CandleFocus Glossary Editor
Bartering represents an ancient form of commerce and is defined as the direct exchange of goods and services for other goods and services, without the use of money. This type of transaction dates back to the earliest civilizations and has been used on a regular basis over time.
Bartering is used in today’s market place when a buyer of goods or services has something of value that the seller wants and vice versa. This exchange may be based on an equivalent estimated price and possible goods/services that could be exchanged in this manner. For instance, a carpenter may be in need of a set of tools in order to repair a roof and he/she may exchange his/her repair services for the tools needed.
The Internal Revenue Service (IRS) considers bartering to be a form of income, and as such, it is taxable. As such, both parties involved in the exchange need to follow the rules of the IRS in order to ensure accurate taxation. These rules require the record keeping of all transactions and the exchange of a 1099 form to the other party, if necessary.
In some industries, bartering has seen a revival in recent years, as a way of circumnavigating the high cost of certain goods and services. For example, bartering has become more commonplace in the travel industry, with airlines exchanging tickets and hotels exchanging accommodations and tickets.
In addition to production and services, bartering also applies to one’s personal life. People offer tutoring, babysitting, pet services, catering, and community activities in exchange for items such as children’s clothing, baby supplies, home-made crafts, and other activities.
Bartering is the most ancient form of commerce and it continues to this day. By following IRS rules and understand the costs associated with the exchange of goods, bartering can still be an efficient form of transaction for individuals and companies alike.
Bartering is used in today’s market place when a buyer of goods or services has something of value that the seller wants and vice versa. This exchange may be based on an equivalent estimated price and possible goods/services that could be exchanged in this manner. For instance, a carpenter may be in need of a set of tools in order to repair a roof and he/she may exchange his/her repair services for the tools needed.
The Internal Revenue Service (IRS) considers bartering to be a form of income, and as such, it is taxable. As such, both parties involved in the exchange need to follow the rules of the IRS in order to ensure accurate taxation. These rules require the record keeping of all transactions and the exchange of a 1099 form to the other party, if necessary.
In some industries, bartering has seen a revival in recent years, as a way of circumnavigating the high cost of certain goods and services. For example, bartering has become more commonplace in the travel industry, with airlines exchanging tickets and hotels exchanging accommodations and tickets.
In addition to production and services, bartering also applies to one’s personal life. People offer tutoring, babysitting, pet services, catering, and community activities in exchange for items such as children’s clothing, baby supplies, home-made crafts, and other activities.
Bartering is the most ancient form of commerce and it continues to this day. By following IRS rules and understand the costs associated with the exchange of goods, bartering can still be an efficient form of transaction for individuals and companies alike.