How to Integrate Square with Xero Online in 10 Minutes [2026]

Running your sales through Square and managing your books in Xero should be simple. But for most sellers, it’s not.

Square bundles card payments, refunds, fees, and taxes into a single payout — while Xero records only the net deposit. The result? Mismatched numbers, missing tax data, and hours wasted trying to reconcile reports manually.

That’s where Link My Books comes in. It automates the Square–Xero integration so your payouts, fees, and VAT are synced accurately, without spreadsheets or manual data entry.

In this guide, you’ll learn:

• How to connect your Square and Xero accounts seamlessly using Link My Books
• How to manually connect Square to Xero if you prefer doing it yourself
• How to reconcile Square payouts in Xero automatically
• How to stay VAT-compliant across multiple regions

Where Most Sellers Go Wrong with the Square–Xero Integration

At first glance, Square’s payouts look straightforward: one daily deposit hits your bank account, and it’s tempting to record that as income in Xero. But under that single figure hides a mix of sales, refunds, fees, and tax adjustments.

When sellers record only the net payout, Xero never sees what’s actually happening inside those transactions. This leads to inaccurate reports, overstated expenses, and messy VAT filings.

Here are the most common pitfalls sellers face when linking Square and Xero:

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When these issues compound over weeks or months, the books stop reflecting the reality of your business. Sellers lose sight of what’s truly earned versus what’s withheld - and accountants spend hours untangling mismatched data.

💡 Quick fix: Use an automation tool like Link My Books that converts each Square payout into a clean, itemized summary invoice in Xero - automatically including sales, fees, refunds, and taxes in the correct accounts.

How to Integrate Square with Xero the Easy Way (Using Link My Books)

• Follow our Pre-integration checklist (2 minutes
• Create your Link My Books account & connect Xero (2–3 minutes)
• Complete the Setup Wizard (5 minutes)
• Automatically Import and Categorize Transactions (1 minute)
• Turn on AutoPost (set-and-forget)
• (Optional) Add more channels to the same Xero

Turn messy Square payouts into clean, VAT-accurate entries in Xero that reconcile in one click, no CSVs, no duplicates, no guesswork. Link My Books sits between Square and Xero, automating categorisation, tax mapping, and reconciliation for you.
Here’s how:

Step 1: Pre-integration checklist (2 minutes)

• Xero login with org access
• Square login (owner/admin)
• Decide where things should land in Xero:
  
  • Revenue (e.g., “Square Sales”)
  • Refunds/returns
  • Processing fees (e.g., “Square Fees”)
  • Tips (if used)
• VAT/sales-tax posture (UK/EU OSS, US state tax, etc.)
• Optional: inventory method/COGS approach (if you want automated margin visibility).

💡Why this matters: nailing accounts + tax codes upfront makes autoposting rock-solid later.

Step 2: Create your Link My Books account & connect Xero (2–3 minutes)

1. Start a free 14-day trial of Link My Books.
2. Choose Connect accounting platform → Xero and approve access.
3. Back in LMB, click Connect a sales channel → Square and authorise your Square account.

LMB now pulls the data it needs (sales, refunds, fees, tips) to build accurate summaries for Xero.

Step 3: Complete the Setup Wizard (5 minutes)

Map once - LMB remembers it forever:

• Income mapping: Square gross sales → your Xero revenue account.
• Refunds/chargebacks: to a refunds/contra-revenue account.
• Fees & processing costs: to your Square fees expense.
• Tips/gratuities: to a separate tips account (not revenue).
• VAT / sales-tax mapping: UK/EU (standard/reduced/zero + OSS) or US state/local.
• COGS (optional): enable if you want automatic margin tracking.
• Multi-currency: confirm home currency and how you want FX handled.

All of the above is guided, with recommended defaults, perfect for busy sellers and accountants.

Step 4: Automatically Import and Categorize Transactions

• LMB creates one clean summary (invoice or journal) that mirrors the payout composition:
  
  • Gross sales
  • Refunds
  • Fees
  • Tips
  • VAT/sales-tax breakdowns
• Your transaction report is properly categorized, no manual sorting, no missed entries.

Because the summary’s net exactly equals the Square bank deposit, Xero reconciliation becomes a single click (Match → Done).

Step 5: Turn on AutoPost (set-and-forget)

• Choose AutoPost and select a start date.
• Pick posting cadence (daily/weekly).
• New Square payouts will post to Xero automatically with correct tax codes and accounts.

💡LMB offers both Manual sync and AutoPost; most teams start manual to review their first entry, then switch to AutoPost.

