Archive for Barter and Taxes

Tax Consequences of Bartering

Originally on: http://sharetheroadcolumbus.org/tax-consequences-of-bartering

Bartering is the oldest form of compensation there is. It still goes on today and many are surprised to learn there can be tax consequences associated with it in the eyes of the government.

What is bartering? It is a simple proposition. I have a jug of water. You have a loaf of bread. I am hungry. You are thirsty. I trade you some water for some bread. We have just bartered. No money has been exchanged, but we have both paid for some benefit. It doesn’t get any simpler than that.

Bartering has obviously become much less prevalent now that money is on the scene. That doesn’t mean it doesn’t occur. We trade services for products or services all the time and don’t really realize it. You might have car problems and ask a client who is a mechanic to work on the car in exchange for cutting their bill. This is bartering at its finest.

Bartering involves the exchange of a benefit.

In the eyes of the government, this makes it a taxable event. Specifically, both parties that receive a benefit are supposed to report it on their tax returns and pay appropriate taxes. This raises the question of how such benefits are valued. The IRS indicates the valuation should be a “fair market” one. Most take this to mean the price that would have been charged if money was paid instead of bartering for the service.

You are probably rolling your eyes to some extent at this point. The taxation of bartering does seem a bit picky, but it can lead to a host of problems if you are not careful. Why? Well, assume you enter into a bartering exchange and give up a piece of inventory as your part of the deal. How will you explain that on your books? If your books don’t balance, the IRS will be very interested in why not.

Further, multiple unreported bartering events can also be viewed as a form of money laundering, so be very careful.

The government is spending money like there is no tomorrow in an effort to get us out of the economic mess we are in. Well, there is going to be a tomorrow. The government is going to need a lot of money when it comes. Guess who they are going to be looking to for it? Make sure your tax situation is in good shape so you don’t run into problems down the road. That means reporting your bartering benefits.

Bartering Tips For Online Business

Back in the early days of civilisation when there was no accepted form of currency, purchasing was based on the barter system. If the caveman down the way had a hunk of dinosaur meat you were interested in, you could offer him a pelt of fur in exchange for it. You got to eat, the other guy got to stay warm. It was a win-win situation.

Things have certainly changed in modern society but the barter system is still in use. Trading products, services, or promotional efforts provides an affordable way to extend your internet marketing reach.

Trading Services

You might be in need of professional services for your company. Often accounting or legal services, necessary for the growth and compliance of your e-commerce company, present prohibitive costs to the small business owner. Why not barter for these services?

Consider offering a free banner ad or a complimentary write-up on your blog in exchange for an initial consultation or a service from a professional who offers the services you need.

If your first offer doesn’t pique the interest of a professional provider don’t give up. Provide a list of things they can choose from. There is bound to be something you can offer that is of interest.

Promotional Bartering

You can really extend your marketing reach if you partner with others to help spread the word about your online business. This is a simple concept, usually offered in exchange for like promotional efforts.

Working with another online individual or company, you can offer to exchange banner ads, blog posts, a link in a blogroll, or even do-follow comments.

But you can also use other items to barter with. If your website sells products, consider giving something away in return for a posted review, a testimonial, or a referral on a social media site.

Planning an event? Whether it is an online or offline gathering, find the vendors who can supply the needed components, such as webinar software. Ask if you can exchange the necessary product or service for advertising spots on your website or a complete write-up of the event afterward that showcases the vendor’s offerings.

Need a logo for your start-up? Why not offer the graphics artist a direct link from your site in exchange for the design or a deep discount?

General Bartering Tips

Bartering works best if you attempt to exchange items or services of similar value. Offering a blog post in exchange for the complete legal setup of your business is probably not going to entice a lawyer to take you up on this deal. It is easier to make appropriate offers by first assigning a dollar value to the product or service you are using to barter.

If you don’t already have a relationship established with a vendor, provide them a show of good faith by giving something upfront. With so many scam artists on the internet these days, many people are leery of deals from an unknown source.

