What You’ll Discover in Bob Meyer Fast Start Barter System
Bartering is an age-old practice-Old practice that is especially common in small communities …. File Size: 99.5MB
Bob Meyer – Fast Start Barter System
Just like you did it as a child, your children will do it at school. Remember? If you didn’t like what you found in your lunch box – say, a liverwurst sandwich or a carrot – you traded it for something more appealing. You might be lucky enough to walk away with some cream-Ring Ding filled or a scarred rubberball. Your kids are, naturally, even smarter. They’re trading for more than their lunch, probably CD-ROMs, computer programs and the like; after all, it’s the value-Performance charged-Mindful ‘90’s – just like the “real” Bartering is a huge part of the world of business-Time. Bartering has become an important business tool for thousands, from restaurants to multinational corporations.-Billions-These corporations are dollar-based and trade their products or services in exchange for other non-monetary assets. Even accountants do it. Companies trade what might otherwise be unused capacity to get a frequently used item that would otherwise have cost cash. James Dee Johnson & Co., an eight person accounting firm in Oklahoma City, barters to mow its lawn, advertise its services and provide dental care to its entire staff. “We’ve utilized bartering through the economic ups and downs since 1983,” said the firm’s owner, James Dee Johnson.
Bartering is an age-old practice-This is an old practice that was common in small towns. However, it has become a highly sophisticated enterprise supported by a large network of third parties.-Party players. Maybe infused with the spirit and trade-Many business executives and owners have made bartering a profitable part of their businesses.-Billions-The dollar industry is a global phenomenon. To it champions, bartering has become a vitally important tool for maximizing a company’s return on its assets while building a network of potential cash customers as well as trading partners. Bartering’s role in the performance strategies of businesses may have grown in significance during the recession of the late ‘80s and early ‘90s, when more and more businesses sought ways other than direct sales to maintain production and the inflow of supplies. Companies are “starting to understand how they can use their products and services as a form of capital to buy things they need,” Bob MeyerEditor and publisher of Barter News, a quarterly trade publication.
“We operate a 70% capacity, but with barter it’s 90%,” Shyka Cohen, the owner of SCE Realty, is a small New York-based real estate management company. In exchange for sending out its maintenance crews to paint and install sheet rock in other companies’ buildings, SCE earns trade dollars through Barter Advantage Inc. is a local barter exchange that purchases business services such as printing and employee benefits.
UNLIMITED SELECTIONS
There are many connections that bartering can offer. To name just a sampling; Hotels unlock their rooms for advertising space in newspapers and magazines; printers roll their presses in exchange for legal services; manufacturers trade widgets for shares of another company’s stock; accountants offer tax preparation services for seats on airplanes; and employers of various kinds barter to provide incentives for employees, such as vacations at exotic resorts. “One of the nice things about bartering is that it enables you to be more generous with employees,” Ken Mara, President of Worldwide Security Salespeople, met with their fourth meeting.-quarter sales quotas, he noted, will receive Florida vacations, including airfare and luxury hotel accommodations – all paid for through bartering.
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There are no set rules for who can trade what. Much is done on an informal, bilateral basis, often depending on what’s available that willing traders need. Owen Freeman is a CPA who practices as a sole practitioner in Anchorage. He expanded his business by performing payroll for a local restaurant. This cost $175 per month. Freeman and his wife eat out at the restaurant regularly and then add the payroll costs to their monthly bills. It works well for everyone, according to the CPA. “I usually end up owing them money every month,” He said. “It’s good food.”
No one knows how much of direct bartering takes place in bilateral and unrecorded arrangements. However, there has been an increase in organized bartering through hundreds or third-party brokers.-The number of party exchanges has increased dramatically in recent years to nearly $9 billion in the U.S. alone.
According to the National Association of Trade Exchanges, (NATE), “retail” bartering – involving products and services traded through third-Party exchanges are mainly between small and mid-sized businesses.-Size companies with annual sales of $10 million and less-The 1994 value of the company grew from $1.3 billion to $1.8 billion in 1992 to $1.8 billion in 1994. “Corporate” Bartering is generally defined as the trade of bulk inventories by companies that have more than $10,000,000 in annual sales. It was $7 billion last year.
Although corporate exchanges have a lower value than retail exchanges for goods, retail barter is more popular in terms of actual transactions and provides greater networking opportunities for its members. Although corporate exchange members may deal only through the exchange operator, and may not be aware of the other members, the typical retail exchange allows members to connect with hundreds of other member companies. Members can interact with retail exchanges and connect with up to 250,000 companies nationwide. “The biggest advantage (retail) barter offers is getting new business,” Tom McDowell is the executive director of National Association of Trade Exchanges. Trading partners can often form a deeper relationship with one another after they start bartering through a trade platform. This may include referrals to one another for cash business. “When someone joins an exchange, they’re exposed to hundreds of thousands of potential clients.”
The industry could be poised for astronomical growth. The Internet and other innovative software will likely enhance the interaction between exchanges and clients in the near future.
