Business Bartering 101: How To Handle Your Exchanges

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When you exchange business services or products with another business, then you have to report the value on Form 1099 (if the cumulative total is more than $600 during the year with the same vendor).

Business bartering |

Do I Pay Tax on Bartering?

Yes. Even though you did not accept cash, you still have a reportable transaction. The IRS expects you to pay income tax on the value of the exchange; it's not a freebie.

TIP: Place the transaction in your bookkeeping to report the sale on your tax return.

Barter Examples

You own a law firm, and another person owns an IT support company. You agree to help them with their corporate documents for 6 months of IT support. 

  • You sell t-shirts, and another person sells handbags. You agree to sell them fifteen t-shirts for five handbags. 
  • You own a grocery store, and another person has a handyman business. You agree to give him a $500 gift certificate to repair your leaky roof.
TIP: Add a barter account to your chart of accounts to track the barter exchanges.

DISCLAIMER: Please consult with your accountant, attorney and financial advisor before implementing any tips displayed on this website. DIY research does not replace the advice of a licensed professional who has thoroughly reviewed your file.