Have you ever traded services in exchange for a product or service?A professional service may trade for such things as a cleaning service, landscaping or plumbing. This is called Bartering and the IRS considers this income. If you barter, you should be aware that the value of products or services from bartering is taxable income.
A direct barter is negotiated between two people for exchange of a particular service. A barter exchange such as Green Apple Services
requires a membership, but offers a variety of services to choose from such as: vacations, office supplies, professional services and restaurant meals. There is an agreement or process in place to value goods and services exchanged. The organization becomes the organizer of a marketplace where members buy and sell products and services among themselves and the service facilitates the barter in exchange for a fee.
Did you receive a 1099 for your bartering services?
Remember, the IRS matches all those 1099s with your tax return. So if bartering services resulted in you receiving a Form 1099-B, don’t ignore it.
Regardless if you’re using a direct barter service or a barter exchange, as a business owner you need to be mindful that you don’t barter too many of these types of services. Becoming out of balance through the use of too much bartering or couponing can cause a cash flow crunch in available money to run your day-to-day operations. Bartering is a great way to receive additional products or services, but just like a Groupon or any other type of sale, it’s important to limit your business liability to insure continued profitability.