Barter For Accounting Services
Nationwide Accounting Services understands that paying hourly fees for accounting services may be difficult, for new and small businesses. In some instances, Nationwide Accounting Services will provide accounting and tax return services in exchange for certain goods and/or services Barter or trade arrangements must be made in writing.
Our firm will consider accepting the following in exchange for accounting services, advertising, California land, antiques, political, or historical, memorabilia, stock in small corporations, construction remodeling services, use of office space in high quality buildings, high quality jewelry, and restaurant gift certificates. Since our need for goods and services will vary over time, please call to discuss the barter of your goods and/or services for accounting and tax return services.
When goods or services are accepted in exchange for accounting and tax services, both parties exchange their services based upon the fair market value of the services provided. The IRS requires that the fair market value of goods and services traded must be included in the income of both parties.
Why We Barter for Accounting Services
We often accept bartered goods and services for accounting and tax return services because we want your business, and we know that you will save money if you can trade for our professional services. We don't want a temporary shortage of cash to prevent you from acquiring the services you require.
Barter Examples:
- A restaurant owner trades credit for monthly accounting services. Since his food cost is only 30% of the menu prices, the owner effectively receives a 70% discount on the accounting services provided.
- The owner of a lot, located in the desert, exchanges it for accounting and tax return services worth $2,000.
- The owner of a desert land parcel worth $30,000 barters it for $5,000 worth of accounting services plus a $25,000 note secured by a deed of trust.
- The owner of a desert land parcel worth $30,000 barters it for $5,000 worth of accounting services plus a $25,000 note secured by a deed of trust.
- A furniture store owner exchanges inventory for accounting and tax return services. Since the store owner's markup is 50%, he effectively saves 50% on his accounting services.
- A contractor, who is not working at full capacity. Barters his services in exchange for services.
- The owner of a fine jewelry store exchanges merchandise for accounting and t return services. Since his actual cost is only 40% of retail, her accounting fees are effectively discounted by 60%
- An individual who inherits political memorabilia and antiques, barters some of them for accounting services.
- The owner of a successful business who wants to franchise it, trades corporate stock for the accounting services needed to franchise the business.
- The editor of a small local newspaper, who wants to start his own local newspaper, barters stock and advertising for help in raising the initial capital.
- The owner of buildings in Los Angeles exchanges empty office space for accounting and tax services.
- A closet design and installation contractor trades his services for accounting services and cash payment.
- The owners of a co-op direct advertising mailing franchise, exchanges advertising for billing and accounting services. Since his cost is 60% of retail, the effective cost of the services are reduced substantially.
Glossary of Barter Terms
Barter Leverage
Barter leverage is the difference between the cash dollar amount invested in a product or service traded and the value received in the exchange.
Barter Systems
Barter Systems are also called trade exchanges and credit clearing exchanges. All act as third party record keepers to facilitate trade between members. They all utilize a trade credit as a medium of exchange between participating members.
Common Currency
Common currency refers to a universal medium of exchange used by organizations that engage in barter.
Corporate Barter Companies
Corporate barter companies work with large and small companies to assist them in purchasing inventory, equipment, services and other things. with trade credits.
Cost of Goods
This is the direct cost required to replace that which is sold.
Cost of Trade Dollars
The direct cash cost incurred to use one trade dollar which is usually the company's own internal cost of goods and/or services.
Deficit
Refers to spending more trade dollars than what is earned.
Excess Capacity
Excess capacity exists when demand for a product or service is less than the amount that can be supplied resulting in a reduced profit. This excess capacity is ideal for barter transactions. An example is when a hotel trades an empty room for some needed product or service.
Fixed Expenses
The expenses of a company that remain the same regardless of their sales volume. These expenses generally include rent, fixed labor, real estate taxes, and general overhead, including utilities.
Gross Profit Margin
Sales less cost of goods sold. Companies with high gross profit margins generally are more receptive to bartering in high volume. Companies with low gross profit margins are generally less likely to barter in large volumes.
Non-Reciprocal Trade
Refers to indirect exchange between two or more parties, accomplished through a third-party barter exchange.
Reciprocal Trade
Reciprocal trade refers to a trade where two parties exchange products or services of equivalent values. This is not common which is the reason barter exchanges exist.
The Tax Equity and Fiscal Responsibility Act of 1982
The law that granted third party record keeper status to barter exchanges. Mandated that all barter exchanges file a report annually with the IRS that verifies the gross amount of barter sales made by their members, and required barter exchanges to provide 1099B reports to each member that made barter sales in the prior year.
Trade
Trade refers to the cashless exchange of goods and/or services.
Trade Dollars
Trade dollars refer to the medium of exchange used between barter exchange members in place of cash. The IRS and FTB value trade dollars the same as U.S. Dollars.
Trade Velocity
This refers to the speed at which trade dollars are turned. Trade velocity is measured by how many times trade dollars are earned and spent in a client's account within a defined period of time.
Variable Expenses
The expenses of a company that increase with increases in production or sales, such as direct labor, shipping supplies, freight, and additional product costs.
Wholesale Buying Power
Refers to the ability through bartering to sell products or services to new customers at a profit.
Nationwide Accounting Services
818-991-9019