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Bartering Makes Good Business Sense

Barter is a system of exchange by which goods or services are directly exchanged for other goods or services without using money.

I believe that bartering can open doors for entrepreneurs so I recently joined a local barter exchange called Bay Bucks. . There are hundreds of small local businesses that belong to Bay Bucks, and collectively, these businesses offer every possible good or service one can imagine.

About a month after listing my services on Bay Bucks as a Life Transitions Coach, another member of Bay Bucks, specializing in website development, used Bay Bucks to purchase one of my life transitions coaching packages.

In turn, I am very low tech, and my website was in need of a major overhaul, so I decided to buy services directly from her company using the Bay Bucks I had earned from her purchase. (A quick look around my website, and you will see the help I have been blessed to receive.) barter-a-skill

Although, a complete history of the bartering system is not the intent of this article, the history of bartering dates all the way back to 6000 BC, long before money was invented.

Besides the fact that no money is involved, another advantage is to bartering is that there is flexibility. For instance, related products can be traded such as portable tablets in exchange for laptops. Or, items that are completely different can be traded such as lawn mowers for televisions. Homes can now be exchanged when people are traveling, which can save both parties money.

When bartering, you do not have to part with material items. Instead, you can offer to swap a service for an item. For instance, if your friend has a laptop that you want and their car needs work, if you are good at fixing cars, you can offer to fix their car in exchange for the laptop. The value of items being traded can be negotiated with the other party. You can buy items by exchanging an item you have but no longer want or need. barter-week-italy-960x1363

A disadvantage to bartering is that at times, it is easy to think the item you desire is worth more than it actually is, while underestimating the value of your own item.

I believe the barter system is a creative way to connect and collaborate with and other people and businesses in the local community and beyond.

Bay Bucks hosts mixers every couple months where local business owners can meet, but actual exchange of goods and services is done via the website.

On Bay Bucks, members don’t necessarily trade with one another directly like we did. They offer their goods or services, and in return, can take advantage of any other members’ goods or services.

Bay Bucks receives a small commission on trades. Every time someone buys a service on Bay Bucks, Bay Bucks receives seven percent of the value of the service in cash. Every time someone sells a service, Bay Bucks receives five percent of the value of the service in cash. These are the only costs.

Barter exchanges in the USA are considered taxable revenue. According to the IRS, “The fair market value of goods and services exchanged must be included in the income of both parties.

How do you feel about bartering? What kind of experiences have you had with it? Does your community have a local exchange like Bay Bucks?

33 Responses to Bartering Makes Good Business Sense

  • Meredith says:

    That is such a great idea! I do barter some with people I know, but would love to expand to more people and services/goods. I will look into whether we have a similar website in my area.

  • Eileen says:

    Bartering was the way our forefathers started their trade. I have never tried it though, because in this day and age, it seems that money is all that people are after. I will look into the idea more and probably consider starting one in our community.

  • The idea of barter is always food for thought. It can make good sense, but I don’t think it should become your default way of doing things if you both genuinely need and desire what the other has to offer. However, if they turn out to be not very good or not to your liking, you can end up with goods and services you don’t want.

    • Local businesses join Bay Bucks as a way of doing business along with their regular business of exchanging goods and services for money. If their goods and services are not up to par, it hurts their reputation as a local business, whether those goods and services are bartered for, or paid for in cash. Aside from eliminating cash, there really is no difference. I agree that it shouldn’t be a default way of doing things, it is simply another way of doing things. Thanks for your comment, Sue.

  • bolaaka says:

    Bartering is a great idea. I’ve not tried it before but will consider the concept.

  • Bartering is fine with me, but some don’t know how to make it fair. I’ve been told to use invoices just like in paying transactions (for proof of income).

  • Welli says:

    Great idea in today’s world where one may have accumulated things that they do not need and does not have cash to purchase what they need. It is a very practical system I will say.

  • Bartering is a good way to get some of those services or items that you might need. It is a great way to get things done that you might now have wanted to pay for with money. It also is a great way to get people to really know what you do.

  • Bartering is a great idea for young people just getting started or budding entrepreneurs. You’re not only exchanging services but you’re developing a network of associates who can help each other throughout their careers.

  • Tim says:

    I have always found bartering to be a lot of fun and it seems to me that on most occasions everyone comes away both happy and with something they want which is not always the case with money.

