How to record a barter transaction in QuickBooks Online

Let us discuss how you can record a barter transaction in QuickBooks Online. Whenever you and your vendor exchange products and services then barter transactions happen. In order to record these exchanges, you will have to fill out an invoice and a bill for recording the items or services you have to exchange. Look at the steps on how to do it.

Bartering transactions are basically utilized in exchanging products or services or any of the non-cash transactions. This is one of the best ways if you want to track the exchange between you and your vendor. The bartering transaction lets you directly connect the transaction to a particular invoice and display the amount as a credit or payment to your vendors. 

What is a barter transaction?

The involvement of economics starts from the ancient times when bartering used to be the single way to purchase any products and services.  However in this advanced era, few of the organizations still know the importance of exchanging products and services with the relevant organizations rather than paying in cash or other types of payments.

In case you have an organization that occasionally barters, still you have to record all of those transactions in the account of your organization in order to meet IRS tax and record maintaining guidelines. 

This is the reason why QuickBooks business accounting software allows you to record the transactions (barters) with the help of a dedicated barter account where you can fill out all of your barter transactions.

Step 1: Set up your barter bank account

  1. Open the Settings option then go to the Chart of Accounts section.
  2. Hit on the option of New in order to create your new account.
  3. From the drop-down menu of  Account Type, click on the Bank option.
  4. From the drop-down menu of Detail Type, hit on the option of Cash on hand.
  5. Fill out the name of the account for example “My Barter Bank Account.”
  6. Choose to Save Close the changes you made.

Step 2: Create the invoice and receive payment

Ensure you have added your partner of the barter as a client for the invoice and vendor for the bill before you enter the barter transaction. Always remember to slightly change one of the names different from another one because you can not make the same name in both lists,.

In case your organization deals on a cash basis, you have to date both invoice payment and bill payment with a similar date as the invoice or bill.

How to create an invoice

  1. Go to the + New section.
  2. Click on the Invoice option.
  3. From the drop-down menu of Customer, click on the name of your vendor or your barter partner.
  4. Fill out all the required information.
  5. Hit on the Save option.

How to receive payment for the invoice

  1. Go to the + New section.
  2. Hit on the option to Receive Payment.
  3. Under the drop-down menu of Customer, click on the name of your vendor or your barter partner. All the information and data under the invoice you have created in the past will appear from Outstanding Transactions.
  4. Enter the date and amount you have to fill.
  5. Go to the drop-down menu of the Payment method, then click on the Add new.
  6. Fill out the “Barter” in the field of Name, then click on the Save button.
  7. Go to the drop-down menu of the Deposit to, after that choose the barter bank account.
  8. Now click on the Save and close option.

Step 3: Create and pay the bill

The final step for recording a barter transaction is to create and pay the bill. Once you have a record of the exchanges you have done. In case the exchange of products is not similar in value, you will show a balance due or credit by the invoice or bill.

How to create a bill

  1. Go to the + New section.
  2. Click on the option of Bill.
  3. From the drop-down menu of the Vendor, click on the name of your barter partner.
  4. Fill out all the required information.
  5. Hit on the Save option.

How to pay the bill

  1. Go to the + New section.
  2. Click on the option of Pay Bills.
  3. Under the drop-down menu of the Payment account, click on the name of your barter bank account.
  4. Hit on the bill you have been created in the past.
  5. Choose the option of Make payment from the Balance Due section.
  6. Fill out the amount you have to pay
  7. Hit on the Save and close option.

Conclusion

A barter transaction happens only if you provide your goods or services in exchange for non-cash transactions that may be other goods or services. As this is a part of an accounting transaction so it is necessary for the event to be recorded in the accounting records of the organization need.

You will be able to see your Bartering payment at the bottom of the Create Invoice screen. You can only see this amount on the Invoice screen when you will have a set up of such a custom template do so.