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MARVIN GAYE & TAMMI TERRELL "Ain't no Mountain
The New World of Bartering
arter -- the cashless exchange of goods and services -- is enjoying new popularity. Hundreds of Internet sites and barter exchanges around the country let you swap for everything from travel accommodations to dental care. Even people who think they don’t have anything worth bartering might be surprised to find their skills -- perhaps a knack for gardening or interior decorating -- in demand.
Here’s how to get started...
How it works: You join a low-cost online barter service, where you can list or respond to offers. Or you can barter on your own by personally contacting people whose goods or services you need.
Best for: Individuals who want to trade occasionally for a specific item or service, such as trading babysitting for lawn services.
Sample savings: A high school tennis coach needed to pay for his daughter’s wedding. The coach went around to local businesses and offered to trade tennis lessons for goods and services. In this way, he was able to get all the flowers for his daughter’s wedding and the alterations to her wedding dress.
Important: Make sure you and your trading partner are bartering at the same value level. You don’t want to trade your goods at wholesale, while he/she is charging you retail prices.
Also, many professionals are willing to barter their labor, but they still might need to charge you in cash for certain fixed costs, such as paying their staff or buying raw materials.
My favorite sites: www.craigslist.org, click on your state, then “Barter” under “For Sale” (free)... www.web-barter.com ($2 to answer a listing/free to place a listing)... www.targetbarter.com ($2.50/transaction for items presumed to be valued under $25... 10% of the transaction for trades valued over $25... free to place a listing).
Drawbacks: You’re limited to trading with people who live nearby -- an optician in New York has little to offer a landscaper in California.
You do all the leg work -- evaluating the quality of goods and services.
There is no governing body with a code of standards or ethics and little recourse, other than small-claims court, if something goes wrong.
TRADE EXCHANGE BARTER
How it works: A barter exchange acts as a broker, a third-party record keeper and, in cases of disputes, a mediator for your transaction.
People who use the service are called “exchange members” and trade in “credits.” (One credit typically equals $1.) Members receive statements monthly. Traders (referred to as “brokers”) who work for an exchange can tap into an international network and put together deals for almost anything.
There are barter exchanges nationwide. You can research them as you would any business. Check the Better Business Bureau for complaints. Make sure the exchange has been in business for at least three years and belongs to a governing body, such as the International Reciprocal Trade Association (585-424-2940, www.irta.com), which has a code of ethics, a peer review board and a certification program for traders.
Resource: To get a state-by-state listing of exchanges, go to www.barternews.com and click on “Barter Contacts.”
Best for: Small-business owners or people looking to trade regularly and save cash for non-tradable items and overhead.
Sample savings: A New England radio station wanted to do an on-air promotion for which it needed 2,000 pairs of socks. The station was willing to barter $1,000 worth of advertising airtime. A trade broker for a national exchange found a local barter exchange in Kansas that had a sock manufacturer among its members. That manufacturer didn’t need radio ad time in New England, so he traded him the socks for a white-water rafting trip offered by one of the exchange’s other members, a travel company in Maine. The travel company used its exchange credits from the deal to purchase the advertising airtime from the radio station.
Drawbacks: Higher costs, including annual dues of $120 and up, and transaction fees (for example, a fee of 6% of the transaction value) each time you buy or sell. You generally need to offer at least $500 worth of goods or services to open a barter account.
According to the IRS, barter “income” is treated the same as cash income. You must list the fair market value of goods or services received through barter on your federal tax return, Form 1040, Schedule C.
For federal rules on barter income, call 800-829-1040 or go to www.irs.gov