New online sites are making it easier than ever before to swap goods and services to get items you need without spending a dime.
Bartering has been around since long before money became the exchange of choice some 3,000 years ago. While money remains king, bartering is making a comeback.
“We actually recommend that Canadians make barter a small part of their budget, about 5%, which allows you to put that money towards paying off your debts,” says Marta Nowinska, founder of Swapsity, a Toronto-based on- and offline swapping community for consumers. “Why spend more when you can barter something you already have for something you need?”
To use Swapsity, you must first sign up for a (free) membership. You then create a list of the products or services you have to trade (everything from used “stuff” to dancing lessons and dog-walking services), and a second list of what you want in the swap (such as a weekend getaway, restaurant coupons or someone to stain your back deck).
The system will then match you up, showing how many people in your vicinity are looking for your service or product. Members can check other traders’ trust levels through an online feedback system, says Nowinska. Then it’s up to the individual to contact the others to see if they want to go ahead with the trade.
The website provides potential barterers with an introductory guide to swapping, FAQs and information on some of its swap meets. Swapsity boasts that in the last year, its events have saved Torontonians $200,000, recycled 30,000 items and swapped more than 25,000 items.
Bartering works for businesses, too
Small businesses barter as well, but often use a different system involving “barter dollars,” where clients are not locked into a straight swap.
John Porter, president of Tradebank in Stoney Creek, ON, says businesses may barter to move idle inventory or make use of available time. “Rather than dipping into their bank account to buy something, it can be much more cost-effective for them to trade their already paid-up inventory or fill in downtime to get what they need. It creates better cash flow for them,” says Porter.
With Tradebank, there is a one-time membership fee of $495. Tradebank guarantees the business owner $5,000’ worth of new business within the first year or it refunds the fee, says Porter.
Then Tradebank designs a custom ad for the business owner, posting it to its online directory and promoting the business owner through its newsletter. Businesses can then start to build up their “Tradebank dollars.”
Sometimes, one request can lead to a number of different deals. For example, Porter recalls a recent trade involving a furniture company with an inventory buildup that wanted its parking lot paved. Tradebank brought in about 50 clients who bought the furniture for $150,000 Tradebank dollars. Tradebank then approached a paving company that agreed to pave the lot — if it could get a high-end hot tub. So Tradebank partnered with a hot-tub company in Regina that sold them the hot tub for Tradebank dollars, and passed that along to the paving company.
Bartering and taxes
When it comes to business-to-business trades, taxes are recorded and paid like a regular transaction, says Porter. Taxes are not usually charged on one-to-one consumer swaps, however, unless the service or product is generally part of the swapper’s regular business. If you’re interested in bartering your regular business skills, Nowinska suggests you check first with your accountant. For tax guidance about bartering, see the Canada Revenue Agency bulletin, Barter transactions.
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