Some small businesses, faced with reduced cash flows in these economic times, are turning toward a bartering system to get by. Anyone with skills or goods can swap services or items without ever exchanging money as pointed out in the Business Week article, “Barter Exchanges Catch On As Credit Tightens“.
As mentioned in the above article “some 400 barter exchanges in the U.S. and Canada generate transactions worth $4 billion a year”. This statistic is according to NATE, the National Association of Trade Exchanges. Barter exchanges such as NATE are fee based membership groups which connect businesses willing to barter goods or services.
If you’re thinking this sounds like something to consider, just be aware that income taxes are still owed on an exchange of service. According to IRS tax requirements: “Barter exchanges, whether Internet based or with a physical location, are required to file Form 1099-B for all transactions unless certain exceptions are met”.
Well bartering has existed a thousand of years ago. I think it may work for us these days.
Wow. I did not that bartering system still have taxes to comply.
Is it not time to cut taxes instead? Click my name if you want to read a blog post on this issue.
My guess is that the barter system was used in great scale in the former eastern countries.