Bartering can save the internet marketer a lot of money while extending their marketing reach. Even if you don’t have cash, there are ways to attain the things you need by offering an even exchange.

Reducing Your Business Costs in 9 BIG Ways

originally on http://dearbusiness.com/653129-Reducing-Your-Business-Costs-in-9-BIG-Ways.html by Rebecca Game

When you live on a business budget, it’s important to know HOW to cut business costs. When you are a woman, then you know you are good at the finding the best, the cheapest, the fastest, and the biggest on a budget. Most women I know can squeeze a whole dollar out of a nickel!

Did you know that Howard Hughes cut business costs by eliminating just ONE drop of the 9 drops of solder on the can lids he was sealing and it saved his company over 250,000.00 a year?

Here are some handy tips to share that will help you reduce those business costs and maybe increase your bottom line a little.

1. Discounted or Free Stuff- You can find free software, graphics, backgrounds, online business services etc., BUT always use your virus tools and spyware before downloading anything from the Internet. You should try visiting the plethora of freebie sites on the internet before paying full price for your business supplies.

2. Auctions- You can find lower prices on business supplies and equipment at online and offline auctions. If you’ve never been to an offline auction, you are missing out on some great deals. You get to see what’s going on in ‘real time’ and you know immediately if you won the bid. Check your local paper for auctions. Don’t forget the storage places as well. They often have auctions selling off contents of those people who have abandoned their spaces or haven’t paid for their spaces. You can find some great stuff that could be handy for your business as well as personal.

3. Watching for Sales- If you don’t have time to check out sales for yourself then delegate a family member to do it for you. Make a list of items that you would like to see a sale on and then have them notify you when they find one.

4. Bartering- Did you know there are several international bartering communities available to businesses? Bartering is a big business by itself. Barter If you have a business you should be bartering goods and services with other businesses. Try to trade for something before you buy it. Bartering usually requires little or no money. Remember if you are in the US that bartering can count the same as income so keep accurate records of your barters.

5. Borrowing or Renting- Have you ever purchased business equipment you only needed for a small period of time? If you did make that purchase, recoup some of your money by auctioning the item or trading it for something of value that you need for your business. There are all kinds of different rental stores carrying everything from machinery to dishes and flowers.

6. Networking- Try networking your business with other related businesses. You could trade newsletter ads, banner ads, text ads, signature file ads and more. This will cut down on your marketing and advertising costs. You may also try bartering goods and services with businesses related to your own, such as a wine business and cheese business.

7. Wholesale or Bulk- You’ll save money buying your business supplies in bulk quantities. You could get a membership at a wholesale warehouse or buy them through a mail order wholesaler. If you don’t have enough money to buy the minimum, then partner with someone who sells what you sell. You can cut the cost in half or even thirds if there are three of you needing the same supplies. Don’t be afraid to partner with someone to get some good wholesale prices.

8. Used Stuff- You would not believe the good used stuff you can find at flea markets and garage sales along with estate sales. You can also check the paper for businesses going out of business and visit their store for some good used stuff. Find several items and offer them a one-price package deal.

9. Negotiate or Haggle- If you plan on being a repeat customer then tell the salesperson that. Don’t be afraid to ask them for a discount for a long term relationship. You might have to agree to purchase a minimum amount yearly or monthly but if it’s something you need all the time then go for the discount.

Bartering: Financial Advantages

originally posted on http://www.associatedcontent.com/article/8054085/bartering_financial_advantages.html?cat=3

Bartering is now becoming a popular business solution in Canada and the United States, here are some additional advantages.

Bartering offers a number of financial advantages to those companies that do it. Bartering:

  • Improves cash flow: When you can avoid spending money for goods and services that you need to run your business ‘” resulting in a decreased flow of cash out of your company ‘” you’re improving your cash flow. Remember, however, that every business needs cash to function. Trying to run a 100 percent barter business wouldn’t be practical ‘” you must have cash available to pay employee salaries and pay vendors who aren’t in the mood to accept whatever you have to barter. (For example, good luck trying to get your local electric utility to accept printed circuit boards in lieu of cash when it comes time to pay your electricity bill or to get your employees to split 10,000 pounds of goose down in lieu of paychecks!)
  • Frees up cash for other uses: Bartering enables you to conserve cash, freeing it up for other uses. If, for example, you need to purchase photocopiers and personal computers, and you’re able to barter some of your own goods or services for the photocopiers, you’ll have more cash available to purchase the personal computers you need. You then have several options available: Either buy more computers, buy better computers, or simply redirect the cash savings to another purpose.
  • Converts excess inventory: Finding yourself stuck with excess inventory is not difficult. All it takes is an unexpected downturn in the economy, a change in buyer preferences, or an unseasonable change in the weather, and your shelves can be chock full of product that’s going nowhere fast. Bartering can help you convert this excess inventory into something that your company really needs while putting your inventory to productive use.

These reasons alone compel many companies to make barter a part of their financial mix. By reducing the need for cash, bartering can reduce your need to secure financing from outside sources ‘” creating a  healthier bottom line for your company.

Bartering – A Way To Move Your Business Forward

originally on http://ezinearticles.com/?Bartering-Your-Way-Back-Through-the-Economy&id=6107568 by Brad Rhoades

Is cash tight these days with your business? Maybe you work independently and it’s difficult to find any kind of lending for a small business or for an individual? Or maybe your business needs to expand but there are simply no extra cash reserves. Well, bartering might be a great way to keep your business moving forward by trading your services or products in exchange for someone else’s goods or services.

If you find your business is lacking cash, then this might be a creative way to help obtain new opportunities, goods, or services for your business.

Trading goods or services can be a terrific solution to acquire something in exchange to help improve or benefit your business without using any cash, especially these days when cash is so tight and banks are not lending too eagerly. This could be that out of the box solution to help push things ahead and keep your business and your life moving forward.

According to Wikipedia, there is an estimated of over 350,000 businesses in the United States which are involved in barter exchange activities. And there are approximately 400 commercial and corporate barter companies serving all parts of the world. I even found quite a few websites that let you look up others online to exchange skills, services, and knowledge. So bartering is looking alive and well these days. These online services take a little off the top from a small commission…but that might be something to consider to help find what you are looking for and vice versa.

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You might want to first just sit down and start brainstorming what types of jobs, services, or physical items you can trade with to another business or individual. Then start thinking what services and goods do you need? Who might need your product or service? Who might like to swap with you?

Maybe you are great with social media or computers? Do you have a special skill set to trade? Are you a handyman? Are you a hairstylist? Are you a plumber? Or maybe you are a dentist or an eye doctor? Maybe you are great at organizing things? Maybe you can help another business with accounting? Then barter your services or goods to acquire what you need for your business, in place of paying for cash.

Here are some ideas to get your business moving without any cash… And this doesn’t have to be just for your business… you might want to consider bartering for your personal life? I think we all have to do whatever it takes to get this economy rolling again and bartering might be one idea to help us do just that. I also listed some skill sets to think about trading with? Why not? If you have a skill that someone else wants…find that someone who wants to make a trade.

~ Barter for marketing and promoting your business.
~ Barter to secure a business coach.
~ Barter to get your website built or online business going.
~ Barter to obtain some computer and office equipment.
~ Hair Stylist
~ Math tutor, language tutor, or other educational subjects.
~ Real Estate Agent
~ Home Stager
~ Pest Control
~ House Cleaning
~ Catering Service
~ Photography
~ Plumbing, Handyman, Carpenter, Roofer, Electrician, etc.
~ Accounting
~ Website Designer
~ Auto Mechanic
~ Landscape Specialist
~ Financial Planner
~ Soccer Coach, Martial Arts Instructor, Football Coach, etc.
~ Taxi or Shuttle Service
~ Make-up Artist

This list could go on forever but I hope this gives you some ideas to work with and I would encourage going online and researching for more ideas. Also, you can barter things like jet skis, pick-up trucks, tools, furniture, computers, and that list goes on forever as well. So if cash is tight these days then make a trade and keep things moving forward. Again, we all need to do whatever it takes to make this economy and our lives strong again.

So be creative, be persistent, and make it happen!

Bartering Sees Comeback with Businesses

originally on http://www.myfoxatlanta.com/dpp/news/local_news/Bartering-Sees-Comeback-with-Businesses-20110511-am-sd by Tacoma Perry

Small business owners are getting creative during these tough economic times and sometimes that means conserving their cash.

And now, an old currency system is seeing new life and it’s helping small businesses survive and thrive.

Remember back in the day, in school, when you used to trade your cookies for a juice box or chips? Well it’s that same concept that’s allowing small businesses to keep their doors open in otherwise tough times.

It’s not a new concept, but among small businesses with tight budgets and dwindling customer prospects, it’s seeing a comeback – it’s bartering.

“Bartering essentially has been around since the beginning of time, even before your most common forms of currency being coins and then bills. People were essentially trading what they had for what they needed,” said Todd Gerry of Tradebank.

And while traditionally bartering has been done on a one-on-one basis, the concept has gotten much more sophisticated with the rise of bartering networks like Tradebank. Small business owners can offer their service or skill to hundreds of other businesses and get needed services or products in return.

“I get all my landscaping done, painting at my shop, gutters, dental care, I get all my basic necessities – prescription glasses,” said Joe Cox of Georgia Electric Service.

And he’s gotten those necessities without using cash. Joe cox is the owner of georgia electric service – and in exchange for his services, he says he’s able to get about 80% of what he uses on a daily basis. At a time when most businesses are cutting advertising budgets, cox has expanded his.

“I’ve got a billboard downtown, two blocks from the capital that I’ve got 100 percent on trade as well,” said Cox.

According to the folks at Tradebank, you don’t have to barter a lot in order for it to help your business. In fact, they say if you just barter 5 percent of the time, you can increase your bottom line by more than 30 percent.

“You normally have to spend time and money getting cash business, with barter, I actually have to turn away business. I’ve got more than I can do,” said Cox.

Tradebank is just one of dozens of bartering networks out there. They charge a one time retainer fee and a quarterly accounting fee – but both Cox and Gerry say your most important commodity is your service, skill or product.

“Everybody needs electrical work at one time or another. So it’s been a very positive experience for me,” said Cox.

“I think that business owners now more than ever realize that they’re going to have to be innovative in terms of how they bring new business through their doors,” said Gerry.

Experts say the key to bartering is finding the right network for you.

5 Tips for Bartering

originally on http://onedotadvice.wordpress.com/2011/04/20/5-tips-for-bartering/

Bartering for goods and services has been around for centuries and often involves some form of negotiation. Societies lost interest as the monetary system developed but with technological advances, bartering has seen a comeback. While it is definitely a good option in some circumstances, there are things to consider when entering into this type of exchange.

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1. The emotional value. People often trade products or services that don’t necessarily have an equal monetary value. It comes down to how badly you need or want something that the other person can provide and how willing you are to give up something you have. Remember Kyle MacDonald? You may not recognize his name but if I said, One Red Paperclip, you probably have seen his story about how he took one red paperclip and began a year-long trading project. After fourteen trades, he ended up with a small house. People traded for some very interesting items along the way. I encourage you to read his story if you haven’t already.
2. The monetary value.
It is much easier to trade products than services. When a person’s time is involved, both parties need to be clear as to how much or how often their service is provided in the trade. With so many people outsourcing today, it is easy to get excited if you find someone who is willing to trade services. However, if you don’t have a dollar value associated with your time or service, it may cause one or both sides to feel they are not getting an even trade. This typically happens later on as one side completes their service before the other.
3. The contract
. Just because there is no money changing hands, treat the trade like any other business deal. In the old days, the barter system relied a lot on trust. We have all seen old movies where two guys shook hands to make a deal. Unfortunately, that doesn’t happen anymore. We need contracts so both parties are protected. I can hear some of you saying, “But I know he’ll keep his end of the bargain.” Or, “I feel awkward asking for a contract.” Let’s just say, getting at least an informal agreement is the first rule in Business 101.
4. The third-party barter system
. If you have read up to this point, you probably have either bartered before or are considering it or just enjoy my articles. While many people make trades one-to-one, there are many barter companies online where you list your HAVES and WANTS. If you haven’t looked at one of these sites before, it’s amazing what people list. It is a combination between Craigslist and E-Bay. BarterQuest is just one of many.

