- What if I can't find another member to make a direct trade with?
- Will I be taxed on the trades that I make through the BarterWorks network?
- How do I file my taxes?
- If there are other businesses or individuals that I would like to see enter the system, what should I do?
- How much does it cost to join and what do I get?
- What is a Barter Dollar?
- What if I have a negative balance?
- Positive Balance? BUY Something!
- How are accounts maintained?
- How should I set my prices?
- What are the risks?
- What happens if someone with a large negative account leaves town?
- How do I avoid disputes and hassles?
- How is BarterWorks itself organized?
- Who benefits from Barterworks? Only the self-employed?
What if I can't find another member to make a direct trade with?
Trades do not have to be reciprocal!
Let's say you own a bakery shop and you need a lawyer to help you incorporate. You can look in the BarterWorks directory to find the lawyers listings. You then meet with a lawyer to discuss your needs; just as you would if this were a cash transaction. So, you need a lawyer...but the lawyer probably doesn't need your baked goods.
That's where BarterWorks comes in. You don't have to trade directly with the lawyer; instead the transaction is paid for in trade dollars. You may have earned your trade dollars by making pastries for a BW Commercial Member (i.e. cafe, restaurant)...or by baking a wedding cake for a BW Individual Member.
Will I be taxed on the trades that I make through the BarterWorks network?
How to I file my taxes?
BarterWorks is not a tax-evasion scheme like "under the table" barter or cash-only trading. It is a completely above board method of trade, but responsibility for collecting or paying taxes or reporting income information rests with the individual members and not the BarterWorks organization. BarterWorks has no obligation or liability to report to the taxation authorities or to collect taxes on behalf of its members.
According to Revenue Canada, income generated in Barter dollars is taxable if it is earned as part of your usual profession and all taxes on BarterWorks trades are payable in regular federal cash only. Hence, members normally charge sufficient federal dollars on taxable transactions to cover taxes.
Barter dollar income received for work that is not your primary source of income is not taxable. For instance, used items that you sell to other people are usually not considered as taxable income. However, for Revenue Canada it comes down to "intent" if you purchase items with the intent on re-selling them to make a profit, the profit is considered taxable income. Another exception arises when you sell an item for a profit with a value of more than $1000. For example, if you purchase an antique for $1000, then sell it for $1500, the $500 profit should be reported as a capital gain.
One last thing on income tax that you will be happy to learn is that charitable donations in Barter dollars are tax deductible!
Regarding PST and GST, any transactions that would otherwise involve these taxes must include GST and PST on the full value of the items traded. Because this applies only to individuals and businesses that are required to collect these taxes, many transactions in a BarterWorks system have no sales taxes.
For example, a bike selling for $50 cash and $50 Barter in the local bike shop would cost an additional $15 tax (PST and GST) payment. When your neighbour makes a one-time sale of a bike to you for $100 (say $25 cash and $75 Barter), no PST or GST need be paid.
If there are other businesses or individuals that I would like to see enter the system, what should I do?
BarterWorks members are rewarded for referrals. If you refer a new business or individual and they purchase a membership, you will receive B$30 credited to your BarterWorks account.
Contact the BW office:
- to refer a potential member (providing name & telephone number)
- to receive promotional material
- to speak to a BW representative
How much does it cost to join and what do I get?
When you join BarterWorks, you receive:
- a "Barter dollar" computer account to keep track of your non-cash trading.
- an automatic $250 Barter dollar, interest-free credit limit.
- a classified directory of everything offered on the system
- Opportunities to attend Market Days, Potlucks & other events
There is currently no membership fee to join BarterWorks.
What is a Barter Dollar?
A Barter dollar exists only as an account entry on the System. You can't physically touch a Barter dollar because no bills, notes or coins are issued.
A Barter dollar is considered to have the same value as a federal dollar. However, it is used only within the BarterWorks system; it never leaves the system and has no value outside of it. It cannot be converted into cash but rather is used along with cash.
What if I have a negative balance?
A negative balance represents a commitment to give something back to the community. There is no interest on BarterWorks accounts. You are allowed to trade in the negative up to the credit limit of $B250. There is nothing wrong with trading up to the limit.
When a member approaches this limit, their trading activity may be reviewed to determine if they have demonstrated the ability to earn Barter dollars. If there are concerns about their ability to repay their commitment, contact will be made with the member to determine if they need help in selling their services or to determine any circumstances that might be preventing them from earning Barter dollars. As a last resort, the BarterWorks system is empowered to insist that a member earn before spending any more. We may also remove confirmed abusers from the system.
Positive Balance? BUY something!
A credit is considered an acknowledgement for a gift or service to the community. The more you use BarterWorks, the more you and others benefit. In addition to the credit limit of -$B250, there is also a positive credit limit of $B250. This ensures that Barter Dollars continue to flow through the network.
How are accounts maintained?
The Seller of the transaction will report transaction details to the BarterWorks office by phone, email or on-line.
