payroll provider want them recorded, since Square does not capture them.
- File receipts for anything bought with cash or a business card that day.
Weekly: reconcile deposits
Square deposits your card sales to your bank in batches, minus fees. Once a week:
- Match each Square deposit in your bank account to the matching period in Square's reports.
- Deposit cash sales and match them to your daily cash counts.
- Review the transactions report for anything that looks off, such as duplicate charges or refunds you do not recognize.
- Check that vendor invoices for the week are entered.
Monthly: close the books
- Confirm all deposits and expenses are categorized.
- Review food and labor costs against sales. Prime cost (food plus labor) is one of the most watched numbers in restaurants.
- Compare month over month using Square's sales trends and item reports.
- Set aside sales tax collected in a separate account so it is ready when it is due.
- Send your accountant the reports they ask for.
At year end, our guide to filing taxes using Square reports lists what to pull. For keeping enough money on hand between months, read understanding your restaurant's cash flow with Square.
Payroll and tips
Payroll is usually your largest expense after food. If you run payroll through Square or another provider, make sure timecards are approved before each run and that card tips and cash tips are both reported. See using Square for payroll management.
Example: a small cafe's routine
A two-register cafe syncs a daily Square summary into its accounting software. The manager counts the drawer at close and notes cash tips. Every Monday, the owner matches last week's Square deposits to the bank feed and enters vendor bills. On the first of the month, the bookkeeper reviews categories, checks food cost against sales and sets aside sales tax. Year end becomes a review, not a rescue.
Common mistakes
- Treating deposits as sales. Deposits are net of fees and refunds, and may cover several days.
- Counting sales tax as income. It belongs to the tax authority.
- Custom amount sales. They make category reporting impossible. Ring real items so your data stays accurate, as covered in using Square POS for accurate sales reporting.
- Mixing personal and business spending. Keep separate accounts and cards.
- Waiting until year end. Small errors are cheap to fix in the week they happen.
How Orda fits
Accounting gets messy when online sales live in a separate system. With Orda, orders from your branded app, website and kiosks are created as Square orders and paid through Square, so they appear in the same Square reports and deposits as your in-store sales. One set of numbers, one reconciliation. More than 10,000 Square businesses have used Orda.