Bartering

“What do you think of barters?” Is a common question from my clients.
They are trying to build a customer base and link up with people- to
have their office painted, for a massage or for bookkeeping services.

Most, if not all, find that they were left unsatisfied by the barter.

Bartering is defined by the Internal Revenue Service as
“exchanging of goods and services without exchanging money”. It is a
common practice in the wellness field; however, the ramifications are
not discussed.

A common misconception is that bartering is considered a free
activity or ‘under the table.’ However, the barter must be included in
the income of both parties. It is taxable. The barter is income for
both parties; even though money is not exchanged there is a transaction
with goods and/or services at a fair market value.

The second issue is the fairness of the barter. Without a written
agreement between the two parties, there is uncertainty of the barter.
The questions that need to be answered are: