Who Needs Money? Home Business Barter For Fun And Profit
When you’re first starting out on your home business journey, you’re generally a.) excited, b.) scared shitless, or c.) both. The fear generally comes from the fact that you have no clients and no money and the possibility of sleeping in a cardboard box seems quite likely.
Home business growth traditionally comes verrrrrrrrrrry, verrrrrrrrrrry slowly and then at some tipping point explodes to the point of ridiculousness. (Just ask the charming gentlemen who hang out at Men With Pens.) If you’re in the beginning phases, though, it seems like the tipping point is either so far into the future that you can’t see it or completely impossible.
This growth explosion usually comes by word of mouth. Word of mouth is awesome, but you have to have a few mouths going before you can benefit from it. There are a bunch of ways you can do this, but today we’ll tackle barter.
(EDITED: After I wrote this but before I posted it, the lovely Tei wrote on bartering at Barter: It’s What’s For Dinner. When I saw this in my feedreader I told myself I really should go back and read it before posting this piece. Then I forgot and now I look like Miss Copy Pants. Sorry, Tei. I suck.)
What is bartering?
Bartering is trading services or products for other services or products, bypassing filthy lucre altogether. I “sell” you marketing in exchange for unlimited access to your porn collection, for example.
Why bartering is cool for your home business
People, especially broke ones, are much happier to trade services than pay you money that could be used for exciting things like groceries and electricity. You show them your stuff and get on their radar and they can whore you out to all their — hopefully less broke — friends.
It works the other way as well. If you are dirt ass poor but need a website, you might be able to swindle someone into doing your website in exchange for your services instead of your money. You both get stuff you want but nobody pays a dime.
How do I get the barter party started?
There are two main types of bartering:
Interpersonal bartering is when two people or home businesses trade products or services, generally services. You do graphics, I do copywriting, we trade. Easy peasy.
Network bartering is a much more formalized process. Somebody somewhere starts a network of businesses and they create a fake cash system. I do copywriting for the guy who cleans pools. I charge him $200 fake dollars and get that fake money in my account. His account is debited $200 fake dollars, meaning he has to clean $200 worth of pools for other people in the network. These pools do not have to be mine.
This is a pretty insanely complicated process at the back end and I wouldn’t recommend starting your own network, but it’s easy to join one that already exists and hang up your little shingle.
Is it legal?
Each state/province/country has its own rules about bartering and taxes. If you care about this sort of thing then you’re likely the type of person who has an accountant. Ask him or her. If you don’t care about this sort of thing then I strongly recommend you ask nobody, your accountant or otherwise.
I’m not going to get into the ethics of cheating on your taxes because I am morally vacant. If YOU have thoughts, please post them and I promise I won’t argue.
So if bartering is so cool, why aren’t we all doing it?
Bartering is good for those just starting out. When you’re new, you don’t have anything better to do anyway. You need the work or the portfolio or the references. Once you reach a certain point in your career you don’t have a whole lot of time to work in exchange for a free haircut and some nice words from Jenni down at Jenni’s Custom Clippery.
Bartering is good for the socially aware. If you want to do a favour for someone, bartering can be a nice way to go.
Bartering is good for those who want to stick it to the man. Some people, some home businesses, (hell, some societies) exist on barter alone. If you don’t feel like making a bunch of money just so you can turn around and pay taxes to a government you don’t support, bartering is a handy way to get around that.
Bartering is good when you can’t afford stuff. When you can afford it, it’s a lot simpler to just write a check.
Bartering is good when you like what you’re getting. DO NOT get sucked into crappy barter arrangements for things you don’t like, need, or want. You will get screwed and end up totally resentful.
Bartering is good when everybody’s equal. If I charge $100 an hour and you charge $100 an hour, each hour is equal. If I charge $100 an hour and you charge $10 an hour, the hours are not equal anymore. Two hours of graphic design does not have the same market value as two hours of babysitting. The closer you can work it to resemble cash, the happier everybody will be.
Well, except the $10 an hour guy. He’s going to feel screwed but that’s what he gets for working in a $10 an hour industry.
