Bartering Business-to-Business Tax Considerations
 Yes, you do pay taxes in a barter system. According to the IRS, barter is considered taxable even though there has not been a monetary transaction. Barter is considered income; however, reporting is not necessary for barter transactions that are:
- Under 100 transactions per year.
- Under $1 in value.
- Done with exempt foreign entities or persons.
In order to stay in compliance with any tax requirements, you need to record barter transactions just as you would with any other business transaction and place a monetary value on the goods or services rendered.
Many barter exchange programs have been shut down due to non-compliance with tax laws.
Although any penalties are assumed by the barter program, the members of the exchange or program are likely to be audited.
Keep accurate records of all barter transactions and be diligent about including barter income to the government as required!
Business-to-Business Barter Contracts and Agreements
Just as with any business contract or agreement, bartering business-to-business should entail what is being exchanged between two parties as a "sale."
If, for example, your 'brick and mortar' place of business needs to be repainted and you sell tires, the contracted painter could receive a set of tires in exchange for the paint job. Both would be recorded as expenses along with their equitable value.
Barter contracts and agreements also need to be written---not verbal---so that one party will not feel slighted by the other either because the values exchanged were not equal or expected.
In additional to business-to-business contractual agreements, does the barter exchange offer an arbitration process in case of disagreements?
On your end, be sure to track and record barter exchanges as well as all contractual agreements used for barter purposes. Having well-maintained records and receipts can save many headaches down the road.
Bartering Stipulations with Business-to-Business Exchange Services
 If you become a member of an off- or online barter exchange or network community, you should always look at the membership first.
Does their membership have something to offer that your business could benefit from? Just as with any other organization where membership fees are involved, you should go beyond any 'pie in the sky' advertising and take a good look at what the barter exchange service offers for your money.
- You should look for full disclosure with any barter exchange group. How are the membership fees applied and what for? While most barter exchanges strive to make a profit just as any other business, be sure you feel any fees you pay are worth it.
For example, does the barter exchange offer its members a directory or online access to its members with what their business is and what their business offers for exchange? You may not need your whole house re-carpeted or swimming pool maintenance if you live in Vermont.
Analyze the member directory and remember not to look at being a part of a barter exchange for simply marketing purposes. The purpose of becoming a member of a business barter program is to gain products and services that are valuable to your business.
- Does your business offer products and services on a regional, national, or international basis? Different areas have different tax structures as well as a definite 'area' that its membership base is made up of.
Important Points to Remember When Joining a Barter Exchange Program
- Does its barter membership offer something of value to your business?
- Does the barter exchange program keep accurate records and disclose how barter membership fees are applied?
- Does the barter exchange program offer arbitration in case of a misunderstanding?
- Is the barter exchange program regional, national, or international?
- Will the barter exchange program increase new customers for your business?
Resources for Business-to-Business Bartering Guidelines
IRS Barter Tax Information and Forms:
http://www.irs.gov/pub/irs-pdf/f1099b.pdf
International Barter Exchange Rates:
http://worldbarterexchange.net/Members/Currency_Exchange_Rates.asp
IBE: International Barter Exchange:
http://www.barter-works.com
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