Bartering Away the Recession
As the daily economic news continues to paint a bleak picture of the health of American business, consumers seek out new ways to make the dollars stretch until the end of the month. A very old way of doing business is once again gaining popularity for its frugality and simplicity. Barter has been around ever since the beginning of commerce, only becoming more scarce as money took over as a means of trade. In the past several years, however, barter has become fashionable and organized barter networks have popped up all over the country.
Barter networks bring together those who have goods and services to trade and allow them to do so with pseudo-cash. These “barter dollars” accrue in members’ accounts and can be used to purchase other available items or services offered on the network. The bartering can be done face-to-face at barter meetings or, increasingly, on the internet.
Bartering helps the under-employed use their skills for compensation from customers who might not otherwise have the cash to spend. It then lets members purchase from any other member on the network with the “money” earned.
Before jumping into a barter network, or even a more informal barter arrangement, it’s important to understand how the IRS views the barter economy. According to Uncle Sam, if you earn “barter dollars” or receive another good or service for your services, it’s taxable income to you and has to be reported on your tax return. So, for example, if you are a plumber and trade $500 worth of plumbing services for $500 worth of lawn care, you have to include the $500 you earned on your taxes. The lawn care company would also have to claim the $500 they earned. You are both also required to charge and remit state and local sales and use taxes on the transactions. The only exception to these requirements is if the nature of the transaction isn’t commercial. So, for example, if you offer to help your neighbor clean out his gutters on Saturday if he’ll help you paint the house next week, that is not considered commercial and is not taxable unless you both do those jobs for a living. Barter networks make the reporting of income easy as they will issue you a 1099-B for the barter income earned.
Barter is a useful and creative way to make money in today’s economy if you follow the rules.
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Tags: barter, cash, economy, Frugality, personal finance, recession, Saving, taxes, unemployment
This entry was posted on Thursday, February 5, 2009 at 10:22 am and is filed under Frugality, Misc, Saving Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
2 Responses to “Bartering Away the Recession”
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Paul Bocheck Says:
Bernz, thank you for this nice and timely article. My name is Paul Bocheck, I am President of new startup called BarterQuest. We have developed a technology that allows trades from all over the world barter over the Internet – as you mentioned, bartering is getting a lot of attention and we provide users with the platform where they can trade goods, services and use of real estate. You can register on our beta site: http://www.barterquest.com.
-paul
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Franklin Says:
Awesome article..
There are also some cool articles on trading on Pete William’s blog fhttp://www.preneurmarketing.com/category/bartercard/
Bernz, your Barterquest looks interesting – how’s it going ?
Did all the PR help?
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