I have a bride who I am bartering a wedding cake with for some work she is going to do for me. My DH would like this "legal" as he thinks we still need to pay taxes on it and such. Does anyone have a bartering contract they use? I want to make sure we both (the bride and myself) get the right service and we have the agreement all lined up in writing...
Thanks for any help!
My accountant told me that bartering is not legal so I'm not sure how you would do that legally. Of course, we were just talking about me trading cake for other services so I guess if you paid the full amount of income tax on the price of the cake then maybe you could do that. That's a tricky tax question though so I will leave that to someone with more experience than me
yeah well I bartered something in the past and I didn't know it was not legal. We didn't sign any contracts, I just trusted them becasue I knew the bride could be trusted. I made a mistake, I made their cake 6 months I still don't have their side of the bargain fully.....I told my husband no matter how good it sounds and how much we think we trust the person, never to barter again. Contract or not even it it's legal
I would state exactly what you are makeing, use one of your regular bride contracts with the price completely figured out as if she was paying cash. When it comes down to the payment you simple make a notation for the work she is doing. She in return should give you a full invoice of everything that she is doing and a price as if you were paying cash. The on the payment line write a note about the wedding cake.
I would make a cover letter stating that so-in-so will be makeing the cake described on page 2 to be delivered on (date) in exchnage for the work stated on page 3 to be completed by (date). If one or both parties need to cancell this barter contract it must be done so by (date-about 3-4 weeks before the wedding due to buying supplies). If the cancellation occures on (date) or later the other party who cancells agrees to pay 100% for the invoice and forfits the barter agreement. (or something like that...)
I would have each part involved sign all three pages (cover, cake and work invoices) and make sure it is signiture garenteed, not notorized. you can always have a lawyer draw up the papers and split the cost of the fees.
as far as taxes, I would think you could write it off, you still bought the stuff to make the cake-but i think the labor part may end up being exempt. I dont know, ask your accountant on that one!
If they receive your services first, make sure you get a receipt that you paid $XXX(value of the cake) for their services in advance (yet to be rendered) as well as a "due by" date. That way, if they don't follow through, they are obligated to give you a refund for the value of the cake. If you want this to be legal, you do have to pay the taxes on it.
I believe barter is legal so long as you pay taxes on the value of the goods (if it's a service, I believe those are not taxable). I have not verified this, but it's what I believe to be true. I have bartered in the past, and find it's a great way to bargain. I recently bought a table off of Craigslist and didn't want to pay more than $200 for it - but they wanted $300. I offered the difference in cake (which is actually only about $10 to me), and they accepted.
(Just Googled it: I was right. http://www.u-exchange.com/bartering-legalities )
lots of typing errors in that, sorry....
another thought. i would try to have her do her work first so you know it will be done...she knows the date of her cake but you dont want to be feft hanging. You could put something in there about if one person hold up the bartter agreement and the other does not, then 100% of the invoice will be due, paid in full, by (date). That way if the contract was not cancelled but still not fulfilled then you are still covered.
another idea. You both write a check out for the amount due and post date it for the contract "due by" date. If one person doesnt hold up their end of the barter then you can cash the check. When the work is complete you get back your check, she gets back hers. That way if you do her cake and she doesnt do her work you can cancell your check and cash hers. Just a thought...
I do some bartering for my cakes, but just with people I know right now.
I am lucky to know 2 professional photographers and a wonderful seamstress who makes beautiful clothes. Comes in handy with 2 kids!
I would love to find a simple barter contract to use with friends, one that just spells out the terms of the barter. Guess I could make up but if anyone has done the work already and is willing to share, I would appreciate it.
Sample barter contract:
thats great, thanks
Bartering is legal, but the IRS considers the value of the goods being bartered as declarable income. As long as you keep records adn declare it as income earned you should eb good.
There are organizations that set up bartering "banks" where you barter with other members in the group for credits to your account. You earn and spend credits within the group, so you don't have to limit yourself to a direct trade with one person. There are two groups in my area that do this, you usually have to pay a membership fee, so I guess the advantage of joining would be that you'd be getting whatever you're trading for for the cost of the cake and your time. The group keeps track of the value of goods being bartered and declares the value to the IRS at the end of the year like it's income to you.
A video I just found on barter: