Square California employer tax guide
About California employer tax information
With Square, you can run payroll, pay your taxes and stay ahead of the compliance to focus on running your business. This guide is intended for your state taxes only. It’s important to note that laws vary by jurisdiction, and this guide does not attempt to address all jurisdictions or federal taxes — for example, counties or cities often have requirements that differ from federal and state law.
Before you begin
To sign up with Square Payroll in California, you must provide your State Employer Payroll Tax Account Number (EDD Number). This information is required for us to make state tax payments and filings on your behalf.
The easiest way to get an EDD number is to enroll online at the EDD’s E-Services for Business portal. If prompted to enter a payroll agent, select No. You should register for your EDD number as though you do not have a payroll agent. Once you successfully enroll, you’ll receive an EDD number for your business. Alternatively, you can call the EDD at 888-745-3886 on weekdays from 8 AM – 5 PM, PT to speak with a staff member.
If you have already registered for an account but have not yet filed a state payroll tax return, you can quickly retrieve the number from the EDD by calling 888-745-3886.
If you are transitioning to Square Payroll from a different payroll provider (or have filed state payroll tax returns in the past), your EDD number can be found on previously filed quarterly tax forms. You can find your EDD number on Form DE-9 or DE-9c (it’s a eight-digit number in the following format: XXX-XXXX-X).
If you cannot locate your EDD number but know your EDD e-Services sign-in information, you can locate your EDD number by signing in to the EDD website.
California payroll tax details
Square Payroll processes the following per the frequency below to the listed state agencies.
California Employment Development Department (EDD)
Payroll tax deposit coupon (DE 88): filed semi-weekly, monthly, and/or quarterly
Quarterly Contribution Return and Report of Wages (DE 9): filed quarterly
Quarterly Contribution Return and Report of Wages Continuation (DE 9C): filed quarterly
Report of New Employees (DE 34): filed per new employee
Make California state withholding tax payments
To make California state tax payments, you must be registered with the California Employment Development Department (EDD) and have a California employer account number. You can make tax payments online.
To pay online, enroll with the Employment Development Department for an e-services account. Once you have an account, you can make payments and filings from your e-services account. Visit the EDD website for more information.
Mail-in filings are no longer accepted. Visit the EDD website for more information. To learn more about California tax payments, visit the EDD website or call 1-888-745-3886.
Make unemployment insurance tax filings in California
Unemployment insurance tax returns and payments are combined with other payroll tax reports and payments. The returns and payments are due by the last day of the month following the end of the calendar quarter (for example, on April 30 for the first quarter). Withholding tax payments, unlike unemployment insurance tax payments, may be due more often than quarterly.
To file online, use the EDD’s e-Services for Business to file, and pay any taxes due using Electronic Funds Transfer (EFT) or credit card.
If you paid no wages during the quarter, you are still required to file Forms DE 9 and DE 9C. Check the No Payroll box in Item A on Form DE 9 and Item C on Form DE 9C, then sign and mail both reports. If you do not expect to pay wages within the next year, notify the EDD by writing to them or by checking the Out of Business/Final Report box in Item B on Form DE 9 and Item D on Form DE 9C. They will send you a letter confirming that your account has been inactivated.
For more information on state unemployment taxes, contact the California Employment Development Department at 888-745-3886 or visit the California Employment Development Department website.
Amend duplicate tax filings in California
The California Employment Development Department (EDD) allows you to correct any payroll that was misreported on a previously submitted DE9 and DE9C by submitting a Form DE 9ADJ, Quarterly Contribution and Wage Adjustment. Here are some general guidelines for completing your amended return:
- Log in to the EDD website to file electronically or download Form DE 9ADJ to file by mail.
- Obtain a copy of the Forms DE9/9C that were originally filed. This is required for the ‘original amounts reported’ section.
- Follow the EDD’s instructions to complete Form DE 9ADJ.
- Submit your completed return online or by mailing to the address listed on the form.
File your Form DE 9ADJ as soon as possible to avoid unnecessary penalties or fees from underreporting your wages and taxes. If you have any questions, please contact the EDD Taxpayer Assistance Center at 1-888-745-3886 or visit the EDD website.
Add your California SUI tax rate to Square Payroll
To locate your state unemployment insurance (SUI) Tax Rate, sign in to the EDD website. If you are a new employer, you will receive your tax rate after you complete the online registration with the EDD.
