Square Banking Q&A: Let’s talk about how Square Savings can help you manage tax season.💰

[Tom]

Hello Seller Community,

As we marked the one year anniversary of Square Savings, we welcomed back @jmonfort to our forums for a discussion on what’s going well and what we can do to improve your experience with Square Banking.

We understand that your time is precious, and we want to make sure you’re able to focus on what matters most: running your business. Square Savings helps automate and organize tax preparation, whether you pay your business taxes monthly or quarterly. We look forward to hearing from you on ways we can make saving as seamless and worry-free as possible.

Wondering what to ask? Here are some example questions: 

• What are the latest Square Savings features and how do I get the most out of them?
• What’s the benefit of setting up an account with Square Banking versus my existing bank account?
• If Square Savings could take care of “_______” for me, that would make managing finances much easier.

We can’t share specific details on our product roadmaps, though this information will be helpful as we continue to make improvements.

Block, Inc., is not a bank. Banking Services provided by Square Financial Services, Inc., and Sutton Bank, Members FDIC. This article is for information purposes and does not constitute legal, financial, or tax advice. We are not tax professionals. For specific advice applicable to your business, please contact a tax professional.

[HC_Charlie]

I can't think of a specific question, but I recently started using Square Savings to automatically set aside a small percentage of my Square sales to use to pay my State's sales tax. The interest rate that Square gives is awesome, and it's making it easy for me to be more confident with my biz finances. Now when my sales tax becomes due, I won't have to worry where that money went (spent LOL), and I'll be easily able to pay those taxes without having to dip into savings or my operating expenses. Thank you Square!

[jmonfort]

Hi @HC_Charlie; we’re so happy to hear that you’re having a great experience with Square Savings! 😁

[Stacelyn24]

Can't wait for this!  We recently starting using Square Savings to make it easier to put up my quarterly (yearly) taxes that I forecast we'll be paying back.  Using the save and forget automation is making it a lot easier and I believe that I won't fear tax time next year because we'll be ready 🙂

[jmonfort]

Hi @Stacelyn24! We’re happy to hear that you’re feeling more prepared for taxes this next time around. Thanks for using Square Savings!

[Britney1]

I would like to ask the 2nd question, "What's the benefit of setting up an account with Square Banking versus my existing bank account."

Well, I did this because what I though I read was that your fee's went from 3 something % to 1.5% which actually is just the transfer fee AFTER you are charged the regular processing fee but you have access to your funds instantly. I am actually now spending more money (the 1.5%). I have to call and get it to go back to the way I had it.  I was ok with the next business day with no fee aside from the normal fee to run a card. So to answer my own question, and anyone please correct me if I am wrong, there is NO benefit aside from the funds are available to you immediately.

I also now have another bank statement to reconcile and another entry for the transfer fee to enter every transfer I make. 

[LisaE]

So there’s a fee for transferring our money into the savings account? Am I reading this correctly? Oh HELL no. They take enough of my money. 

[Verowest]

I did know that we pay a fee to transfer money 💰 to the savings? And another fee to transfer to my bank account if I transfer imediatly ? I’m lost 😠 have to closely 

[jmonfort]

Hi @LisaE and @Verowest – nope, we do not charge any fees to allocate a portion of sales into a Square Savings account. There are no monthly maintenance fees, sign-up fees, or fees associated with minimum balances, as there are no minimum balance requirements. There are also no overdraft fees or withdrawal limits fees that are associated with traditional business savings accounts.

[jmonfort]

Hi @Britney1 –our Square Banking offers a suite of products: Checking, Savings, and Loans.

First of all, you are right that with Square Checking you have instant access to sales. The account comes without the usual account fees (e.g. monthly service fees or overdraft fees) and you can use it just like your normal bank account e.g. to deposit checks for free or use your account and routing number to pay bills and add funds. If you take out a Square Loan, those funds are also instantly accessible in your Checking balance. When you have your funds in your Square Checking account you can still use next day transfers to your external bank account for free. There is only a fee if you want to transfer your funds instantly from your Square Checking to an external bank account.

Additionally, with Square Savings you have the ability to set aside a portion of your sales automatically (for things like taxes, a rainy day fund or other business goals.) You’re also able to track your progress, adjust target amounts, and pause automated savings at any time. With Savings you can also organize and separate out your funds for different use cases by utilizing our Folders feature so that you don’t accidentally dip into funds with a dedicated purpose. Savings also offers a high yield of 1.75% on account balances of at least $10, which is 5x the national average rate of 0.35% (as of 2/21/2023).

[MudFire_Deanna]

Since we are an S-corp I can't use Square banking but love the philosophy of putting the tax money aside (sales tax, regular taxes, and actually a small percentage of profit). I think it is easy to spend money just in a regular account and when you put aside the tax money you can reduce your stress and also putting aside a bit of profit helps with future business building or necessary spending (like we are re-roofing our building right now - nothing like a NNN lease 🙄). 

[Evey]

Can Square saving separate my sales tax automatically daily into a separate account?

[jmonfort]

Hi @Evey - Since automated savings is a feature of our Square Savings account, it can’t allocate those funds into an external bank account. However, there is 24/7 online access to funds in our business savings account, and those can be instantly transferred to Square Checking and available to spend on a Square Debit Card immediately—for free. We also support standard, cost-free ACH transfers to external bank accounts (and those funds can be expected to settle within 1-2 business days.)

[Manolito1]

My question is regarding mobile service based business that charge different tax rates. For example our business operates primarily in three different cities across two counties, each has a different tax rate. 

How would we be able to use square savings to automatically set aside the tax percentage from each transaction when we have three different tax rates? 

[jmonfort]

Hi @Manolito1, if your business operates across three different cities with different tax rates, you could set aside a percentage of your sale to the tax folders that represents a weighted average of the expected tax obligation. This will give you an overall estimated tax rate that takes into account the varying rates in each location. You could also set up a different folder (each folder can have a different percentage contributed from sales) for each location.

[drsstenseth]

I have been using Square for years, but each time I try to add Square Savings, I'm told that my business isn't eligible right now.  My EIN is what is used for taxes, which may have been an issue early on meaning it was different, and still get told the same thing...

[jmonfort]

Hi @drsstenseth We are sorry to hear that.  Please know that we rely on third party data sources for help to verify personal and business information, such as the Internal Revenue System (IRS) and the Social Security Administration (SSA).

[GinaG18]

I have tried to set up square savings and it says I’m not eligible. After chatting with a square team member, I’ve been told my ssn isn’t valid with my account and they can’t help me.  I use square for my business and have no issues besides with setting up a savings account. How do I resolve this issue???

[jmonfort]

Hi @GinaG18- For your privacy and account security, I’m unable to access the information you entered during your attempt to sign up for Square Savings. We are working to make the eligibility process more transparent and seamless in the future.

[inkdawgz]

1.75% is low, all the banks in my area are up to 3.5-5% now. 

[jmonfort]

Hi @inkdawgz - you’re right that there are a lot of personal savings accounts that offer higher rates right now, however the FDICs monthly rate cap for business savings accounts is 0.37% as of Mar 20, 2023.