You open Square and see that your business made $5,000 in sales.
Great!
Then you check your bank account, and the deposit is only $4,825.
Where did the other $175 go?
Before you start hunting for missing money, there's something you should know.
Your Square sales and your bank deposits aren't supposed to match dollar for dollar, but your bookkeeping should explain the difference.
At Dunham Bookkeeping Services, I help small businesses reconcile payment processors like Square so their financial reports accurately reflect what they've earned. If your books don’t show that, give me a call.
Tired of trying to make your deposits match? Let's get your books straightened out.
Your Sales Aren't the Same as Your Deposits
When a customer pays through Square, several things can happen before that money reaches your bank account.
Square may deduct processing fees, account for refunds, or include transactions from different days in one transfer.
That means the amount deposited into your bank account isn't necessarily the same as the sales reported for that day.
And that's perfectly normal.
The problem starts when someone records only the bank deposits as sales.
Let's Look at a Simple Example
Suppose your business processes $5,000 in card payments.
Square deducts $175 in processing fees and transfers $4,825 to your bank account.
Here's what your bookkeeping needs to reflect:
Customer payments: $5,000
Processing fees: $175
Bank deposit: $4,825
For this simplified example, we're assuming there are no refunds, tips, sales tax, or other adjustments.
Your business collected $5,000 from customers. The $175 is an expense, not missing revenue.
Recording only the $4,825 deposit as sales understates your revenue and leaves out your processing fees.
Now imagine that happening every day for an entire year.
Those differences add up.
And Then There's Sales Tax
This is another place where things can get messy.
The amount collected from customers may include sales tax, which generally isn't revenue your business gets to keep.
It needs to be tracked separately from your sales.
Add refunds, tips, gift cards, and transfers that cross from one month into another, and suddenly reconciling Square becomes a little more complicated.
That's why simply comparing the sales total to your bank deposits doesn't work.
What Should You Actually Be Comparing?
A proper reconciliation looks at the information behind the numbers.
That means reviewing your Square sales reports, payment activity, processing fees, refunds, and transfers.
Then those amounts need to be matched to what actually reached your bank account and what was recorded in your bookkeeping software.
Square even has a reconciliation report designed to help explain how customer payments turn into bank transfers.
The goal isn't to force two different numbers to match.
It's to understand why they're different and make sure everything is accounted for.
Your Reports Should Tell the Whole Story
Your bank account tells you how much money arrived.
Your payment processor tells you what happened before it got there.
Your bookkeeping should bring those pieces together.
At Dunham Bookkeeping Services, I help business owners reconcile payment processors, identify discrepancies, and maintain financial records they can actually rely on.
Your Square deposits shouldn't be a monthly guessing game.
