The down economy has a lot of in a money squeeze, but you don’t always need cash to get the products and services you need to run your business. Bartering is another option. “In a time of tight cash flow, bartering can be extremely useful for a ,” says Max Barger, an attorney with Paley Rothman in Bethesda, Md. “You may find a larger economy and selection of goods and services.”

But bartering is more complicated than simply trading services with another small business. Take care to adhere to the tax guidelines, says Barger, who has many clients who don’t realize that exchanging goods and services is taxable–even when no actual money is exchanged. “You report on your income tax return just like you report income,” he says. “A barter transaction that involves an exchange of services is generally reported on Schedule C or C-EZ of form 1040. However, reporting is case-specific.”

Before you barter, make sure you research how your transaction will be taxed. For example, the owner of an apartment building who exchanges free rent for goods received should report the barter as rental income on Schedule E, which is different from other types of bartering, Barger says.

If you’re not sure how to barter for business, sign up with a bartering organization that can connect you to other businesses that might need your goods or services. “But above all, keep good records, and report any barter transactions on your income tax return,” he says. ”If you don’t, you may be guilty of tax evasion, and nobody wants to find themselves in that mess.”

Incoming search terms for the article:

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.