How to score barter clients
Tell people you do it. The internet is big and the economy is down. Add it to your services page, preferably at the end. Tweet it. Tell your friends.
But won’t everybody go for barter instead of cash?
No. Why? First of all, not everybody’s as broke as you are. Second, some people don’t dig equality in client/provider relationships. Sometimes I just want to pay you to do it and never talk to you again. Barter is not conducive to that. Last, many clients can’t work with you for whatever reason. If you don’t work online it doesn’t matter how good my social media marketing strategy is for you — you can’t use it so I’m just gonna have to pay cash..
So should you be bartering your micro-business?
Generally speaking, barter only when you can’t get cash and when the product and service for which you’re trading has value for you. (How to figure out if it has value: If you have to think about it, the answer is no.) Barter can’t pay your rent but it might have a hand in paying your future rent.
I’m curious to hear your experiences in bartering? Have you done it? Have you been happy with the results? Are you doing it now? Speak! Let your voice be heard.
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Dude! You stole my barter post!
Vengeance will be mine!
Especially since you did it BETTER and all. Son of a . . .
I’m with you on the taxes, though. Tony came around and told me I had to declare it on my taxes and I went, “Yeah . . . not so much.”
Prewritten, dude. I felt bad when I read yours. Meant to go back and link in before posting but forgot because am a moron. Will fix immediately.
You don’t have to link just because I’m a whiny little bitch.
Though I can’t really think of a better reason to do it, actually. Damn, that’s depressing. I need more honeyed whiskey. And a footrub. Anyone out there want to barter for that?
US tax law seemed pretty clear when I read the income section … barter = taxable income :-(
‘course, I’m not an accountant so I’m sure there are loopholes I know nothing about. All I can do at this point is leave witty Mad Max references in my Name field …
And that, my dearest, darlingest, diggiest Dave, is why we love you so.
Yeah, my thought on the barter = taxable income thing is . . . well, bite me. How’re they going to know? There’s no evidence.
My masseuse friend gave me a massage for some copy.
IRS guy: “Hah-HAH! You are FAR too relaxed and languid, smallfry! Cough up your 18% for Uncle Sam!”
Uh, no.
I think I should have clarified - I believe the section I was reading was about established barter networks like mentioned earlier … the kind with fake money & accounts and all that traceable stuff.
Know any masseuses in North Carolina? I’ll write some copy, my back is KILLING me.
I hand out my services all the time. And then, I get…wait, aren’t I supposed to get something in return? Dammit! I knew something was screwy about the way I was bartering.
Bartering is the only thing I do. I’m just started to do Web Design and so most of my clients are friends/family.
My cousin’s website is getting me a new kitchen floor.
My dad’s website gets me his love and affection. Doesn’t add to my home’s equity as much as the previous work, but whatever.
In a few month’s I’m going to see if I can barter a new puppy that my wife wants. She wants the dog real badly and they could benefit from a nicer website.
Funny you should mention bartering. I have a post coming up in a few days of a barter deal that screwed me over. Usually I’m all for barter, but all it takes is for one person to ruin it to make you think twice about doing it again.
I don’t know how taxes work in Canada, but I can’t imagine it’s much different. It’s definitely the case that barter is taxable income both in Canada and the US.
You are a fool if you don’t declare income.
Look at it this way: if you get audited and you deducted your pool maintenance because you work so much better after a refreshing dip, that’s going to get disallowed, but if they slap a big fine on you and you have to go to court, you might be able to convince a judge or jury that you really thought it was a legit business deduction. Maybe not, but you’ve got a shot. They aren’t going to let you deduct it, but you might convince them your intentions were honest and escape the fine.
Now say that you didn’t report income. What are you going to say? Uhh, I didn’t know THAT income was income? C’mon - you know it is and nobody is going to believe otherwise.
Report all income. Be as creative as you dare on business deductions, but report the income.
I’m with Tony. Declare everything you can. Because if you declare only some and you run a web business, you’re in a high, high risk factor moment for auditing.
My accountant said: It’s not a question of if you get audited. You run an online business. You’re already on their radar because they know how easy it is to cheat on taxes. And they *will* come after you.
