Chickens for Check-ups? Not exactly!

Thanks to my nephew David who originally pointed this out to me. And thanks to him again as I once again see that no one in my family really pays attention to the unique and, quite honestly, economy boosting business my husband Barry and I have. We operate a barter exchange, And for the purposes of this commentary I will clarify barter vs. trade and you will see why my tag line is “If you think you know barter…Think again!”

Every business seems to trade (I differentiate barter and trade although it is the same…but stick with me on this) A CPA does a lawyer’s tax and in turn the lawyer writes contracts and collection letters for the CPA. A painter may in fact paint the doctor’s house in exchange for annual physicals for the painter’s family. That is trading, one-to-one, which is legal and yes it is taxable. It is recognized by the IRS as a transaction that has value or income and is taxable. The lawyer and CPA, if doing services for each other’s businesses could in fact cancel out. And let’s face it – no one who trades ever reports it on their taxes.

This is where Lowden, and yes Reid and so very many other people have no clue what is going on in the real world. First of all, no one is bringing chickens to the doctor. And BARTER is not the same as BARGAIN. Barter is the regular retail price of something – cash or barter it must be the same.

Back to barter – Formal bartering is recognized by the IRS. That’s right Lowden – if I bring a chicken to the doctor it is doubtful the doctor is going to declare its value on his income taxes. Not so with true bartering. As a member of a barter exchange, member A goes to Member B for service and pays in barter dollars, not cash. What’s a barter dollar worth? In the US it is worth one US dollar. In Europe it is worth a Euro..you get the idea. I call it an alternate currency. Going back to trading – what if the doctor is a vegetarian? What if I don’t carry chickens in my wallet? For a business, to fill up down time or to move products off their shelves has been difficult, although it is getting better. By offering up what a business has for barter dollars, a business can move product, fill in downtime, etc. And get something tangible in return – a barter dollar. Yes a chicken is tangible, but our doctor is a vegetarian, remember?

So now you can take the barter dollar and spend it with someone else who accepts those barter dollars. Barter is becoming a small community currency. And with the power of great software (yup, mine & Barry’s other company along with our “son” Luther – www.BCLSoft.com) small barter exchanges can barter with each other.

So how does this help the economy more than Lowden’s chickens for checkups? First, the barter dollar is a currency which means you can take it from one person and spend it with someone else. Second, in the US it is reportable income. That’s right, as an exchange we are charged with completing and sending 1099B forms to all members and reports to the IRS. It’s taxable income. The chicken? Not so much.

So there you have it – how barter IS saving our economy, how SMART businesses have been bartering for quite some time and how true barter (not chickens for check-ups) is generating more tax dollars simply due to the increased revenue the barter exchange members are experiencing.

Any questions?