Setting up taxes for Square + Xero integration

Overview

• Map taxes to Xero tax rates or current liability accounts.
• Set up tax groups
• Set up taxes that are used as surcharge (e.g. weekend, public holiday or credit card surcharge)

Setting up taxes

Map taxes to tax rates or current liability accounts.

If you are using taxes as a surcharge, a workaround solution introduced by Square, you need to select the appropriate sync behaviour so that it will sync as a revenue instead of a tax.

Square taxes and Square Online/External taxes

We recommend mapping taxes to tax rates for any taxes reported and filed through Xero with your local tax authority. This is for your to fully utilise Xero’s tax reports capabilities.

We recommend mapping all other taxes to current liability accounts. This way, you can easily run account transactions or balance sheet reports to view the output tax due outside your local tax authority.

View and edit your tax mapping by following the steps below.

1. Sign into the Square + Xero dashboard.

2. Click the integration you would like to update.

3. On the left navigation panel, click on Settings → Tax Types.

4. Review and update the mapping by choosing a tax type or a current liability account from the dropdown.

5. Select a Xero invoice branding theme where you would like to attach the Payment Service.

6. Click Save + Continue.

Tax groups

Setting up tax groups is optional. If your tax on sales is a combination of two or more tax rates, create a tax group and map it to a tax rate or current liability account. If you intend to map a tax group to a tax rate with multiple tax components, please ensure you’ve done this already in Xero.

1. Sign into the Square + Xero dashboard.

2. Click the integration you would like to update.

3. On the left navigation panel, click on Settings → Tax Types.

4. Click Add New Tax Group and select the tax rates included within the group.

5. Map the tax types to tax rates or current liability accounts.

6. Click Save + Continue.

Tax behaviour

If you’ve created taxes in Square but intended for recording surcharges (e.g. card or public holiday), you need to select the appropriate option to sync them as sales or income.

1. Sign into the Square + Xero dashboard.

2. On the left navigation panel, click on Settings → Surcharges.

3. Select Default from the dropdown for all taxes.

4. Select Surcharge from the dropdown for all surcharges.

5. Click Save + Continue.