5. The taxes. Even though no money is changing hands, you know the IRS gets involved in bartering. They want their piece of the pie. Since I cannot give tax or legal advice, if you barter, exchange, or trade services or products, make sure you understand the tax rules involved.

No cash? No problem, if you barter

No cash? No problem, if you barter

originally posted by A. Kawlowski on http://www.cnn.com/2008/LIVING/wayoflife/09/02/bartering.rise/index.html

(CNN) — Miriam Brown has always wanted to visit Cape Cod, but when she recently began to plan a trip and found out she would have to pay $200 or more a night for lodging, her dream vacation seemed out of reach.
Miriam Brown and her husband bartered their services for room and board on Cape Cod.

Brown, who lives in New Orleans, Louisiana, is an accountant. Her husband is a home renovations contractor.

Like many people dealing with a soft real estate market and high food and gas prices, they just don’t have that kind of extra cash for a trip.

“I have traveled a lot in prior years, but after [Hurricane] Katrina, there’s just no money for traveling,” Brown said.

So she still plans to go, but she won’t spend any cash at all on lodging.

Brown has joined the growing ranks of Americans who are bartering — trading goods and services without exchanging money — as a way to cope with tough economic times.

Brown posted an ad in the barter community last month, offering to trade her accounting skills and her husband’s knack for home repairs in exchange for room and board on Cape Cod, Massachusetts.

She has lots of company.

“When the economy turns unfriendly, users become far more creative to get their everyday tasks done,” Susan MacTavish Best said.

Swapping ‘to get by’

Other Web sites that put Americans in touch with like-minded people who are willing to trade everything under the sun have also seen a boost in traffic.

“I think a few years ago it was more for fun,” said Jessica Hardwick.

“But we’ve seen a real shift in the last year, and especially an increase in the last few months, where I think people are really doing it to get by.”

Some of the most popular items to trade for late this summer were school uniforms, which some parents found they could not afford to buy for their children, Hardwick said.

Experts aren’t surprised Americans are becoming more financially creative during an economic downturn.
Dealing with the economy

• 67 percent of consumers have haggled in recent months, compared with 33 percent in 2006

• 61 percent of consumers now regularly use a shopping list, compared with 35 percent last fall

• 70 percent of shoppers now look primarily for “the deal” in the Sunday inserts, compared with 51 percent last fall

“Historically, when times get tough, you see a 50 percent-plus increase in bartering as a way for people to be able to buy things or get things and do it economically,” said C. Britt Beemer, chairman of America’s Research Group.

The company talks with thousands of consumers every week to gauge their spending habits and attitudes.

A couple of years ago, many Americans had $500 to spend at the end of the month, but that money has evaporated because of rising prices, Beemer said.

“We’ve never had a time, at least in my lifetime, where you have food and fuel going up at the same time. So it isn’t a question of buying things, it’s a question of buying nothing,” Beemer said.

Breast implants and a horse

Businesses have long recognized the benefits of bartering, and there are hundreds of barter networks set up across the country to fill their needs.

They use barter credits as currency, so a plumber in need of a filling doesn’t need to search for a dentist’s office with plumbing problems to make a deal. He can fix a leaky pipe for one member of a network and use the credits he earned for that job at any other.

