Bartering has become more prevalent with today’s turbulent economy and businesses desiring to increase resources with decreased working capital.
The act of Bartering is when you exchange goods and/or services in lieu of of money. Even if you barter for someone else’s products and/ or services, you will need to report the fair market value of that product and/or service you received on your tax return.
Before you barter, you should familiarize yourself with the tax requirements, and not assume that because not money exchanged there are no tax liabilities for bartered income. Barter dollars or trade dollars are identical to real dollars for tax reporting. You may be subject to liabilities with your income tax, self-employment tax, employment tax, and excise taxes or on the other hand, your bartering activities may result in capital losses or gains.
In the event that you do engage in barter transactions know that as wonderful as the offer may sound initially, as you consider your full financial picture, you may or may not find it beneficial for you to engage in bartering activities.
For help with your business accounting or tax related needs, contact the professionals at www.EnvisionTaxandAccounting.com
