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Council of Better Business Bureaus
BBB Small Business Advice: Save Money by Bartering
September 30, 2010

BBB Small Business Advice:  Save Money by Bartering: Image of business persons in a meeting The concept of bartering predates currency, however currency isn’t as easy to come by these days and some business owners are seeing the benefit in trading their goods or services, instead of dealing in cold hard cash. Better Business Bureau offers the following advice for small business owners on how they can benefit from bartering.

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 individuals to barter just about any item or service on Craigslist; but bartering isn’t 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 in a tight economy,” said Steve Cox, BBB spokesperson. “Whether you’re trading services or goods, bartering can help out your bottom line and even help generate new customers.”

While Craigslist is a free service that can be used for bartering items or services directly with another person or business, local networks have also been created in cities across the country where business owners earn credits that can be redeemed with any other business in the network. For example, Sally’s Salon can give Al of Al’s Automotive a haircut, and then redeem those credits for lunch at Dave’s Diner. Dave can then go get an oil change at Al’s Automotive.

BBB offers the following advice for small business owners to consider when researching the possibility of bartering:

Don’t 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 may 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, it’s important to evaluate 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.