We have briefly mentioned the concept of barter exchange sites in a previous small business article as a way for small businesses to save money. We thought it might be a good idea to expand on the concept and highlight how small business users are increasingly using barter exchange sites to do business.
What Does Bartering Do For You?
Bartering can allow small business owners to use their goods or services to get other goods or services in their area, without spending money. It can be a great way to leverage your talents, save money, decrease waste, and get things done that you may have been putting off for financial reasons.
How Do Barter Exchange Sites Work?
Barter exchange sites are often set up as networks to connect people in local areas. They may focus on a city, state, or region. Often, sites are membership-based and sorted by industries and professions. Some sites may charge an initial joining fee, a small recurring membership fee, or they may charge percentage-based fees for transactions.
A common misconception about bartering is that it is simply two people or businesses that exchange goods or services, rather than using currency. Transactions on barter exchange sites certainly do not have to be direct trades between two parties. Sites generally issue “barter dollars” or “trade dollars” in cases when one party may not have a need for the goods or services offered by the other party. In these cases, the site will issue the value assigned to the good or service provided based in US dollars. This allows businesses to participate in barter transactions at any time by spending the site-issued credits toward these goods or services.
It should be noted that any trade dollars, barter dollars, or other denominations, are considered taxable income. The value of any barter transactions is measured based on the fair market value of the goods or services exchanged. Barter exchange sites are required to issue users a Form 1099-B on an annual basis.
If you have a small business and are in need of a service, there may just be someone on your local barter exchange sites that can help.