Hi @loboyle. I can give you the basics here, but you’ll need to contact a competent accountant/CPA to help you with the details. First, a little background.
Since you are not a non-profit/charitable organization, donations to your business are taxable to you, period. That’s the law. From time to time, my business collects funds that we turn around and donate to a worthy cause. In our case, our CPA advised us to properly document the relationship with said cause, then deduct the donation on our tax returns. That all worked fine and, of course, we were effectively not taxed on that money. Your CPA should be able to help you do the same.
Also, by law, Square must report all funds received by your business as sales. You can’t set things up to do something else. If it was paid by a card, this money will also show up on your annual 1099 from Square as sales, as required.
Ultimately your question is a tax/bookkeeping one that you need to address with a competent financial advisor.
Regards,
Chip A.
Square Expert & Innovator and member of the Square Champions group. (But NOT a Square employee, just a seller like you)
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