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Bartering for services... NEED ADVICE!

post #1 of 19
Thread Starter 

Hello! I recently had a professional photographer friend take photos for me. In return I offered to bake for his upcoming wedding. Unfortunately, both of us are new to bartering so we didn't hash out the details. The photoshoot was 4 hours + time for editing. I provided everything myself. What would be fair: A. to trade based on the VALUE of his work vs the VALUE of the baked goods where i would provide everything ie true retail cost for either. B. trade based on time spent, 10 hrs of photo taking & editing for 10 hrs of baking; in addition, they would provide all the supplies. THANK YOU

post #2 of 19

retail cost is what I have used. 

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post #3 of 19

I agree with Leah...

 

Whatever his retail cost would have been for the shoot is what your retail cost of a cake would be covered...

 

If his retail was $500 and he picks out a $700 cake, you credit him the $500 and charge him the $200... 

post #4 of 19
Quote:
Originally Posted by AAtKT View Post
 

I agree with Leah...

 

Whatever his retail cost would have been for the shoot is what your retail cost of a cake would be covered... If his retail was $500 and he picks out a $700 cake, you credit him the $500 and charge him the $200... 

 

I agree, too. It's a great arrangement for saving money with a wide variety of services. If you will continue bartering, be prepared that (for the most part) using this pricing method with professionals is usually easier than with hobby/business folks.

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post #5 of 19
I barter for services often. I use retail worth. For example I made a cake for my massage therapist and got a 1 & 1/2 hour massage. The beauty shop next to me writes up their coffee and then I get treatments/products for that value. The list goes on.....
post #6 of 19

This reminds me of the plumber who came to fix a tiny problem in our bathroom (took him about 3 mins) & who then said when my husband wanted to pay him "no payment, I'll take a cake instead" I was so angry. Bartering is not always the best way to go about caking..............

post #7 of 19
Quote:
Originally Posted by Claire138 View Post
 

This reminds me of the plumber who came to fix a tiny problem in our bathroom (took him about 3 mins) & who then said when my husband wanted to pay him "no payment, I'll take a cake instead" I was so angry. Bartering is not always the best way to go about caking..............

 

I don't think you have to take him literally. He was just using an expression in a thoughtless way. And you may have gotten the better end of this deal. Plumbers charge a lot and there's usually an hour minimum.

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post #8 of 19

It was serious, he called me up that night to tell me what cake his wife had chosen! You might be right though, I hadn't thought of it in those terms, I was just put out at his nerve.

post #9 of 19

Use retail cost. You have to declare bartering activity as income on your taxes, so you need to keep everything aligned with what you'd be charging regularly.

post #10 of 19
Quote:
Originally Posted by costumeczar View Post
 

Use retail cost. You have to declare bartering activity as income on your taxes, so you need to keep everything aligned with what you'd be charging regularly.

 

Killjoy...  :wink:  But you're only talking about real businesses, right? Because hobby/businesses have a different set of rules, right?

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post #11 of 19
Quote:
Originally Posted by MimiFix View Post

Killjoy...  icon_wink.gif   But you're only talking about real businesses, right? Because hobby/businesses have a different set of rules, right?
Ha!
"I can do that, because this is my sandbox and I've got the bullsh*% shovel." ~Dianne Sylvan, Author and Lunatic
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"I can do that, because this is my sandbox and I've got the bullsh*% shovel." ~Dianne Sylvan, Author and Lunatic
Birthday Cakes
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Birthday Cakes
(2 photos)
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post #12 of 19
Quote:
Originally Posted by MimiFix View Post
 

 

Killjoy...  :wink:  But you're only talking about real businesses, right? Because hobby/businesses have a different set of rules, right?

 

There is only one set of rules.  Whether a real business or a hobby business, you are required to report any income you generate. If you earn income from your hobby it is taxable. The only question is whether you are able to deduct your expenses.

 

The exception to the bartering reporting requirement is if the arrangement is "an informal exchange of similar services on a noncommercial basis." Discussion of this phrase emphasizes the arrangement is a casual exchange between individuals i.e. the exchange was not bargained for and thus there is no obligation to give or receive things. To be an informal exchange the plumber that said he would take a cake in Claire138's example has no expectation of receiving that cake as payment. But based on the limited description provided he did---hence it is not an informal arrangement.

 

In addition, this example also probably runs afoul of the "exchange of similar services" requirement. One might be hard pressed to explain how fixing a pipe is a similar service to a decorated cakes--especially given the description of the plumber showing up for 3 minutes to fix a tiny problem. On my view, at least, even if retail costs are similar, the services provided do not appear to be similar.

 

Even if an individual claimed their cake making was a hobby they still generate income by selling their cakes and would be required to report that income. If they then enter into an agreement to exchange a cake for plumbing services, they have entered a formal agreement and thus have to report it is an income. Put another way being a hobby does not preclude you from paying taxes on income generated from the hobby including bartering as it is considered income.


Edited by gatorcake - 2/4/14 at 4:21pm
post #13 of 19
Quote:
Originally Posted by gatorcake View Post
 

 

...being a hobby does not preclude you from paying taxes on income generated from the hobby including bartering as it is considered income.

 

Have you been following some of these threads, gatorcake? If you're talking to me, then you're "preaching to the choir" because I fully understand (and teach) the legalities of running a business. But if you're talking to the majority of hobby/business owners, well, good luck.  

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post #14 of 19
Quote:
Originally Posted by MimiFix View Post
 

 

Have you been following some of these threads, gatorcake? If you're talking to me, then you're "preaching to the choir" because I fully understand (and teach) the legalities of running a business. But if you're talking to the majority of hobby/business owners, well, good luck.  

 

Not talking to you---how about talking with you? 

post #15 of 19
Quote:
Originally Posted by gatorcake View Post
 

 

Not talking to you---how about talking with you? 

 

Great example of a great attitude! :)

 

Liz

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