Bartering is the trade of goods or services in exchange for other goods or services.  Historically, bartering dates back to around 6000 B.C. and the ancient Mesopotamian tribes.  It eventually became popular with the Phoenicians and Babylonians when trading items including weapons, food, spices, and apparently, even human skulls.  Bartering has been used by the Europeans in the Middle Ages and the colonial Americans and was used during the Great Depression of the 1930’s when Americans often had no money.

Modern bartering can involve elaborate bartering exchanges or just a small business trading goods or services with a customer or vendor.  According to the Internal Revenue Code you must include in income the fair market value of goods or services received from bartering. However, at the same time, you can deduct the expense of the good or service you are giving up.

Recording a barter transaction in QuickBooks is a process that requires a few one-time setup steps that can then be used to record any barter or trade transaction you may have with your customers or vendors.  The following explains how to set up the necessary items and record the transactions.

In QuickBooks, you cannot have a customer and vendor with the same name.  If you have an existing customer that you need to also use as a vendor, you must create a new vendor that has some difference in the name.  I suggest using (V) after the vendor name and, optionally, a (C) after the customer name.  You can then go into the payment settings of the vendor to enter the correct name in the “Print on Checks as” box.   You will record the customer invoices as you normally would using the customer with the (C) and the vendor invoices using the vendor name with the (V).











Create a barter clearing account for your barter transactions using a bank account type of account.  You will use this account to record the “deposit” of the non-cash payments received for the barter transaction and the non-cash “payment” of bills received.












Create a barter payment method and choose the type Other.









If you have your preferences set to use undeposited funds as the default deposit account, when you receive the barter payment, you will also need to make the deposit of the barter payment to the barter bank account.

If you don’t use undeposited funds as the default deposit account, you can choose the barter account as the account to deposit to when you record the customer payment.















Pay the Vendor Bill using the barter bank account.  Choose the Assign Check Number option and use Barter or some other identifier as the check number.

Receive the Customer Payment using the barter payment type.  In this example the customer is paying only a portion of his invoice with the $610 that you owed him on his bill.   Additionally, in the example below, the preference for the account to deposit to is set to use the undeposited funds account so that the option to choose which account is not available on the customer payment window.  The next step in this instance would be to make the deposit from undeposited funds to the barter account.


Record the deposit from the undeposited funds account to the barter account.  Choose make deposits and then choose the Barter transaction from the list of available payments received and click ok.


Select the barter account to deposit to and click save and close.










The following shows the completed set of barter transactions in the barter account.  The barter account should have a zero balance if all transactions are recorded correctly.

As you can see, once the initial setup is complete, using the barter account and payment types for any future bartering/trade transactions is very simple.  For additional information or assistance with setting up your QuickBooks for bartering transactions, please call one of our knowledgeable QuickBooks ProAdvisors.