Step 6: (Optional) Add more channels to the same Xero

If you also sell on Shopify, Amazon, eBay, Etsy, TikTok Shop, or Walmart, connect them too. LMB supports multi-marketplace syncing into one Xero file with consistent VAT mapping and one-click reconciliation across channels.

What you’ll notice immediately

• No more net-only deposits: Xero now sees the real composition (sales/refunds/fees/tips).
• VAT is right by design: standard/reduced/zero (UK/EU) or state/local (US) mapped for you.
• Bank recs become trivial: every Square payout matches in one click.
• Monthly close time plummets: typical teams go from hours to minutes.

Using Link My Books as a Reconciliation Tool for Square ⇆ Xero Integration

Reconciliation is where most Square–Xero connections break down.
Square deposits a net payout (sales minus refunds, fees, and tips) into your bank, but Xero, by default, only sees that lump sum. Without the right breakdown, your books never match your bank feed.

Link My Books solves this at the source by creating a single, itemized summary entry for every Square payout. Each component is automatically categorized, VAT-mapped, and posted to the correct accounts in Xero.

How Link My Books Handles Each Component

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💡 Each Square payout in Xero now mirrors the exact structure of your real deposit, so when you open your bank feed, Xero instantly recognizes and matches it.

That’s why reconciliation becomes a one-click process.
No missing fees. No duplicate income. No mismatched tax lines.

Why It Works So Well

• Automated accuracy: LMB’s summary entries always balance perfectly with Square payouts.
• Audit-ready detail: Every journal entry includes full VAT breakdowns and notes.
• Bank-feed friendly: The net total aligns exactly with the Square bank deposit, removing manual matching forever.
• Cross-channel consistency: If you sell on multiple platforms, the same reconciliation logic applies across Shopify, eBay, Etsy, or Amazon.

💳 See it for yourself: Start your free 14-day trial of Link My Books and watch your first Square payout reconcile automatically in Xero.

How to Manually Enter Square Data into Xero

• Export Your Square Transaction Data
• Record Gross Sales in Xero
• Record Square Fees
• Record Refunds or Chargebacks
• Match the Net Deposit in Xero

If you’d rather connect Square and Xero without an automation tool, you can still do it manually.
It’s workable for small sellers, but as your transaction volume grows, this method becomes error-prone and time-consuming.

Here’s how to record Square data into Xero manually, step by step.

Step 1: Export Your Square Transaction Data

1. Log in to your Square Dashboard.
2. Go to Reports → Sales Summary or Transactions.
3. Choose a suitable date range - daily, weekly, or monthly.
4. Click Export → CSV.

This file will show your total sales, refunds, fees, and taxes.
You’ll use it to create manual entries in Xero that reflect your true activity for each payout period.

Step 2: Record Gross Sales in Xero

1. In Xero, go to Business → Invoices → New Invoice (or “+ New → Sales Invoice”).
2. Enter the total gross sales amount from your Square report (before any deductions).
3. Under Account, choose your revenue account (e.g., Square Sales).
4. Add a line item for VAT or sales tax if applicable.
5. Set Paid to your Square clearing account or “Undeposited Funds.”
6. Click Approve.

💡This ensures Xero records your total revenue rather than the net payout - the most common mistake sellers make.

Step 3: Record Square Fees

1. In Xero, click + New → Spend Money or Business → Bills to Pay → New Bill.
2. Payee: enter Square Fees.
3. Account: select your Merchant Fees or Square Fees Expense account.
4. Enter the total fee amount shown in your Square CSV export.
5. Set Paid from to the same Square clearing account.
6. Click Approve and Pay.

Now, your fees are logged separately and won’t distort revenue totals.

Step 4: Record Refunds or Chargebacks

If Square refunded a customer, create a credit note or refund receipt:

• Go to Business → Invoices → Credit Note → New Credit Note.
• Select the same customer or enter “Square Refund.
• Use the same sales account as your original invoice.
• Enter the refund amount.
• Set Paid to your Square clearing account.
• Click Approve.

💡This step keeps your refund amounts visible and prevents overstating income in reports.

Step 5: Match the Net Deposit in Xero

When Square transfers the net amount to your bank:

1. In Xero, go to Accounting → Bank Accounts → Reconcile.
2. Find the incoming deposit.
3. Match it against the invoice (gross sales), fee expense, and refund transactions.

If the total equals your Square payout exactly, click OK - reconciliation complete.

