Once in a while, a business will have an opportunity to trade goods or services for goods or services instead of paying in cash or writing a check. Barter also works as a means of debt collection. If your debtor cannot pay, perhaps they can trade you some of their products or provide a service such as pressure washing your driveway or washing your fleet of service vehicles.
Whatever the circumstances that lead to a barter, the business owner needs to be aware that the IRS views goods and services received through barter as if they were cash income at the fair market value of those good or services.
Make sure your CPA knows the details of any barters you make. If you use a Barter Exchange Network, make sure they'll provide you the correct IRS form at the end of the year.
Don't be afraid to barter, but make sure you keep good records and let your accountant know what's going on.
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