This found in the business section of Associated Content:
In difficult economic times, small businesses and individuals can have trouble making ends meet and having enough cash on hand for emergencies. Bartering is an age old method of trade that has gained a new life in today’s economy. If your community doesn’t already have a barter network,consider setting one up. Here are the basics to get you started:
Introduction to Community Barter Networks
Community barter networks serve many purposes. They can be an effective marketing tool to get your company’s name out in the community. They can also ensure that community businesses can support themselves and thrive in their own local areas. They can also help underemployed individual develop new skills and find new venues to sell their goods and services.
Bartering has been used for thousands of years (I’ll trade you one lamb for four of your geese) but it has an inherent flaw; a simultaneous coincidence of needs. This means in order to get what you need, you have to find someone who needs what you have. This can make trading difficult. An organized barter network can facilitate barter trades by allowing trades to occur in the network without a direct offset. This is done by using a virtual currency that you can use to purchase items or services anywhere on the network. This allows members more freedom to trade but requires a significant amount of record-keeping by the administrator.
Attracting Members to Your Community Barter Network
Once you have considered starting a barter network, the next step is to gauge interest in the community. Prepare a list of local businesses and email or telephone several to see if they would be interested in joining. You may have to explain what a barter network is and how it works and “sell” the benefit of membership. Once you have the commitment of several businesses, it will be easier to attract more. As new members join, poll them to find out which goods and services they would most like to see in the network and approach those businesses next. Let them know that there is already a demand for their business within the network.
When the barter network becomes more established, you can print flyers about the network that members can hand out to customers or take with them to business networking events. Eventually, businesses and individuals will approach you about joining.
Accounting for Barter Transactions in the Network
A barter network is only as good as its accounting records. There are many ways to account for transactions. Larger networks can purchase customizable software that members can access to report their transactions. Smaller networks generally report their transactions by email to the administrator and entries are made in a manual or computerized ledger system. Keep all records up-to-date so that members know what their barter balance is at all times.
Tax Implications of a Community Barter Network
Many people are under the mistaken impression that bartering their goods and services is a great way to get around paying taxes on revenues. This is not the case, however. The IRS treats barter transactions the same as if they were completed in actual currency. Barter revenues must be reported and business-related barter expenses can be deducted. A barter network must provide a 1099-B to each member at the end of the year and report the transactions to the IRS.
Setting up a community barter network is a substantial amount of work but can be very rewarding for entire communities. Have a look at what other barter networks are doing before setting up your own and copy the best pieces from each. Read all that you can on barter economies and, above all else, have fun in setting up your own barter community.
