How to record a barter transaction in your books (US and Canada)

How-to guides / Barter transaction

The accounting behind it

Barter is taxable. The IRS and the CRA both treat the fair market value of what you receive as income, the same as if you had been paid in cash and spent it.

What you receive is a business expense or asset in the normal way: if a sign maker trades signs for your landscaping, the signs are an advertising expense for you, and the landscaping is income.

A clearing account (Barter Clearing) keeps the two halves visible. It should net to zero when the values are equal; any difference is cash paid or owed on top.

Income side
Account	Debit	Credit
Barter Clearing	Fair market value
Service or sales income		Fair market value

Expense side
Account	Debit	Credit
Expense or asset received	Fair market value
Barter Clearing		Fair market value

Worked example: landscaping for signs

You do spring landscaping for a sign maker that you would normally bill at $1,200.00. In return they make you $1,200.00 of vehicle signs. You record $1,200.00 of service income and $1,200.00 of advertising expense.

Your profit is unchanged, but your income and expenses are both correct, which matters for sales tax, GST/HST thresholds and anyone reading the books.

The trade
Account	Debit	Credit
Advertising and Marketing	$1,200.00
Service Income		$1,200.00

Common mistakes

Leaving barter out because no money changed hands.
Using a made-up value. Use what you would normally charge a paying customer.
Forgetting sales tax or GST/HST on taxable supplies in the trade.
Treating a long-term asset received (equipment) as an expense instead of a fixed asset.

In the US and in Canada

United States

IRS Topic 420 says to include in income the fair market value of goods or services received from bartering. A barter exchange reports trades on Form 1099-B; people who barter without an exchange may need to file Form 1099-MISC.

Canada

The CRA says a business that exchanges goods or services by barter must include their value in income. For GST/HST, each side is a separate supply valued at fair market value, so a registrant charges and accounts for tax on its side of the trade and may claim an input tax credit on what it receives.

In AcboBooks

AcboBooks 0.2.1 has no separate screen for this, so it is done with a journal entry.

Open Make Journal Entry. Go to Activities → Make Journal Entry and set the Date of the trade. Put the other business's name in the Memo.
Enter both sides. Debit the expense or asset account for what you received, and credit your income account for what you supplied, both at fair market value. Add GST/HST or sales tax lines if the supplies are taxable.
Post it. When the Difference shows In balance, click Save & Post.

If one side is worth more and cash makes up the difference, record that cash through the bank on the same entry or as a separate deposit or check.

Menu names are from AcboBooks 0.2.1. Not using it yet? Try it free for 15 days, with the sample company to practise on.

Questions

Is bartering taxable?

Yes, in both countries. The fair market value of what you receive is business income.

What value do I use?

Fair market value: normally what you would charge a paying customer for the same goods or services.

Do I charge GST/HST on a barter?

If you are a registrant and your side is a taxable supply, yes. Each side of a barter is a separate supply for GST/HST.

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Sources

Updated October 25, 2026. General bookkeeping information, not tax, legal or accounting advice. Rules differ by state and province and change over time; check with the IRS, the CRA or your accountant for your own situation.

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How to record a barter transaction