Get what you need for less by bartering with other companiesLong before the words "cash, check or charge" became a part of every transaction, we paid for our goods and services through barter. Want someone to baby-sit little Og? Your neighbor will do it — if you help her wash her saber-tooth tiger skins down by the river. Now, once again, barter has become a credible way for small businesses to exchange goods and services — no filthy lucre required.
- Helps you save money.
- Lets you use up overstock or products that aren't selling well.
- Lets you swap services over and over again (they're a renewable resource)!
Join a barter exchange
Do-it-yourselfYou don't have to join a fancy barter service to do some old-fashioned swapping — just approach a business that sells what you need and offer a trade.
Trade safelyAs with any business, bartering has its share of scammers. Try to talk to the trader on the phone, ask for photos of the product, request references and don't be afraid to ask for a contract.
Beware the tax manIncome you receive from bartering is treated exactly as any other business income by the IRS — which means you have to pay taxes on it. The value of the bartered goods or services is determined by their fair market value — so even if you barter a $5 product for $500 worth of legal services, you pay taxes on the actual value of what you received.
IRS Topic 420: Bartering Income explains how bartered goods and services are taxed and which forms you must fill out at tax time. The IRS offers more description and examples in Publication 525: Taxable and Nontaxable Income.
- To persuade businesses to barter, explain how your offer will benefit them; for example, if a Web designer creates a site for you, you'll design and publicize a contest to bring in more business. Stress that a swap will help the owner attract bring in more paying customers — at no cost to them.
- Some barter exchanges will offer you a line of credit so you can start buying even before you earn trade dollars.
- Before you barter, consider what the total cost of the exchange will be to you, including shipping, any barter exchange fees, and the actual cost of the products or services you're trading.
- When listing your offer on a barter exchange or barter website, make it appealing. Create a descriptive headline, use conversational language, be as specific as possible, and stress the benefits the buyer will receive. If it's an online exchange, use keywords in your headline that you think potential buyers may use to search for your product or service.
- Keep records of your barter transactions to make filing your taxes easier. Hang on to contracts, receipts, and other records in case you have to have to go through an IRS audit.
- Before joining a barter exchange, make sure they have members who are offering the products and services you're looking for.
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