Business Bartering 101: How To Handle Your Exchanges

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 | www.deductingtherightway.com


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.