Why Manual Entry Isn’t Scalable

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For small sellers, this method can work. But as soon as you process dozens of daily orders, it becomes unsustainable, especially if you’re VAT-registered or sell internationally.

💡That’s why most Square sellers eventually switch to Link My Books.

It automates these exact steps: fetching your Square data, mapping VAT, creating the summary invoice, and matching the payout in Xero automatically, saving hours every month.

How Link My Books Makes Integrating Square with Xero Automatic & Easy

Manual reconciliation might work when you have ten orders a week — but if you’re running a busy Square store, bookkeeping quickly turns into a full-time job.

The Link My Books integration automates the entire process, from importing Square payouts to posting clean, VAT-accurate summaries into Xero.
You get books that balance perfectly with your bank, without the spreadsheets, manual data entry, or late nights.

Automatic Categorisation That Saves Hours

Once connected, Link My Books automatically pulls your Square payout data, sales, refunds, fees, tips, and taxes, and assigns each to the correct Xero accounts.

Every entry is categorised based on your initial setup wizard mapping (which LMB remembers). That means:

• Sales → your income account
• Refunds → contra-revenue
• Fees → expense
• Tips → tips/gratuity account
• VAT or sales tax → the right regional tax code

Summary Invoices That Match Your Bank Deposits

Square deposits a net payout into your bank.
LMB builds a summary invoice or journal that mirrors that payout exactly:

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💡That’s why reconciliation becomes effortless, your Xero bank feed recognises each payout automatically.

Built-In VAT and Sales Tax Mapping

For UK, EU, and global sellers, tax accuracy is critical.
Link My Books automatically separates and maps every tax type:

• Standard, reduced, and zero-rated sales for UK VAT
• OSS (One Stop Shop) mapping for EU distance sales
• Marketplace-collected tax vs. seller-collected tax
• US sales tax by state and jurisdiction

💡LMB’s tax wizard ensures every transaction posts to the right VAT or sales-tax code, ready for MTD or OSS reporting.

Multi-Marketplace Integration in One Dashboard

If you sell across multiple channels, Link My Books keeps everything synced in one Xero file.

Connect Square, Shopify, eBay, Amazon, Etsy, TikTok Shop, or Walmart, and view all your payout summaries side by side.
Each platform’s transactions are colour-coded and tagged automatically - giving you a consolidated, audit-ready view of total sales, fees, and taxes across all channels.

💡You’ll never need to juggle multiple CSV exports or cross-check which platform a payout came from again.

Accurate COGS Tracking and Profit Visibility

For product sellers, knowing your true margins is essential.
Link My Books lets you enable Cost of Goods Sold (COGS) tracking directly within your setup.

When each Square payout syncs, LMB automatically adjusts your inventory and posts the corresponding COGS entry in Xero - giving you live profit insights without manual spreadsheets.

One-Click Reconciliation and Full Audit Trail

With LMB, reconciliation happens automatically.
Each payout summary matches the corresponding Square bank deposit perfectly, allowing for instant one-click matching inside Xero.

Plus, every journal entry includes:

• A detailed description of the payout
• Linked source data from Square
• A VAT/sales-tax breakdown
• References for audit tracking

That means your accountant can audit every figure in seconds.

Built for Sellers and Accountants Alike

• For e-commerce sellers: Save up to 90% of your bookkeeping time and eliminate reconciliation errors completely.
• For accountants: Manage multiple client connections in one place, standardise workflows, and guarantee VAT compliance for every seller.

💡LMB was designed by qualified accountants who understand both Square’s complexity and Xero’s tax logic, so it just works, out of the box.

💳And yes, you can try it totally free, no credit card required.

Square–Xero Integration: Regional, Local & Tax Considerations

Square operates globally, which means tax rules, payout timing, and reporting formats differ depending on where you’re selling.
If these aren’t handled correctly, your Xero records can show the wrong revenue, VAT liability, or exchange rate.

VAT and Sales-Tax Handling

Tax is one of the most common pain points for Square sellers syncing with Xero.
Each country (and sometimes each state) treats sales tax differently — and that affects how payouts should be posted.

Here’s how LMB manages that automatically:

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💡 You’ll never overpay VAT or miss regional tax obligations again. Everything posts accurately, ready for your next return.

Payout Timing and Settlement Periods

Square payout schedules vary by country and account type:

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Because these settlements often combine multiple days’ transactions, manually reconciling them in Xero can cause timing mismatches.
Link My Books resolves this automatically, grouping transactions by payout date and syncing summaries that match your bank deposits exactly.

