The key realization is that it increases expenses at an equal rate as the revenue increase.

You get $5000 of revenue but spent $5000 on services.

You also have to pay taxes on that $5000 like other revenue.

So many small businesses will try to just exchange the services more directly in some way, or give steep discounts. (Tip: This doesn’t mean it’s entirely correct for tax/legal/accounting purposes, so don’t do big deals like this without consulting professionals. I’m just saying this is what’s done by some people)

> The part that makes it not fraud is that both parties do actually do the work.

The cheap criticisms of these deals always miss this part: something of value is traded for the dollars by both parties. Companies can’t simply circulate dollars between themselves.