Although Square Payroll will assist in verifying your tax rates each quarter, given that you have provided a valid Employment Development Department (EDD) number, you are responsible for ensuring that these rates are accurately reflected under Tax Info in your Square Dashboard:
State Unemployment Insurance (SUI) Rate
Employment Training Tax (ETT) Rate
The State Disability Insurance (SDI) rate is fixed for all employers so Square Payroll will update your SDI according to the annual rate set by CA EDD. Please contact Square Support if you need to update your rates.
Enroll in CalSavers retirement program
CalSavers is California’s retirement savings program that enables eligible employees to automatically contribute a portion of their paycheck to a Roth IRA. Employers can sign up for CalSavers directly through the state to offer this benefit to their employees for free. CalSavers is a voluntary retirement program for employees.
All California employers are required to give employees access to CalSavers, unless they offer a company sponsored retirement plan, like a 401(k) plan through the Square Payroll third-party integration with Guideline. Learn how to set up 401(k) benefits with Guideline.
If employees opt in to the CalSavers program, employers can set up a benefit deduction in their team’s payroll profile to withhold contribution amounts from their paycheck. To opt in to CalSavers:
Sign in to your Square Dashboard, select Staff & payroll > Team, and select an employee’s name.
Select Add Benefit > Create New.
Enter a plan name as you’d like it to appear in your employee’s pay stubs, like CalSavers or Roth IRA. You cannot edit the benefit name.
Select Roth IRA as the benefit type for the CalSavers program.
Specify the details for your employee’s deductions such as the calculation method and any deductions to date. Selecting Percentage of Disposable Income calculates the contribution as a percentage of the gross pay minus taxes or other pre-tax deductions. If an employee wishes to deduct 5% of their gross pay, we recommend manually calculating the amount and inputting via Dollar Amount setting for accuracy.
If you would like the contributions to not exceed a specific dollar amount within a calendar year, select Add Limit in the Deduction Limit and enter the limit as a dollar amount. Information about CalSavers contribution limits can be found within the CalSavers FAQ.
Select Save.
If creating a manual deduction, employers must submit each paycheck’s contribution amount to CalSavers within 7 days of taking the deduction out of the participating employee’s paycheck. Square Payroll does not complete this payment on behalf of employees or employers. Learn more on the CalSavers website.
Understand California's Paid Sick Leave Law
As of July 1, 2015 employees must be offered at least 3 days (24 hours) of sick leave per year, with the option to rollover any unused days to the following year, allowing for a total accrual of at least 48 hours (six days).
All California employees who work more than 30 days in a year qualify, including part-time and temporary employees. Employees are entitled to use accrued sick days beginning on the 90th day of employment.
Employers can choose to offer sick leave in one of two ways:
Incrementally offer at least one hour of paid leave for every 30 hours worked; or
Offer all employees the minimum paid sick leave (3 days) at the beginning of each year.
Sick pay is based on the employee’s regular hourly rate. Employers must also show how many days of sick leave employees have available on their pay stub or a document issued the same day as their paycheck.
This statewide law does not preempt local ordinances.
To be compliant with new and existing requirements, here’s a checklist of what you’ll need to prepare:
Provide a written copy of your sick leave policy to employees at the time of hire.
Display a poster explaining your sick leave policy.
Provide at least 3 days (24 hours) of paid sick leave to each eligible employee per year.
Show how many days of sick leave an employee has available, either on their paystub or a document issued the same day as their paycheck.
Keep records of hours earned and used for a period of three years.
Learn more about California’s paid sick leave law on the State of California Department of Industrial Relations website.
If you have specific questions regarding labor and pay requirements, contact the EDD by email at AB1522@dir.ca.gov and/or your local government offices. Be sure to consult a professional about local ordinances which may apply to your business.
Square Payroll sick leave feature lets you set up a Sick Leave policy and track it from your Square Dashboard. Your employee’s sick leave balance is displayed on their pay stubs, allowing them to keep track of it. Learn how to set up paid time off and sick leave policies.
This Sick Leave Tracker can help you keep track of your employees’ paid sick leave hours.
To get started using the Sick Leave Tracker:
- Go to the Sick Leave Tracker tab and enter the names of all of your employees in row 3.
- Each time you run payroll, fill in the Pay Period column with the applicable period and enter the number of hours (including overtime) each employee worked during the period.
- The total will automatically update for you. Feel free to add extra rows and columns when you run out of room.
- When your employee uses their sick leave, enter hours in the Total Sick Leave Used row. The balance will automatically update with the number of hours they have left.
- Be sure to post or share this information. You are required to show how many days of sick leave an employee has available, either on their pay stub or document issues the same day as their paycheck.