To cancel Square Payroll, log into your Square Dashboard, open Settings, then Business, then Pricing and Subscriptions, select Square Payroll, choose a reason, and confirm. The click itself is easy. The work around it, running a final pay cycle, downloading your records, and understanding which tax filings Square still handles versus which come back to you, is what keeps the cancellation from creating problems later.
Download Your Records First
Once your subscription ends you lose the ability to generate new reports or run payroll. You keep read-only access to previously filed documents, but pulling everything while the account is fully active is faster than hunting for it later.
In your Dashboard, go to Staff, then Payroll, and find the reports and tax forms section. Three reports are worth saving. The Payroll Summary shows total wages paid and taxes withheld across all employees. Employee Totals breaks that down per person. The Tax Wage Detail report is the one you’ll want if questions come up later, because it shows each worker’s earnings subject to specific taxes like Social Security and Medicare.1Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
The IRS requires you to keep employment tax records for at least four years after the tax becomes due or is paid, whichever is later.2Internal Revenue Service. How Long Should I Keep Records That’s well beyond the life of your subscription. Save the files to a secure cloud drive or external storage.
Run Final Payroll Before You Cancel
Process a final pay run covering every active W-2 employee and every 1099 contractor with outstanding compensation. These final amounts feed directly into the tax forms Square generates at year-end. Missing wages mean incorrect W-2s and 1099-NECs.
For contractors, sign in, go to Staff, then Payroll, and select Pay Contractors. Choose the pay period, select the payment method, enter the amounts owed, and submit. Contractors paid by direct deposit won’t receive funds for four business days after submission, so plan your cancellation timing around that lag.3Square Support Center. Run Payroll for Contractors
The same timing applies to W-2 employees. Run their final paycheck with enough lead time for direct deposits to clear before you deactivate. If you need to correct a direct deposit after submitting it, you’ll have to contact Square Support; manual check entries can be removed directly from the pay period history.
One deadline to know for contractors: all contractor payments for a given tax year must be recorded in Square Payroll by the third business day of the new year to be included on 1099-NECs Square generates.4Square. Verify and Distribute Form 1099-NEC with Square Payroll
Canceling in the Dashboard
Log in and open Settings, then Business, then Pricing and Subscriptions. Square Payroll will appear among your active subscriptions. Select it, choose a reason for leaving, and confirm.
Your subscription runs through the end of the current billing cycle. You won’t get a prorated refund for the remaining days, but you also won’t be charged again once the cycle closes. After confirming, you should receive an automated email acknowledging the cancellation. Save that email. It’s proof you initiated the termination on a specific date, which matters if a billing dispute comes up later.
What Square Still Handles After You Cancel
Canceling doesn’t mean Square walks away from tax obligations tied to the period you were a paying customer. Square completes the quarterly federal and state tax payments and filings for any quarter that was fully active under your subscription. If you cancel after the end of Q3, Square files your Q3 Form 941 and makes the associated deposits.
Square also generates and distributes W-2s to your employees for the portion of the year your subscription was active,5Square. Verify and Distribute Form W-2 with Square Payroll and the same for 1099-NECs to contractors. Deactivated team members can still access their own tax forms and paystubs through the Square Payroll employee dashboard, so you don’t have to hand-deliver copies to former workers who had accounts.
What Falls Back on You
If you cancel mid-year and move to another payroll provider, that provider typically picks up filings for the quarters they manage. If you’re closing the business entirely, several obligations sit with you.
Final Form 941
When you permanently stop paying wages, file a final Form 941. Check the box on line 17 to indicate it’s your last return, enter the date you paid final wages, and attach a statement listing the name and address of whoever will keep your payroll records going forward.6Internal Revenue Service. Closing a Business Square covers full quarters you paid for. If you cancel mid-quarter, that partial quarter’s 941 falls to you or your new provider.
Final Form 940
Form 940 covers annual federal unemployment tax. If you’re shutting down, check box “d” in the Type of Return section to mark it as final. Even with a third-party payroll service, the IRS treats the employer as ultimately responsible for filing returns and depositing federal tax. That responsibility doesn’t transfer to your provider.7Internal Revenue Service. Instructions for Form 940
Late Filing Costs
Missing deadlines on W-2s and 1099s carries real penalties, and the IRS also charges tiered penalties on late employment tax deposits, from 2% for deposits one to five days late up to 15% after a notice.8Internal Revenue Service. Failure to Deposit Penalty For a business with even a handful of workers, information return penalties stack quickly.9Internal Revenue Service. Information Return Penalties
Close Tax Accounts if the Business Is Ending
Canceling Square Payroll and closing a business are two different things, and canceling the software notifies no one in government. If you’re shutting down, the IRS expects you to cancel your Employer Identification Number by sending a letter to the IRS in Cincinnati, OH 45999 that includes your business name, EIN, address, and the reason for closing. They won’t close the account until all required returns are filed and taxes are paid.6Internal Revenue Service. Closing a Business
On the state side, close your state unemployment insurance account and state withholding tax account. Every state handles this differently; some use an online portal, others require a written request or phone call. If you leave state accounts open, filing notices and eventually penalties for returns you didn’t know you owed will keep arriving.
Getting Into Your Records After Cancellation
Square maintains read-only access to your account after cancellation. You can log in with the same email and password to view previously filed tax forms, download paystubs, and review payroll history. That access generally covers the IRS’s four-year retention window.10Internal Revenue Service. Employment Tax Recordkeeping
Even so, relying on a former provider for your only copy of critical tax records is risky. Platform policies change, inactive accounts can get locked, and password recovery gets harder the longer you’re away. Pull your own copies before you cancel. A few minutes now can save real trouble if an IRS notice arrives three years from today.