Bartering has been recognized as a reliable way to do business. Third, although it still faces its fair share of critics.-Now, party bartering through reputable platforms is considered a way to keep everything under control and within the government’s tax laws.“There were some shoddy barter exchanges in the past, but most of those have been weeded out,” said Kevin Andersen, a partner of the Salt Lake City accounting firm Andersen Andersen & Strong, which audits the books of a local trade exchange. “Now bartering is a credible industry.”In fact, the federal government gave the barter sector a significant boost in credibility with the Tax Equity and Fiscal Responsibility Act of 1992. This act includes a provision that allows barter exchanges to be recognized as third parties.-Parties that keep financial records, such as banks and stock brokers. “It made our industry go from an underground economy to a legal form of business,” Lois Dale, president Barter Advantage Inc. New York “Members are not fearful of doing anything wrong.” Added Meyer, “Essentially, the barter industry has become an agent for the IRS.”
Third-party retail exchanges operate in a fiduciary role as a conduit between the exchange’s trading members, providing them with a form of currency, or “trade dollars,” Members can use their credits as cash to purchase any other products or services from other members. The number of trade dollars a member receives is based on the value of the products or services it’s offering to trade; the value is determined by the members who are the buyer and seller. Since trade dollars are the same as cash, they can be used for buying and selling within an exchange network. “the IRS looks at them as if they are cash dollars,” Mike Hartman, partner in Chicago accounting firm Kach Hartman Ltd. is a Chicago trading member.-based Illinois Trade Association. According to him and others, any business expense that can be tax deducted in cash form is also exempt if it’s handled as barter.
BALANCING Act:
One of the biggest challenges facing members of barter exchanges is maintaining a balance of trade dollars that is in the company’s best advantage. A good barter exchange will assist its members in maintaining a trade dollar balance within a safe limit.
Even accounting firms that participate in barter exchanges caution that companies need to carefully consider whether bartering is right. “Bartering isn’t for every organization,” Tom Burrill is a CPA and prepares the Seattle business tax returns.-Cascade Trade Association, Inc. – a barter exchange based on base
For those that do barter, the National Association of Trade Exchanges suggests that a good rule of thumb is to use barter for about 5% to 7% of a company’s business.
Members should also ensure that they conduct business transactions with exchange members with the same scrutiny as any other business transaction. While many exchanges will limit their membership to only reputable businesses, traders must make the final decision.
ACCRUAL ACCOUNTING METHOD
Bartering accounts are treated equally by the IRS, regardless of whether they are accrual- or cash-based.-Based accounting. The agency recognizes trade dollars as income as soon as they are credited to a company’s account, even though the company may not receive products or services for them until a later date. However, if a trade is done for a business-related product or service through an exchange results in a negative balance of trade dollars – in other words, more products or services were received than paid for with trade dollars – the trader can claim a tax deduction for a business expense without having spent any cash.
It is important to remember that timing is crucial.
The ideal time to start bartering depends on each company’s ability to maintain a large cash flow. “I wouldn’t recommend barter for someone just starting out in business, unless they have sufficient capital backing,” Jack Schacht, President of the Chicago-based Illinois Trade Association with almost 4,000 members, said that it may be the largest retail barter firm in America.
Companies that don’t otherwise have the capital can barter to grow their business. “If you’re on a limited budget and have to wait a year to print a brochure, bartering can give you that extra budget, said Dale. She added that when an accountant member of her exchange took on a partner and needed to quickly develop new business, she put him in touch with four companies that have since become regular accounting clients. “He increased his business without having to go out and sell himself,” She spoke.
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Experienced traders will carefully monitor their level of bartering throughout the year, making sure that their balance of trade dollars doesn’t get too far on either the positive or negative side.
On the other side, traders may build up trade accounts in anticipation for a big or seasonal demand. Worldwide Security will have tens of thousands in trade dollars at the end the year to prepare for a major advertising campaign, which is usually run in the first quarter. “When I’m planning to put on a big blitz through a radio campaign, I start banking credits,” Mara said that Mara has been trading with 10 broadcast stations.
MIXING CASH WITH BARTER
Retail barter exchanges allow transactions to be made completely in cash. A rare exception would be transactions that are unusually large, such as for advertising worth $1 million. If a deal can’t be closed with that much in trade dollars, the two parties might agree to mix cash into the deal. “If companies cannot offer their products at 100% trade, they cannot be part of Cascade,” Steven White, President of White Brokers, said that cash is only included in 5% to 5% of trades. Cash is often included in corporate barter exchanges where trades are usually done on a larger scale.
NATURAL FOR ACCOUNTANTS
Bartering is growing at a great time for accountants. Their diversification into new practice areas coincides well with a need for many types of business service. “Accountants and attorneys are the bread and butter of barter exchanges,” McDowell said, “Moreover, “As CPAs become more diversified, it brings more value to them in exchanges.” He stated that many CPAs become involved in barter trades after learning about them from clients. Once you are involved, “CPAs become some of our best members,” McDowell stated. “They often have clients with excess inventory, and they recommend them.
Professional services firms also make good prospects for joining exchanges because their fixed operating and capital costs don’t usually increase through bartering. “We’re a natural for accounting firms,” White.
BARTERING IN FUTURE
Bartering, like many other industries, is under pressure to be more efficient, more widespread, and faster than ever before. Along with large barter companies, the National Association of Trade Exchanges is looking at modern technology and software programs to ensure that bartering continues to play an important role in the future of bartering.
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