With the premiere of the new television show, Barter Kings, on A&E airing this week, I have a feeling that we’re going to start hearing a lot about the practice of bartering. Far from being something new, bartering is a system of obtaining goods and services without the exchange of money. It has been around for centuries; it’s what people did before we had a monetary system in place. In today’s economy, where individuals and small businesses might not have the financial resources available for all of the services that they need, bartering is a way that you might be able to afford to “hire” professionals that you otherwise wouldn’t. The way it works is that you would offer your services in exchange for someone else’s. This could be done informally, but in order to prevent resentment and one or both parties feeling taken advantage of, a contract of sorts might be a better idea. The commonfig philosophy is that each of us should give abundantly when we’re able to; with that said, if you plan on making barter a way of life, some sense of order and accounting is necessary. Here are a few tips on making barter work for you: Consider Joining a Club Barter clubs exist for the purpose of matching up people who are offering and looking for services. If you plan on bartering for many different items or services, this might be your best bet. With a barter club, you may not be constrained to giving person A an hour of your time and receiving an hour’s worth of work from the same person. Instead, you may be able to trade an hour of time helping person A for a service or product from person B. The club would take care of keeping track of who gives what and in matching seekers with providers, and vice versa. LendingTree has compiled some tips for those considering this option. Join Forces With Another Entrepreneur If you anticipate needing a particular service over and over again, you may be able to find a provider who is willing to accept your services as payment for a set period of time. When you collaborate with another entrepreneur, bartering is a likely outcome, as in a cooperative and collaborative relationship, money may never change hands. With this type of arrangement, you could simply trade hour-for-hour or dollar-for-dollar each week or each month. One benefit of this type of arrangement is that you’ll be establishing a good relationship with another professional; a risk, however, is that one person may feel as though he is contributing more. Keeping close tabs on time and money spent would be prudent in the beginning weeks or months of the arrangement; as you grow to trust one another, this may be less necessary. Make One-Time Deals on an Individual Basis Simply letting others know that you’re available for barter may put you in contact with a lot of interesting people that you otherwise wouldn’t have met. For example, if you’re a dentist, you might allow patients to make you offers for trade. A hairdresser may offer you free haircuts for a period of time in exchange for cleanings and exams, or a local eye doctor might offer to provide your kids with free eye exams if you fill her kids’ cavities. You can also approach others; if you need a new roof and you have a roofer as a patient, you might ask if he’d do the work in exchange for the root canal and crowns that he needs. The formalities that you take depend on your relationship with the service-seekers. In most cases, you should have a contract in place. If you are considering bartering, you must ask an accountant to help you determine what types of bartered services need to be reported to the IRS; although money doesn’t exchange hands, you might still need to declare the worth of the services or products that you procure. The IRS answers this question on its website, and a tax professional will be able to give you individualized advice. Have you successfully bartered goods or services? We at commonfig would like to hear about it!
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