He may have been offended by your downgrading your arrangement especially if you had a social 'relationship' before hand. Even though he was helping you out by paying you for your services .. He (by the sound of his comments) was enjoying having the company, and was offended by you making a point to remove any level of social connection.
Was he being inappropriate at the time when you felt compelled put him in his place .. By being so honest? I am confused why that would even come to a point where you would feel the need to deflate him.
Nothing wrong with having a balance social/professional arrangement for such a part time endeavor. You are not a formal employee .. You could plausibly just be two friends helping each other out.