“Really, there are no limits to it. We trade for just about anything you can think of,” Michael Krane said.

Bartering on this scale is also robust in tough economic times. Krane said his exchange has seen a 20 percent rise in barter transaction volume in the first six months of this year.

A longtime client is Thomas Forrest, an orthodontist in suburban Pittsburgh who barters his services for everything from office improvements to stationery. His practice hasn’t been affected by the economic downturn, Forrest said, but some of his patients seem glad to be able to visit him under the barter arrangement.

“I think if you have a business owner who has children in need of braces, I sense a gratitude that that’s available,” Forrest said.

Barter exchanges must carefully document all trades, since the Internal Revenue Service considers income from bartering as taxable. However, a barter exchange “does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis,” according to the IRS.

In New Orleans, Brown and her husband are getting ready to go to Cape Cod after finding a taker for her bartering offer. The couple will work five hours a day in exchange for staying in “a beautiful three-bedroom house right in the center of it all,” Brown said.

“We can do a lot more if we don’t have to pay for room and board,” she added.

Even “Stars” need to safe money

Originally posted on http://www.usmagazine.com/momsbabies/news/edie-falco-i-buy-unisex-clothes-for-my-kids-to-save-money—needs-pic-2010287

Edie Falco: I Buy “Unisex” Clothes for My Kids to Save Money

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Edie Falco doesn’t go overboard shopping for her children, Anderson and Macy.

“It’s hard to justify spending a lot of money on kid’s clothes because they grow out of them in five minutes,” Falco, 47, tells UsMagazine.com. “And my kids don’t really care what they wear.”

“So I occasionally buy something for my son and he wears it until he grows out of it, and my daughter wears it,” the Nurse Jackie star goes on. “I just make sure that it’s unisex.”

Falco, who adopted her Anderson in March 2005 and Macy in April 2008, says she asks her 94-year-old grandmother for parenting advice.

“[She] raised five kids who back in the day was doing everything. Grandpa was out making the money, and grandma was feeding one kid with her hand and rocking another kid in the cradle with her foot,” says Falco.

“She would explain to me about patience. It’s about teaching yourself to be patient. We all move at a pace and get used to it. And then you’re with kids who have their own schedule and own time frame. Part of me wants to just say ‘C’mon let’s go.’ But they’re not having it.”

“You can come to loggerheads if you don’t learn how to breathe and learn how to let them take the time they need. You have to let them be sometimes — to let them look at a book to let them brush their teeth,” adds the Emmy winner.

Proven Work From Home Jobs

Originally posted by Jules Vandermint on http://tinyurl.com/25wwwh4

Some Top Advantages Of Using Bartering For Your Small Business

Barter is something that is becoming an increasingly popular method of commerce. If you would like to take advantage of the benefits of using bartering for your small business then this is certainly something you could look into. As such, here are some of the benefits that you will see when doing so.

One of the main benefits is the fact that barter increases new business opportunities. You can attract customers and referrals who would not have known about your business had you not joined a Barter network. Members of the network will be a lot more likely to choose you over your competition as there will be no outlay of cash and you can instead use Barter credits. This will then increase your cash sales due to the additional exposure and through referrals.

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Your customer base can therefore be massively expanded through your network as well. While you can maintain your current base it will be possible for you to add new customers and new clients into your business through referrals and good word-of-mouth.

You can also improve on your current way of life through joining a network like this as well. You can use your barter credits for any sort of service that you want in the network. And even if it does not, you are able to recruit any other business into the network. In many cases, by doing this you may even receive a bonus for doing so in the form of credits.

If you are interested in joining a Barter network then it is probably best to do your research online. This is another benefit and you do not have to live in the state in which the network operates in order to take part.

All in all, these are some of the primary advantages that you will see if you want to use bartering for your business.

Writer Jules Vandermint describes herself as a “versitile author.” Jules enjoys writing about just about anything including previous articles about , 4 mil poly bags and clear poly bags.