How to keep vendor rentals out of sales

[jsartisans]

I own a small artisan shop where the vendors pay rent for their spaces and then they each receive a check for their sales at the end of the month. Up until now the vendors have been paying their rents by cash or check. I would like to invoice each of them each month for their rent so they can pay me with a credit card, but I don't want this rent money to be reported as sales. My question is, how do I keep the rental income separate from sales, so they are not included in any monthly sales reports, but I can still see an accounting for it.

[JK_Fiber_Art]

Hi Jsartisans,

It's  possible to run two businesses using the same Square account by creating multiple locations within your account, locations are intended for users who have multiple locations related to one business.   However, you may want to consider setting up two separate accounts (Different bank accounts, different names, different square entities.).   One for your rental and one for your sales as you're dealing with two different types of income - it may make your accounting easier.   Just a thought of course.

jk

[TheRealChipA]

Hi @jsartisans. I’ll add another idea to @JK_Fiber_Art‘s.  

You don’t say how you invoice them, but I assume that you have an item called something like “Space Rental.”  You could put it in its own category so that it is broken out on category reports.  But if they pay you through Square, it is considered by the IRS and everyone else that matters to be income that must be reported somehow.  There’s no real, legal way around this if you are going to accept cards for space rental.  For Square’s purposes that rental income IS sales.

If you did put it in it’s own category, you could then just make two accounting software entries that separate “sales” from “rental income” in your business’ books.  As long as those numbers add up to the “sales” that Square reports to the IRS on your annual 1099, then all will be fine.  If you keep it all in one business, then accounting “tricks” are the only way to separate your types of income.