If you are an accountant or a bookkeeper and you notice that all of a sudden your client is not getting deposits from their sales into the bank account you may need to ask them if they enabled banking features in their Point of Sale or ecommerce system. Huh?
Square and Shopify have basically become banks.
Silicon Valley tech startups who help businesses sell and collect money want to keep that money and provide more services. So, Square and Shopify have now basically become banks – offering savings, loans, and investment products and services to individuals and businesses. Square, Shopify, and others finance apps are working to help their small business clients, but could also inadvertently create more of a mess in the accounting and bookkeeping community.
Square Banking refers to the suite of Square’s financial and banking products. Square Banking includes Square Checking, Square Savings, and Square Loans. With Square Banking enabled, once you make a sale you can instantly access the funds in your Square checking account and spend it with your Square debit card. You can also view/download your monthly statements. They tout, “No monthly fees, credit checks, or long applications,” calling them unnecessary and often unfair. Once you’re set up you get an account number and routing number (just like a bank).
Square savings is a business savings account integrated with Square payments. This tool automatically sets aside a percentage of daily sales, which can be nice if you follow Profit First methodology or just want to set aside your sales tax. Square Checking and Savings are FDIC-insured up to $250K. You can even take out a Square small business loan (from $300—$250,000) depending on eligibility and auto-pay it back through your sales.
Shopify Balance is a platform that gives merchants an account in which they can manage their cash flow, pay bills, and track expenses. It includes a federally insured bank account with no monthly fees as well as a corporate charge card that offers cash-back rewards for some purchases.
After your Shopify Balance account is set up, it becomes the account connected to your Shopify Payments account. Your payouts will be deposited into your Shopify Balance account. You can view your account number and your routing number and view/download your statements for the last 12 months. Merchants who are offered funding can request funding from Shopify Capital which offers funding amounts between $200 to $2,000,000 USD or $200 to $2,000,000 CAD.
|Square Banking||Shopify Balance|
|Location||US only||US only|
|Savings Account APR||0.50%||N/A|
|ATM Withdrawal Fees||$0 charged by Square|
ATM operator fees may apply
|$0 charged by Square|
ATM operator fees may apply
|Rewards||Save 2.75% on every purchase|
made at a Square business
|Yes, Cashback on eligible|
|View Transaction Report||Here|
(download as CSV)
|Account → Finance → Balance|
(download as PDF)
|QuickBooks Banking Feed||No||No|
|Xero Banking Feed||No||No|
|Bookkeep Banking Fee||Coming Soon||Coming Soon|
What does this mean for accountants?
If you have any control over what your client does (I know, I know) then ask them to wait before they enable Square Banking or Shopify Balance. Why wait? Well without an automated banking feed into your books this type of bank account will add many hours of work each month per client in manual bookkeeping. We have been in touch with both Square and Shopify and they tell us that automated access to these transactions is on the horizon. We recommend holding off until you can automate the Square Accounting or Shopify Accounting for these transactions.