Multi-Currency and Exchange Rate Adjustments

For sellers processing payments in multiple currencies (e.g., USD, GBP, EUR, AUD), currency conversion can create discrepancies in Xero if not handled properly.

LMB takes care of this automatically by:

• Posting each payout in the correct base currency.
• Applying the exact exchange rate used by Square at settlement.
• Creating accurate realised FX gains/losses in Xero when currencies fluctuate.

That means your Xero balance sheet reflects real exchange differences, not arbitrary conversion estimates.

Local Reporting Compliance

• UK: LMB’s VAT-mapped summaries are fully compliant with Making Tax Digital (MTD) rules.
• EU: One Stop Shop (OSS) sales are grouped by destination country for quarterly submission.
• US: State-level sales tax breakdowns appear in Xero reports automatically.
• Australia & NZ: BAS and GST-ready summaries posted directly from LMB.
• Canada: GST/HST/PST properly allocated to each province.

Why It Matters

Getting regional tax and currency rules wrong leads to:

• Overstated or understated income
• VAT/sales tax overpayment
• Unreconciled payouts in Xero
• Compliance errors during tax filing

Link My Books eliminates these issues with automation that mirrors local accounting standards and tax authority requirements.

Post-Integration Best Practices

Once your Square and Xero accounts are fully connected, a few best practices will keep your bookkeeping clean, compliant, and audit-ready.

1. Review Auto-Posted Entries Monthly

Even with automation, it’s smart to check that each Square payout in Xero matches your bank feed totals exactly.

• Confirm that settlements appear under the correct date range.
• Verify that fees, refunds, and taxes are posting to the right accounts.
• Correct any duplicate or missing entries immediately.
• A five-minute review each month keeps your financial statements accurate and prevents small errors from snowballing.

2. Reconcile Regularly

Reconciliation shouldn’t wait until year-end. Match Square deposits weekly or monthly to ensure all transactions are complete. Regular reconciliation also simplifies VAT or sales-tax submissions and gives you real-time profit visibility.

3. Keep Product Costs Updated

If you track cost of goods sold (COGS), update your cost data whenever supplier prices change. Accurate COGS ensures your gross profit and margin reports stay realistic, not inflated.

4. Invite Your Accountant or Bookkeeper

Give your accountant access to your Link My Books account so they can review mappings, tax settings, and reconciliation history directly. This reduces back-and-forth during filing season and ensures compliance with HMRC or IRS requirements.

5. Monitor Multi-Channel Performance

If you also sell on Shopify, Amazon, or Etsy, connect those channels within Link My Books to get a consolidated financial view. Multi-channel reporting helps you spot trends, compare margins, and benchmark your store’s performance against industry averages.

6. Maintain a Clean Audit Trail

At the end of each quarter, export your reconciliation summaries from Xero or Link My Books. A full audit trail, showing every Square payout, fee, and tax entry, protects you during compliance checks and speeds up financial reviews.

Takeaway

Automation doesn’t replace good bookkeeping habits. With a quick monthly review, consistent reconciliation, and clean records, your Square–Xero setup stays accurate, compliant, and ready for growth.

Checklist: Your Monthly Square–Xero Routine

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By keeping these habits, your Square–Xero connection stays smooth, compliant, and future-proof - no messy spreadsheets, no VAT headaches, and no year-end surprises.

FAQ on Square and Xero Integrations & Connections

Can Square integrate with Xero?

Yes - Square connects directly to Xero either through the official Square–Xero app or through automation tools like Link My Books.

The official app imports daily transactions into Xero, but it still requires manual category mapping and reconciliation.
Link My Books, by contrast, automates everything (categorisation, VAT mapping, and payout matching) so your books balance perfectly with your bank.

How do I reconcile Square in Xero?

Square deposits the net payout (sales minus fees, refunds, and tips) into your bank account.
Without automation, reconciling those deposits manually can take hours.

Link My Books automatically summarises each Square payout into one clean entry in Xero that matches your bank deposit exactly.
You simply click Match → OK in Xero, and reconciliation is complete.

👉 Read our full guide on how to reconcile Square payments in Xero online for step-by-step details.

What is the best Xero Square connector?

The official Square–Xero connector is suitable for basic imports.
However, for sellers who need automated reconciliation, VAT accuracy, and multi-channel support, Link My Books is the preferred choice.

It’s purpose-built for e-commerce sellers and accountants who want a compliant, hands-off integration that scales with their business.
You can also explore other options in our comparison of the best Square accounting software.

How often does data sync between Square and Xero?

