In another article about the proper and right uses of barter, three specific exchanges and organizations are named: IRTA, BizXchange, and Hudson Barter. The author does a great job of explaining exchanges and some basics around the proper use of barter and the tax implications of barter. The full version is reproduced below:

Bartering for Business
By Eve Tahmincioglu

Ralph Sigler, owner of Carolina Packaging & Supply Inc. in Raleigh, North Carolina, recently moved into a bigger warehouse and needed two steel front doors, signs and a new security system. But Sigler didn’t want to lay out the cash, especially since business was off about 30 percent in the early part of the year.

His answer was bartering, something Sigler has turned to often in the past 10 years as a way to get what he needs for his business, which employs eight people and had sales of $1.6 million last year. “You can minimize your costs by bartering. It saves cash,” he says, adding that business is now up 20 percent.

Of course, there are plenty of things to know before diving in, whether yours is an established small business or a startup.

During tough economic times, many small firms can find themselves cash poor and with time on their hands. With bartering, business owners can get many of the products and services they need to run day-to-day operations by offering their services or products in return. That’s basically how this ancient economic system of trade works, and more and more firms seem to be getting in on the bartering action.

According to the International Reciprocal Trade Association, the main bartering industry group, barter spending is up about 15 percent this year.

It makes a lot of sense for startups, especially because one of the biggest issues for business owners initially is getting the customers and cash they need, says Andrew Whinston, a University of Texas at Austin professor who has studied bartering. “Bartering is a way to get your product out and at least get something in return,” he says.

Whinston offers some things to keep in mind:

- The Internal Revenue Service treats barter dollars just the way it treats real dollars.
- Get everything in writing.
- And, remember, “The ideal is still cash.”

Indeed, most experts suggest you only barter 5 to 10 percent of your annual sales. “Every business has their costs of goods,” explains Jason Richards, spokesman for BizXchange, a bartering network based in Seattle. “If you do too much [bartering], that can negatively impact your cash flow.”

You can barter informally with business owners and professionals you know in your area, or you can opt to join a bartering network like BizXchange, which has seen its membership rise last year by 23 percent to 1,600 members, and trade volume between firms jump 37 percent.

“If you don’t have a lot of connections, an exchange can be a good way to start,” advises Whinston. Bartering exchanges, he says, can facilitate the search because they have established lists of firms that want to barter and you don’t have to do a direct exchange of goods or services as you would if you engaged in bartering on your own. Some exchanges charge per transaction, while others charge monthly flat fees.

How exchanges work:

- With an exchange you have a network of companies, so you can provide your wares to a firm and then get credit via the exchange to obtain the goods or services from another company in the network that matches what you need.

- If you get products or services through the network, you end up basically with a debit against your account and will be credited when someone uses your services.

- The value of any product or service is typically the same as it would be if you were paying cash, so if you would charge $100 for a widget, that’s how much it’s worth when bartering.

Kevin Brown, co-principal of Elmsford, New York’s Hudson Barter Exchange, which has more than 173 members, points out the marketing benefits of a bartering network. “When you join the exchange you immediately are introduced to 170 companies, most of which are not doing business with you,” he says about his service, which charges $275 for a lifetime membership and $10 a month for marketing and administrative fees.

Scott Gorky, owner of Atlas Party Rentals in Mount Vernon, New York, which has 25 employees and sales of $2.3 million, has been a member of Hudson Barter Exchange for about a year after unofficially bartering with firms in his town for much longer. With sales off about 7 percent, he says bartering has been a great way to make up for the shortfall.

Earlier this year, he used the exchange to find a photographer who could take photos of his glassware for the company’s Web site, and it worked out well. “We were able to save about $1,500 on photography.”