Businesses around the world utilize bartering tactics to save money and share resources. Bartering allows business owners to swap goods and services with other business owners who need or want what they provide. Whether swapping home cleaning services for brochure designing, or hair coloring with bookkeeping services, bartering is an advantageous practice for business owners, if done correctly.
Work With a Trusted Network
Two entrepreneurs can set up a bartering arrangement on their own, however, many business owners opt to become members of local and national bartering networks. Know who you're doing business with by researching bartering networks you're considering joining. Visit the International Reciprocal Trade Association website for a list of barter exchanges. You can also check out BizXchange, International Monetary Systems or contact your local Chamber of Commerce for local recommendations.
List Your Needs
Part of entering into a successful bartering exchange includes knowing your needs. Sit down and make a list of the types of services you'd like to acquire in exchange with other business owners. This will help you identify service providers who can truly meet your needs.
Decide What You'll Offer
Take a look at the products and services your business offers to determine which ones you want to use in a barter exchange. Take the cost of goods into account for products, and consider how long it will take you to complete service-related tasks as you decide what to offer.
Set Understandable Terms
Once you find a business owner to exchange services with, get the deal in writing and set understandable terms that both parties agree to abide by throughout the course of the exchange. Define the exact services being provided, the time frame for providing them, where the services will be rendered and how the goods will be delivered. These written terms will help you in instances where the other party fails to fulfill his end of the deal. For extra protection for high-end barter exchanges, have a lawyer review the details and give you feedback on the terms.
Consult With a CPA
The goods and services you exchange through bartering need to be reported to the Internal Revenue Service. Bartering exchanges will provide you with tax documentation, which discloses the dollar values for your deals, however, if you barter outside of an exchange service, you need to keep track of the details. By hiring a certified public accountant, he can walk you through the process of reporting your exchanges as taxable income.
