Do you have clients that want to trade their services with you? Possibly you performed a service for them and they provided you with goods and services or vise versa. If that’s the case, the following describes how to best handle this barter transaction inside of QuickBooks. The net effect on your income is zero, but you will gain a more accurate picture of your total income and expenses for that period of time.
In this Example you will be Lucy’s Landscaping: Johnny’s Plumbing installed a new Shower for Lucy’s Landscaping business and Lucy’s Landscaping spruced up the yard with new shrubs and flowers at Johnny’s Plumbing Office.
Let’s begin by going to your Chart of Accounts and creating a New account (the type=Bank) and let’s call it Barter/Trade Clearing Account.
Enter in an invoice for landscaping services for your (Customer) Johnny’s Plumbing representing the amount of income you would have received had you not traded services.
Next enter in a Bill for the Shower installation under Johnny’s Plumbing (Vendor) for the amount you would have paid had you not traded services.
Receive a payment against the landscaping invoice. When depositing this money into your bank account (In QuickBooks) choose the Barter/Trade Clearing Account.
Now pay the Bill for the Shower install using the Barter/Trade Clearing Account.
At this point, you will need to reconcile the Barter/Trade Clearing Account. Begin the reconcile by choosing the Barter/Trade account and entering a zero in the ending balance amount and proceed to reconcile like you would any normal bank account. Always reconcile this account once you have completed your trade transactions.
About the Author: Deb Rockwell was chosen as one of Intuitive Accountant’s 2016 Top 100 ProAdvisors in the U.S. She has been recognized as one of the leading consultants who have embraced the ProAdvisor program and have leveraged it in order to better serve her clients and grow their own businesses. She can be reached at 207-873-1603 or firstname.lastname@example.org.