It’s only a matter of when.
He predicted in less than three years and closer to two.
Barter is a nice way to get what you want/need and it also helps you increase your network contacts. Good one.
Oh, by the way, you’re absolutely right on the explosion factor. It’s quite something to experience.
(Even more reason for the tax man to come after me.)
Ah, and yes. Canadian tax law is the same as U.S. tax law for declaring barter as income.
I’ve dealt with people who totally get the barter concept and people who just want to get free shit. The part about the services being of equal value has been the fly in the ointment for me. I’ve had to explain the value of my service (teaching and performing violin - not exactly low skill, right?) on more than one occasion. Bad sign. Other times I’ve had good exchanges. Just have to be heads up about people’s intentions - usually quite obvious. And Tei, I actually HAVE gotten massages.
*sigh* Barter is difficult when you provide such a niche product (ie. handspun yarn and knitting lessons). If only more people knit!
PS. Want some yarn in exchange for a social media marketing strategy?
I barter with my wife all the time.
Does this mean the tax man is coming around for some of what I got? I wonder what sort of dollar value they’d put on the services she provides me?
I guess I’ll call my accountant.
@Tei and anyone else thinking “how’s the IRS going to know, there’s no evidence?”
The person you barter WITH may be law abiding, may send in the ‘exchange of services/goods’ barter info, and that leads to you. Their tax return is the evidence.
Like the mob says: the only way to keep a secret is to kill the person you told it to or kill the person who told it to you. (Or maybe that was David Chase.)
Oh, see, that’s no problem. My bartering compadres are all my homies. We would never dream of declaring anything. We might skip taxes altogether, and run off to Sherwood forest.
Why have I not been invited to this Sherwood Forest you speak of?
Because it’s down here, and you’re up there. We have discussed this already.
Also, you know. I’m selfish with my merry men. :P There can only be one Marion, and it’s ME.
That’s good, because I’m the Robin Hood hitting the bull’s eye target on great content.
Barter with Men with Pens. We’d rather steal from the rich and help the poor. Or no, wait, we don’t steal… we… uh… we… have really nice bows and arrows.
And kick-ass katanas.
I am not merry, I won’t wear tights, and don’t even talk to me about the Puffy Shirt.
That’s because the puffy shirts get in the way of the bowstring. Believe me, it’s been tried.
You don’t have to be merry, Harry. You can just continue to be awesome.
Um, brainwaves, anyone? I can trade brainwaves… :)
Wish I could come up with something witty to say ….um, nope! Just adding that the barter system works. I’ve used it lots of times - over on the switchboards there’s a whole forum for folks looking to barter. I’ve bartered my cards for bath & body stuff …. and just last week I bartered 2 Bruce Baker CD’s for a pair of lovely earrings. I didn’t need the earrings, but then again, I didn’t need the CD’s anymore either. :-)
I just have one final thing to say and I’m very serious about it:
If you can’t pay the taxes you owe, you don’t really have a business. You have an amusement, a toy, a fictional shell that you pretend is a business.
I moan about my taxes just as much as everyone else, but I wouldn’t cheat on anything. I’m one of those idiots who actually reports Internet purchases that I owe sales tax on, and dutifully records the $20 bills that sometimes arrive in the mail as unsolicited payment for some small favor.
Barter income is income. Pay your damn taxes.
@ Tony - I’ll join you in idiotdom. I do the same.
I bartered for services a few times when I was beginning my business. I got free services at my hair salon in exchange for helping them set up and manage their email newsletter. I gained good experience doing that and was able to offer it as a service to future paying clients. I also got some really great haircuts.
I also bartered with a business coach who was just starting out. I provided her with my virtual assistant services and she helped me get my business started. She gave me some great guidance. I also gained valuable experience working with her because I learned new skills that I can provide to other clients.
I think bartering is a great system.
Umm . . . that would be yes. If I could post a picture I’d show you the mounds of bows I’ve bartered updates with one of my ecommerce clients that sells hair bows.
I keep telling her she needs to find a photographer to barter with because her product pictures are crap.
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