Wednesday, May 9, 2012

How to Get What You Want by Bartering Without Paying Taxes

If you're thinking of starting a business, one of your challenges may be to obtain expertise in areas that you nothing very little about. They may include how to create a website, how to set up an online shopping cart, and how to deliver your product. The lack of know-how can be a vexing problem because new businesses seldom have the resources to pay for these services. So, what can you do?

The obvious thing would be to figure out how to do it yourself. This is something that many entrepreneurs do. Some of them have a talent for fixing things. Others spend an inordinate amount of time searching for and learning about the solutions, and then try to put them into practice. Unfortunately, things are seldom as simple as they seem. In addition, few people are able to explain what they mean in that are as simple as they claim.

So, what can you do? If you need the expertise of another, but can't afford the time or the money to get it, what choice do you have?
The easy answer is to barter for it. Bartering has been around for longer than money itself. It's the means of exchanging your skills for someone else's. On the British program, the Antiques Roadshow, you still occasionally hear stories of how someone came into the possession of a painting or a watch because a second party needed to pay a bill, but didn't have the money.

That illustrates the principle of bartering, but it's also useful for understanding how to barter without having to pay taxes on it. Let me say at this point that you should not rely on this article to help you avoid pay taxes. You need to seek the advice of an expert in tax preparation. But, it's worth thinking about what bartering is considered to be taxable and, by default, which isn't.

The American Internal Revenue Service describes taxable bartering with an example, that of a plumber doing repair work for a dentist in exchange for dental services. This is the key to the entire issue. If you exchange your core activities for the core activities of another, then it's considered to be taxable. By implication, however, if you provide a product or service to someone else that is not part of your business, then it isn't considered to be taxable.
So, how could you obtain that degree of expertise without using someone who sold it as a product or service? And the answer to that is to look*for people who have multiple skills that are outside of those they use in their business.

For example, how many people do you know who build websites as a hobby, but whose full-time work is in a company? How many people do you know who work on their own cars, but work for a firm that is outside of the automotive industry.

And what about students. They're primary "job" is to study; but many of them have talents in a wide range of areas. Look for the hidden talents of others, and think about how you could have your needs met by trading their non-core skills for your needs. Likewise, think about how you could help others in a similar way.

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