Tips for Bartering Goods and Services

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I decided to update this article on bartering goods and services after I got quoted in this article: How a smart-shopping expert got a year’s worth of free haircuts. The anecdote I share in this article on Grow, part of CNBC, is a true story.

Before that bartering with my then hair salon, it had been quite some time since I’d last bartered for goods and services. For example, at the time I got married, I was doing freelance photography along with freelance writing. I’d been in touch with the PR people for a resort in the U.S. Virgin Islands where my husband and I hoped to honeymoon. And one thing led to another with me bartering photography of the resort for the PR person in exchange for a half-priced honeymoon.

The only other time I’d bartered was when a design company offered to create custom stationery and business cards for me if I, in turn, would do some promotional writing for them. Together, we figured out how much the stationery and business cards would cost, and I gave them the same value in writing services.

How bartering goods and services helps save money

In some of my wedding books, I suggest bartering as a way of saving money on a celebration. I still tell the story of my friend who bartered with the limousine company that transported her wedding party. In exchange for a free limousine, she wrote a brochure for the company.

It isn’t just writers that can barter for goods and services. One Wall Street Journal article describes a number of companies that, when tight on cash, turn to bartering. These businesses range from movers to a refrigeration company.

With inflation at an all-time high now, bartering for something you need (versus paying cash money) may be a win-win. That is, you get a product or service that you require, and the person you barter with gets something they need, too. 

Tips for Bartering Goods and Services

Tips to keep in mind when bartering goods and services

Here are tips you need to keep in mind when bartering goods and services.

Understand the value of a barter

Just because you want to barter with someone doesn’t mean that they’ll find value in the services that you have to offer. I’m lucky in that I know how to write and write well. Pretty much every small business needs writing services of one sort or another.

The same could be said, in this day and age, for website design or computer programming. So I would imagine someone wanting to offer these kinds of services for barter wouldn’t have trouble finding any takers.

Bottom line: make sure you have a service to offer that is potentially as valuable as the service you’re looking to receive.

Have a clear idea of what you need ahead of time

Don’t waste your time or anyone else’s by being all wishy washy about what you think you might possibly want via a barter. Come up with a concise description of what service you need and what service you can offer so that when someone asks, you can tell them in a sentence or two. 

Do your homework when looking for potential barter partners

Like with most things in business, I find that networking and word-of-mouth recommendations usually pay off in the long run. If, like me, you have a bona fide project for which you want to barter, tell everyone and anyone you know about your needs–and the services you can provide in return.

If you belong to a networking organization or a local Chamber of Commerce–even a playgroup with other moms or the Rotary Club–let them know about your desire to barter as well. Don’t know anyone locally with whom you can barter?

Then check places like Craigslist, which has an entire section, under “For Sale,” for bartering. Or even Facebook Marketplace.

Get your bartering agreement in writing

When you find someone to barter goods or services with, make sure you get your agreement in writing. Not only do you want to include the basics of who and what’s involved, but also you should spell out the value of the services and the time line by which it will be completed.

Remember, just because you’re giving and getting something for free doesn’t mean that you shouldn’t get a contract for the exchange. This will, hopefully, help you from getting ripped off.

Understand the tax implications of bartering goods and services

Again, just because you’re getting something for “free,” that doesn’t let you off the tax hook. Here’s how the Internal Revenue Service (IRS) sees bartering:

“If you engage in barter transactions you may have tax responsibilities. You may be subject to liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss. Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter – barter for another’s products or services – you will have to report the fair market value of the products or services you received on your tax return.”

This potential tax implication is yet another reason to make sure you keep good records about the give and take of bartering, and why you want to have your agreement in writing. Of course, ask your tax provider how he/she thinks you should handle any bartering done during the tax year. 

Final thoughts on bartering goods and services

If you have a skill, any skill, it might be possible to barter your expertise for something you need. It never hurts to ask. As I was quoted in that Grow article as saying, “What’s the worse that can happen? Someone will just say no.”

Do you have additional thoughts on bartering? If so, let me know.

8 thoughts on “Tips for Bartering Goods and Services”

  1. As an expert in the field of bartering, having worked for an organized barter exchange for about 15 years now, it is important as Leah has mentioned to be cautious when trading one on one with another individual to ensure that both parties are receiving equal value for their products and/or services.

    The absolute best way to protect yourself is to participate in a professional barter exchange. Because trade exchanges such as TBT Inc. use their own currency (a trade dollar being equivalent to a cash dollar) everyone sells at normal retail pricing and no one is ever short changed. There are a whole host of other benefits, not to mention many more trading opportunities that would be available to you within your local area or even on a global scale – everything from auto repair, restaurant meals, vacations, carpet, tile, advertising, printing, etc. The list goes on!

    Recently, I had a tree removed for a personal fitness trainer, had HVAC work done on a restaurant, and am sending an occupational therapist to Curacao on vacation – all on trade!

    As far as taxes are concerned, the IRS’ posture on this comes as a result of the Fair Fiscal Responsibility Act of 1982. When bartering with an exchange, you should receive a Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. The amount shown in 1099-B Box 3 is your barter transactions proceeds and is generally reportable as income and must be included on your tax return. Barter exchanges have an annual obligation to report your bartering proceeds to the IRS. However, when you make business related purchases, it offsets your tax liability, just as it would for cash!

    I encourage you to explore this side of bartering and I would be happy to field any questions pertaining to trade exchanges.

    Reply
  2. Actually the IRS cannot tax you in anything but legal tender, so no one is required to pay their tax in cheeseburgers, cars, boats, or anything else that is not legal tender.Besides how can the IRS require the average Joe to be a certified appraiser? Do you receive compensation for your appraising? OR is only the time of Gov officials worth something? Only congress has the power to determine issues of currency. Many cases of people paying their employees in $20 gold coins have been taken to court by the infamous IRS. The IRS claimed that it was the “value” of the gold content of the $20 gold coin that had to be reported. The courts uniformly disagree, as they should I.E. US Constitution, because the courts cannot determine the value of currency, only congress can do that and the coin plainly states that it is legal tender and in a denomination of $20. End of subject. If an IRS worker tells you differently, simply ask for the law substantiating their claim. They won’t have it.

    Reply
  3. @leahingram

    I currently barter accounting services for personal training, and that is working fine. I have also prepared many a tax return in exchange for everything under the sun – free summer camp for my kids, car repairs, even frozen homemade dinners. My policy is to never sign anything as a CPA, the returns don’t have my name on them as a preparer so I am not putting my license up for grabs should the taxing authorities take issue with them. I think this would apply to CPAs, attorneys, maybe doctors and nurses. I would hate to get tangled in a court case over tax liabilities in a return I did in exchange for lasagna!

    So far my agreements have all been verbal, but I see your point about contracts being a good idea. I will consider that.

    I love your blog!! Thanks so much for sharing with all of us!

    Reply
  4. You might also need to consider the legal liability if you barter professional services. I am a CPA who frequently barters services (everyone needs taxes done!) and I have to be very careful about exposing myself to liability. For folks with professional license guidelines, think about it before you offer your services.

    Otherwise, barter away!!

    Reply
  5. Another great thing about the Internet! Think how hard bartering might be without it. Not impossible, but definitely easier with more available resources.

    Great post! I know you’ll find someone to barter with – can’t wait to see the results.

    Reply

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