The messages are transferred to a computer database by a BarterWorks member. BarterWorks account statements are sent out every 2 months. While the statements themselves are confidential, we do operate on an open book policy which means that any member may enquire as to the current balance and trading activity to date of any other member. This way, members are able to check if another member is trading in good faith.
How should I set my prices?
BarterWorks members set their own prices. Generally supplies in cash; labour and profit in Barter.
Example: You might spend $10.00 cash to purchase your supplies to bake cookies. You then spend 2 hours baking, packaging and pricing your items. You decide to pay yourself $7.00per hour in Barter. Your total batch of cookies would be $24.00 - if you had 24 cookies you could charge $1.00 - 60% Barter and 40% Cash. This way you would replenish your cash for the purchased supplies and earn Barter Dollars for the time you spent making the cookies.
Set prices however you like, but be sure to cover any cash expenditures you will have to make (such as supplies or taxes) with the cash portion of payment.
Experience has shown that selling your products and services largely in Barter will make your offers more attractive and accessible to other members. Remember that Barter dollars stay in Waterloo Region and will always come back to benefit you and your community.
What are the risks?
All currencies are based on trust, and this trust can be abused. Barter dollars, however, are generally a lot safer than regular money. An essential difference between federal dollars and Barter dollars is this: in the regular cash economy, there is often a time lag between selling something and receiving the money. If the buyer declares bankruptcy or does not honour their debt, the seller never gets paid.
In a BarterWorks system, the seller receives their payment as soon as the transaction is recorded. Even if a member leaves town with a debt, the corresponding credit of the members who sold their services is still valid. Again, experience in other BarterWorks systems has shown that abuse of the system is very rare.
Because barter dollars have no physical existence, they cannot be forged, devalued, stolen, or lost. Also, there is no point in hoarding or loaning out Barter dollars because no interest can be gained.
What happens if someone with a large negative account leaves town?
First, a negative balance is a commitment, not a debt. Members in the negative have not borrowed money or taken it out of circulation; they have actually issued Barter dollars by buying or selling goods or services. A negative Barter dollar balance represents a community obligation to give value for value received at some time in the future.
Second, if someone with a negative balance leaves, no ONE person is left waiting to be paid as in the case of a default on a loan. Instead, the members of the system as a whole absorb the cost. If someone with a commitment leaves town, they don't create a shortage of money. As long as the majority of BarterWorks members continue to participate in good faith, the community economy can pick up the slack for members who can't (at the moment) or won't fulfil their commitments.
Third, BarterWorks facilitates community regulation of its own currency through social control. In a community situation where reputation and word of mouth are everything, there is little incentive to act in bad faith and those who do are easily identified. A member may know the balance and trading activity of any other member. The simple knowledge that commitments are a matter of public record is usually sufficient incentive to encourage people to give as well as take from the system.
Lastly, the BarterWorks administration reserves the right to freeze members' accounts, set limits to account commitments or impose terms and conditions of continued membership in those cases where it is warranted. It also monitors holders of extremely high positive or negative balances with a view to counselling them on how to earn or spend Barter dollars.
How do I avoid disputes and hassles?
Please remember to agree on exactly what you are buying, delivery/completion dates, the total cost, and the percentage paid in Barter dollars before you agree to a trade. Put the details of all major deals and professional contracts in writing.
If you're unsure about a BarterWorks member's reliability or quality of work, check for references as you would for a cash trade or call the BarterWorks Line to check their trading balance and activity. These precautions should ensure satisfactory service and payment.
How does a member leave the system?
If you are going away for an extended period of time or wish to stop trading temporarily for any reason, simply ask for your account to be made 'Inactive.' This means that no charges will be levied, notices or ads listed or mailings sent to you until you request that your account be reactivated.
Members leaving the system for any reason will have their accounts closed. If they have an account in commitment (i.e., with a negative balance), they are required to settle their account by bringing it to zero by paying their commitment in federal dollars.
Any member wishing to leave the BarterWorks system whose account is in credit must donate their credit to another member within two months or forfeit that amount. The BarterWorks system does not exchange federal dollars for Barter dollar credit.
How is BarterWorks itself organized?
The BarterWorks office is located at 58 Queen Street South and is staffed part time by several paid staff and volunteers. BarterWorks is a collaboration between its members hosted by the Working Centre.
Who benefits from BarterWorks? Only the self-employed?
Any business, non-profit organization or individual may join. People who live in the area served by the System will find it most practical.
- Businesses get a wider customer base, inexpensive advertising, and more sales.
- Non-profit groups can get donations in BarterWorks and even issue receipts for tax purposes (ask us for details).
- Individuals can earn extra income by turning hobbies into paying activities and offering articles for sale.
Just ask yourself: What do I like to do? What have I done that other people have benefited from? BarterWorks members offers such services as baking bread and pies, knitting sweaters, providing child care, raising extra vegetables or eggs, providing car rides, consulting, shovelling driveways, renting out trucks or tractors. BarterWorks systems also include services such as graphic design companies, restaurants, dentistry, etc.