How Barter Can Build And Strengthen Your Business

by Anita Nickerson

If you are a self-employed individual and the proud owner of your own company, you know first hand the sacrifices that have been necessary, and how much blood sweat and tears you have had to invest into your business in order for it to succeed.

That’s why within the hearts of entrepreneurs everywhere, there runs a thread that binds every independent business person together, in an on-going quest to find new ways of streamlining costs, improving productivity and increasing revenues all at the same time. There are various ways of going about this, and may include something as simple as an attempt to keep up to date on what best practices are being followed by our competitors. Indeed, most wonder if there’s a secret floating around that we’re not privy to, or a magic formula we somehow need to get our hands on. While I wouldn’t describe barter as a magic formula, I would venture to say that for the many thousands of independent business owners across North America who are successfully using it on a daily basis to reduce operational costs and increase sales and revenue, it is without a doubt a very efficient, unbeatable and cost effective tool that still remains somewhat of a mystery to many business owners.

Exactly what is barter?
Simply put, barter is a cashless medium where an exchange of goods and services of equal value between participating parties takes place. What this means is, if I am an accountant and you operate a yard maintenance service for example, and you agree to cut my grass and tend to my garden for a price of $600, I then in turn will offer you $600 worth of accounting services, as opposed to a cash payment. Over the course of time barter has been in use in every area of the globe for many thousands of years dating back to ancient times. Today, barter is a world-wide eight ($8,000,000,000) billion dollar a year industry. Nowadays with federal and provincial government regulations in place, the barter industry is carefully managed and overseen by third party barter exchanges. In return for providing services that includes the tracking and recording of each individual transaction, and then providing members with an itemized monthly account statement, an exchange charges a nominal cash fee.

It’s not often you able to purchase an item or service for a measly 6¢ (cents) on the dollar
On the ITEX Toronto barter exchange for instance; this fee amounts to 6% of the total value of every transaction. This is done as a ways and means of covering in-house administration costs. It’s not often you able to purchase an item or service for a measly 6¢ (cents) on the dollar, or 94% below retail. The process of becoming a member of an exchange is generally simple and straightforward. Typically, a business owner contacts the exchange and after filling out a one page application form, submits it for review. Applicants generally are approved on average within a few business days. Once your membership is activated, you’re free to use all of the inherent features and enjoy the many benefits which come with it. Members quickly discover they are able to maximize barter in ways that enhance their business and quality of life easily and seamlessly through a variety of added value programs and services. Thanks to the convenience of the Internet, the business of barter buying and selling is carried out exclusively on-line and over the telephone. Each day members receive up to several ‘hot sheets’ sent directly to their e-mail inbox. These bulletins list and highlight a wide ranging variety of goods and services being offered by various other members, and oftentimes will include items which tend to be scarce at the best of times, like concert and professional sporting event tickets.

The benefits of barter extend far beyond discounts
While many appreciate the chance to purchase goods and services ranging from everything from soup to nuts, there are endless items and services guaranteed to appeal to virtually every taste and desire. The list is practically endless, but some of the more popular ones are accounting and legal services, office supplies, vacations, clothing, restaurants, IT, antiques, cosmetics, and advertising among numerous others. However, as extensive as this line up is, the benefits of barter extend far beyond discounts as members are offered sales and marketing opportunities designed to build their business through the acquisition of new customers and clients.

This barter professional is your very own business development representative
The first benefit extended to a new member is the welcoming message they receive from their trade director. This barter professional is your very own business development representative who is charged with not only promoting your business to thousands of other like minded members, but also actively works on your behalf in an on-going effort to increase the sales of your goods and services.

A trade director also searches the network securing the items members are looking to purchase, whether that’s on behalf of their business, or for recreational use. As well, they keep a sharp eye and lookout for business referrals which then can be passed on to members. According to the Canada revenue agency, barter transactions are legal commercial undertakings and are classified in the same way cash transactions are. In other words, as with any business activity where there is a buyer and a seller, all sales and purchases acquired using barter are regarded as either earned revenue or an expense. Consequently, there are little or no tax advantages associated exclusively with the use of barter.

Members should also be aware that most of the time transactions will have government taxes such as GST and PST included within the purchasing price of items acquired over the barter network. However, a small proportion of members will keep this separate and ask that federal and provincial sales taxes be paid in cash by a purchaser. The decision to include or exclude federal and provincial taxes when purchasing is entirely left up to each individual member.

Subsequently, barter sales are recorded as revenue, and barter purchases can be considered an accrued business expense subject to the same tax rules and requirements as cash transactions. With this in mind, accounting and tax specialists encourage members that they carefully store their monthly barter statements, and include them with other official receipts and business records at tax time.

Barter is a phenomenon which continues to gain momentum, as more and more business owners recognize that it is a cost effective tool and inexpensive way to grow and strengthen their business. This is a widening trend which is sure to continue well into the foreseeable future.



Anita Nickerson is a CAWEE member and President of CATS, Canadian Accounting & Tax Solutions, and helps small businesses save thousands of dollars with strategic accounting and tax solutions. She can be reached at 416-898-0700 by email at anita@catsolutions.ca Michael Muzzin is president of ITEX Toronto, Canada’s largest barter network. He can be reached at 647-477-5414 by email at michael.muzzin@itexcanada.net