  • I’ve never participated in bartering, though the concept makes a lot of sense. I think I might be willing give it a try, though it’s not something I’d jump in to without doing my homework, and that includes the tax implications. You have got me thinking though so thanks for the inspiration!

  • andleeb says:

    Barter exchange has been here for years and in my country, my uncles and aunt tell me they used to study by giving wheat grains, and in return their teacher used to teach them, and there were many more exchanges in the open market. It is nice to exchange something that is useful for both, without money matters.

    • With regard to exchanging something useful for everyone, without money matters, I couldn’t agree with you more. I love what you share here about exchanging education for wheat. Thank you for your comment, Andleeb.

  • Pat Amsden says:

    Bartering sounds like a good idea. One started here a few years ago but didn’t last. One of the problems was figuring out the taxes (apparently the tax department was interested)

  • Ken Dowell says:

    I’m a big fan of barter but I have a lawyer friend who was suspended for accepting a TV as payment. So don’t make any deals with lawyers.

    • That’s very interesting, Ken. Of course I am providing a service rather than goods, so the rules may be different. In any case, I would imagine the person who furnished the TV as payment was not penalized.

  • Arleen says:

    Bartering has existed for years and many countries use this practice.. As for bartering on the internet, I think it is hard to evaluate what each are offering, so the offering is equal. I also do not know how you list a price in order to pay taxes. I think it would be difficult. Doing it locally might work better.

    • You list your price just the same as a regular retail sale involving cash. You only pay tax if you have a positive balance at the end of the year. The website keeps track of all transactions and balances. Thanks for your comment. Arleen.

  • I think bartering sounds kind of fun, as long as you don’t sell yourself short. I haven’t done it before and not sure if there is a bartering group in my area, but with checking into. Tax issues are never fun to figure out though.

  • It is funny how something old is new. Maybe bartering is in our nature, this is why it once was the major form of commerce before money, and now it is making a comeback.

  • jacquiegum says:

    I have friends that have done some bartering, but the personal and face to face kind…not on these exchanges. I think it’s a great idea, but I sense more complicated than meets the eye:) An example might be if one or the other parties feels like,in the end, they didn’t get a fair exchange?

    • Thanks for your comment, Jacquie. Considering this exchange is in the local community, I would imagine that anyone who joins the exchange would provide a good service, otherwise their reputation and business will suffer. Businesses join the exchange for exactly the opposite effect.

  • I did my first barter this past week. I am not a big fan. I would rather have the money in exchange for my services and I do not want to deal with the tax implications. For some, it’s a great way to go, for others, not so much. I think being educated about the whole barter system is a necessity before diving in.

    • My understanding is that the tax implications in the U.S.A. are the same as when dealing in cash, and that with a zero balance or a plus balance in your barter system account at the end of the year, you don’t have to pay taxes. That said, I am new to this and still learning. I don’t completely understand the local system I belong to yet, but I do love it so far.

  • lenie5860 says:

    I think barter is a great way to get products or services. There is a club in our neighborhood but I don’t belong. I just don’t have the energy to give back and that’s one way bartering doesn’t work. But if I was a lot younger, you bet, I’d be a member.

  • patweber says:

    In general I love bartering. As Catarina said, it has a history. It’s how business was done until money came on the scene. I think money gives us little leverage unless we are good negotiators. It’s been years since I’ve bartered in exchange for business. Our group didn’t last long. If it grows, you can count on our USA government, taking a bite of it. But I would think in the way you described it, it’s good business sense.

  • Beth Niebuhr says:

    People have always bartered, I think. I don’t do it often but have occasionally. It’s important to remember the tax requirements.

  • You are right, bartering has existed throughout history. Long before money. Great idea to set up a barter exchange website.

    One of my actually built up a fortune doing barter deals.

    The only catch could be the tax authorities. So find out exactly what the rules are before doing anything. Most likely the worst places to be when it comes to the tax authorites are the United States and Sweden. They seem to be able to tax anything under the sun:-)

  • Carolyn Field says:

    Bartering is such a wonderful idea, and such a great way of getting past the financial barriers that so often exist. In fact, putting finance to one side and getting on with what really matters! Individuals would be able to give of their talents and resources in exchange for those of others – I really like it. Thank you for a great post.

    • I echo your sentiments Carolyn. Bartering makes exchanges much more personal since no money is involved between the people trading their gifts and simply giving what they have to offer.

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