• The Square–Xero app syncs daily or every few hours.
• Link My Books syncs automatically in real time (via AutoPost) or on a custom schedule you control.

This flexibility ensures your books are always current - even during high-volume periods or seasonal spikes.

How do I connect a Square seller account to Xero Online?

1. Log in to Link My Books.
2. Select Connect Accounting Platform → Xero and approve access.
3. Then choose Connect a Sales Channel → Square, and authorise your Square account.
4. Run the setup wizard to map your accounts and VAT/sales-tax codes.

From there, LMB automatically imports, summarises, and posts your Square payouts directly into Xero.

Can you sync orders, inventory, and customer data between Square and Xero?

Square and Xero primarily sync financial data, not full customer or order-level details.
However, Link My Books bridges that gap by summarising order data at payout level, ensuring accurate sales, refunds, and fees are reflected in Xero.

If you track inventory or COGS, LMB can also automate those adjustments during each sync.

Can I use Xero without an integration tool?

Yes, but it’s not efficient.
Manually entering each Square sale, refund, and fee can easily consume hours per week - and VAT errors are common.

An automation tool like Link My Books eliminates this work by syncing payouts automatically and ensuring all data is VAT-accurate.

What’s the best app for Xero for Square sellers?

For most e-commerce sellers, the best choice is Link My Books - because it combines accuracy, VAT compliance, and multi-platform support.
It’s designed specifically for online businesses that sell through Square, Shopify, Etsy, or other marketplaces.

You can compare features in our breakdown of the best Square accounting software.

Can ConnectBooks handle multiple Square seller accounts?

ConnectBooks is primarily built for U.S. sellers and integrates with QuickBooks rather than Xero.
For Xero users, Link My Books supports multiple Square accounts - plus Shopify, Amazon, Etsy, eBay, TikTok Shop, and Walmart - all under one dashboard.

How does the integration handle tax calculation and compliance?

Link My Books automatically applies the correct VAT or sales-tax codes based on your region:

• UK/EU: Standard, reduced, and zero-rated VAT codes
• OSS: Country-based VAT rates for cross-border sales
• US: State and local sales tax

It also separates marketplace-collected tax from seller-collected tax, keeping your Square sales tax report and Square tax forms compliant.

Is the Square–Xero integration different for Xero Online vs. Xero Desktop?

Xero is a cloud-based platform, so there’s no “desktop” version.
All integrations, including Link My Books, connect through Xero Online.
Everything runs securely in the cloud - no downloads or manual uploads needed.

Can I sync inventory with Xero and Square automatically?

Yes - partially.
Xero and Square don’t share full inventory data natively, but Link My Books allows you to enable COGS tracking.
When a payout syncs, it automatically adjusts inventory and posts COGS entries in Xero, giving you accurate gross profit reports.

How do I handle returns when connecting Xero and Square?

Refunds processed in Square are automatically included in your payout data.
Link My Books deducts these refunds in your summary entry, posting them to your refund account in Xero - keeping revenue accurate and VAT properly adjusted.

What are other good integration solutions for Square?

Some alternatives include Amaka, Synder, and Webgility, which offer various levels of Square–Xero or Square–QuickBooks integration.
However, most sellers find Link My Books more reliable for multi-region VAT compliance and one-click reconciliation.

How does automated tax data syncing between Square and Xero simplify e-commerce tax management?

Manual tax tracking across multiple channels can cause costly errors.
Link My Books automates VAT and OSS compliance by:

• Applying correct tax rates per region
• Separating marketplace- and seller-collected tax
• Producing reports that align with your Square tax forms and Square sales tax report

This keeps your filings accurate, reduces manual adjustments, and ensures audit-ready records across all platforms.

Square Business Integration with Xero – Automate with Link My Books

Manually connecting Square to Xero works - but it’s time-consuming, error-prone, and risky when VAT or multi-currency sales are involved.
Link My Books automates the entire process, turning messy payout data into clear, accurate summaries that reconcile in Xero automatically.

Each payout includes:

• Sales, refunds, and fees broken down precisely
• The correct VAT or sales-tax mapping for your region
• One-click reconciliation with your bank feed
• Full audit trail for accountants and HMRC/IRS compliance

Thousands of Square sellers and accountants use Link My Books to save hours every month, eliminate manual data entry, and prevent VAT overpayments.

👉 Start your free 14-day trial - no credit card required, full access to all features.
👉 Or book a demo for a more personalised experience, and see how we can simplify your Square–Xero bookkeeping from day one.

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