Barter Goods And Services For Your Business

Bartering is not just for “Burning Man” attendees. You can also do it for your business. Be sure to note the tax implications and note it properly in your bookkeeping.

clipped from www.nyreport.com
Bartering for products and services can be very beneficial. Barter exchanges (trades among persons or organizations other than informal exchanges on a noncommercial basis) have a positive impact on cash flow � businesses do not need to spend cash to acquire the goods or services needed by a business (preservation of capital). Bartering also is a way to get rid of excess inventory.
However, as with any other transaction, barter is taxable. Any exchange of goods or services without money is treated as a barter transaction. Swaps, trades or exchanges are taxable transactions. The fair market value of goods and services exchanged must be included in the taxable income of both parties.

Fair Market Value

When using barter as a method to get rid of excess inventory or remnant goods or services, both suppliers involved in the trade have to agree to the value of the services or products, and that value will be accepted as fair market value.

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