Should Small Businesses Barter Online?

There's a growing online community engaged in small business bartering. Entrepreneurs strapped for cash and lacking capital can trade goods and services, propping up their businesses without exchanging funds.

The community separates itself into barter exchanges, which are usually for-profit businesses. "Barter dollars" are earned when a trader provides a good or service. Those dollars can then be used to purchase a commodity from another trader.

This system could be great for some businesses, but is it right for you?

It depends on what you need and what you're offering.

If you're looking for services that can be provided remotely, online business bartering might be useful. A web designer, accountant, or marketing guru doesn't necessarily need to be in-state. A carpenter needs to live nearby.

If you're looking to get rid of (or acquire) seasonal goods, a bartering exchange might be just the place. New York businesses need heavy coats, not swimsuits come November. A small retailer in California might be willing to make a trade.

There are other considerations, too.

If you barter online, you're going to need to choose the right barter exchange. Each is different, so you'll have to research rules and fees. Reputation and management are important criteria, too.

And you can't forget those pesky taxes.  Business bartering may translate into income or capital gains. You'll need to keep track of all trades as well as value each service and good. The additional recordkeeping can be quite the headache.

So if you choose to engage in online business bartering, talk to your tax attorney first.

Related Resources:

• Is Barter Right For Your Small Business? (Forbes)
• Small Business Tax Information FAQ (FindLaw)
• Bartering for Small Biz: Deciding What to Barter (FindLaw's Free Enterprise)