Bartering

Bartering is the process where two people, or companies, trade products or services rather than exchange cash. It provides a means of getting something of value that you can’t or don’t want to pay for in exchange for something the other party wants. In a time of tight cash, bartering is becoming quite attractive to some people. I once had a client in the landscaping business who was cash-poor but needed my consulting services. The client and I came to an agreement where I would provide a certain number of hours of consulting in return for specified landscaping services. We both benefitted, got what we needed, and no cash changed hands.

Bartering often enables an individual or business to acquire something the want and need but may not be able to justify the cash outlay. The key to bartering is that both parties must feel that they received equal value.

One note of caution. Even though no cash changes hands, the IRS considers the barter transaction as taxable and requires you to file a form 1099-B – proceeds from Broker and Barter Exchange Transactions.