The concept of bartering predates currency. However, currency isnt easy to come by these days and some business owners are trading their goods or services instead of dealing only in cash.
According to Craigslist, a network of online classifieds, bartering ads have doubled in the past year. Craigslist attributes the increase to the declining economy.
It is possible for people to barter just about any item or service on Craigslist, but bartering isnt just for individuals.
About 400,000 U.S. companies are doing business-to-business bartering, resulting in $3 billion to $4 billion in transactions annually, according to the International Reciprocal Trade Association.
Going back to the basics with bartering can help a business owner cut down on personal and business operating costs . Whether youre trading services or goods, bartering can help your bottom line and even generate new customers.
While Craigslist is a free service that can be used for bartering items or services directly with another person or business, networks have also been created in cities across the country in which business owners earn credits that can be redeemed with any other business in the network.
For example, Sallys Salon can give Al of Als Automotive a haircut, and then redeem those credits for lunch at Daves Diner. Dave can then go get an oil change at Als Automotive.
Better Business Bureau offers the following advice to small business owners who are thinking of bartering:
Dont Forget Uncle Sam: While no money is exchanging hands when bartering, there are still tax implications for both parties. IRS rules vary according to the services and businesses involved in the transaction, but generally speaking, both parties will need to report services received as income at the fair market value.
Know the Deal on Bartering Networks: Bartering networks often charge annual or monthly administrative fees and might even require a cut from every transaction. Read the fine print and understand the conditions of membership including the true cost before joining a bartering network.
Evaluate Your Needs: A wide range of items and services can be bartered online or through bartering networks comprised of businesses such as auto shops, salons and even professional services from lawyers and dentists. Before signing up for a network, evaluate your business and personal needs to see if they match up with the local services available.
Barter with a Trusted Business: BBB-accredited businesses agree to uphold the standards of BBB for honesty, customer satisfaction and dispute resolution. Always look for the BBB Accredited Business seal when bartering with other businesses.
Go Local on Craigslist: Deal with local businesses or individuals when answering an ad on Craigslist, and regardless of the reason given, never wire money as payment through services such as MoneyGram or Western Union unless the recipient can be trusted.
For more small business advice on making ends meet in a tough economy, visit www.bbb.org.
Kelvin Collins is the president/CEO of Better Business Bureau of Central Georgia & the CSRA Inc. Refer questions or complaints about a company or charity directly to the BBB at (800) 763-4222, www.bbb.org or by e-mail to email@example.com or firstname.lastname@example.org.