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How to Reconcile Square or Toast With Your Bank (Without Losing Your Mind)

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If you’re running a food cart, food truck, or even a small café, chances are you’re using Square or Toast as your point-of-sale (POS) system. It’s fast, easy, and your customers love tapping a card instead of digging for cash.


But here’s the part nobody tells you: your Square or Toast deposits never match your sales exactly. And if you’re not reconciling, your books are lying to you.


This post is going to cut through the noise and show you:


  1. Why your Square/Toast deposits don’t match your daily sales.

  2. The risks of leaving it unreconciled.

  3. A no-fluff way to reconcile POS with your bank.

Why Square and Toast Deposits Never Match Your Sales


At the end of the day, Square or Toast might show you $1,000 in card sales. But when the deposit hits your bank, it might be $964.37. What happened?


Here’s the breakdown:

  • Processing fees: Square and Toast both skim their percentage before sending you the deposit.

  • Timing delays: Friday night sales may not hit your bank until Monday.

  • Tips: Depending on setup, tips may be included in deposits or handled separately.

  • Refunds/chargebacks: If a refund goes through, it lowers your deposit but doesn’t show up the same way in daily sales.


Bottom line: if you’re only recording the bank deposit as “income,” you’re underreporting sales and misclassifying fees.

The Risks of Ignoring Reconciliation


Many food vendors skip reconciliation because it feels complicated. But here’s what happens when you don’t:


  1. Profit blind spots. You’ll think you made less revenue than you actually did, because fees are hiding in the deposits.

  2. Expense gaps. Processing fees won’t show up clearly as expenses—they just disappear into the ether.

  3. Audit risk. If the IRS compares reported sales to 1099-Ks from Square/Toast and sees gaps, you’ll get questions you don’t want.

  4. Cash flow confusion. You won’t know if missing deposits are timing issues or actual problems.


In short: reconciliation isn’t optional—it’s survival.

No-Fluff Steps to Reconcile Square or Toast With Your Bank


You don’t need fancy software. Here’s the simple process:


Step 1: Pull Your POS Reports.

Log in to Square or Toast and pull your daily, weekly, or monthly sales report. Note: you want gross sales, not net deposits.


Step 2: Identify Fees.

Check the fee report. For example, Square usually charges 2.6% + 10¢ per transaction. On $1,000 sales, you might see $35–$40 in fees.


Step 3: Match Deposits.

Compare the POS deposit report to your bank statement. If Square says $964.37, that should match the deposit in your bank.


Step 4: Record Properly.

In your books, log $1,000 as sales income and $35.63 as Square fees (an expense). That way your income and expenses are both correct.


Step 5: Reconcile Weekly.

Don’t wait until year-end. Weekly reconciliation keeps you ahead of mistakes, refunds, or missing deposits.

A Real-World Example


Let’s say you ran $5,000 in sales through Square last week.


  • Square’s fees = $150.

  • Net deposit to your bank = $4,850.


If you only recorded the bank deposit, your books show $4,850 in sales and no expenses.


Reality? You had $5,000 in sales and $150 in expenses. That $150 matters—not only for taxes but for understanding your true margins.


Multiply that by 52 weeks and you’re looking at $7,800 in hidden expenses if you don’t reconcile.

Why Vendors Get Stuck


Here’s why so many food vendors avoid reconciliation:


  • Time crunch. After long days, sitting down with reports feels impossible.

  • Confusion. The POS vs. bank numbers never match perfectly, so it feels like a guessing game.

  • “Close enough” mentality. Many vendors just record deposits and move on.


But here’s the no-fluff truth: “close enough” doesn’t hold up when tax time or an audit rolls around.

The IRS Angle


This is where my IRS background comes in. Remember, Square and Toast file 1099-K forms with the IRS showing your gross sales. If your tax return reports a lower number because you only tracked deposits, guess what? The IRS notices.


That mismatch is one of the biggest triggers for IRS letters. And trust me—once that process starts, you don’t want to be on the receiving end.


Reconciliation solves that problem before it starts.

Building a System That Works


Here’s how you can make reconciliation sustainable:


  • Pick a rhythm. Weekly is best. Put 30 minutes on your calendar.

  • Use templates. A simple spreadsheet (or our free tracker) makes it easier.

  • Don’t mix cash. Track POS separately from cash sales to avoid confusion.

  • Get help if it’s messy. If you’re already behind, that’s exactly what cleanup services are for.

Final Word


Square and Toast make sales easy. But if you’re not reconciling deposits to your bank, you’re running blind. You’re underreporting sales, losing sight of fees, and exposing yourself to IRS problems.


The fix isn’t complicated. Reconcile weekly, log fees as expenses, and don’t rely on bank deposits as your only “record.”


👉 And if your books are already a mess? That’s where Zero Fluff Books comes in. Cleanup is what we do—so you can focus on food, not spreadsheets.


Ready to stop guessing and start reconciling? [Learn more about our cleanup services here.]

 
 
 

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