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How BarterXchange Works PDF Print E-mail

Transaction Example

A restaurant wishes to "barter" for $10,000 worth of printing using meals and drinks. No printer would ever want $10,000 in meals from that one restaurant, however by selecting a BarterXchange printer, the restaurateur pays the printer with BTC10000. The printer’s account is "credited" and the restaurateur’s account "debited", so the restaurant now owes BTC10000 in meals to the BarterXchange network, NOT the printer. This is repaid as various BarterXchange members come to the restaurant (new business) over the following months.  Hence, the restaurant has paid for its printing requirements with meals, using an interest-free "line of credit" and at a cost of approximately 30 - 40 cents in the dollar, in replacement good cost.

The printer can now use the barter trade credits earned to buy office furniture, advertising, car repairs, stationery, courier services, colour separations, accounting and legal services ~ even a family holiday. These are all commodities for which the printer would normally pay cash. By using their trade credits, the printer conserves his cash, and benefits from the extra business.

Accounting

BarterXchange recommends that you obtain advice from an accountant experienced in the record keeping and taxation accounting of Barter income, expenses and tax related issues.

BarterXchange has a network of accountants within the membership base that are highly experienced in providing advice on Barter, Taxation, Accounting which you can pay for their services in barter trade credits..

Cash and Non-Cash Accounting
If you use the cash basis to report your income, you will account for your income when you receive payment and, similarly, you account for your expenses when they are paid. You receive or make a payment in a barter transaction when the recipient of the supply signs the docket or transaction slip to authorize the exchange of credit between the supplier’s and the recipient’s barter account.

If you use the non-cash basis, you will account for your supplies when you have issued a tax invoice or when any of the payment is received, whichever is the earlier. Similarly, you will account for any purchases when you receive an invoice for the purchase or when you have provided any of the payment for the purchase, whichever is the earlier.

Generally, businesses that have barter transactions will also have other transactions involving the exchange of money. The main method used to record income from barter transactions is to include them separately in a cash receipts book.

  • Use a pre-numbered invoice book to record barter and other transactions. This helps keep track of all transactions.
  • Maintain a filing system to keep track of transactions on barter accounts.
  • Record the value of barter transactions expressed in Singapore Barter Trade Credits (SBTC) or Malaysian Barter Trade Credits (MBTC) in your sales record. You can record this in a separate column in the same cash receipts book you use to record your other sales or in a separate cash receipts book to account for your barter sales only.
  • Perform barter reconciliations between Barter Exchange statements and your sales record at least monthly.
  • Keep the barter reconciliations and the individual barter records for 5-7 years.

What does a typical system for recording payments from barter transactions look like?
The diligence required in accounting for Barter transactions is the same as that required for cash transactions. Basic requirements are:

  • Update and summarize barter transactions into a secondary record such as a cash payments book using individual barter records regularly. Record the value of barter transactions expressed in Singapore or Malaysian currency. You can record this in a separate column in the same cash payments book you use to record your other purchases or in a separate cash payments book to account for your barter sales only.
  • You will need a valid tax invoice if the supplier is registered for Goods and Services Tax (GST) and you wish to claim an input tax credit. A tax invoice for a barter transaction needs to include the GST-inclusive price expressed in Singapore or Malaysian currency ($550 in the example above) or the GST payable in Singapore or Malaysian currency ($50 in the example above).
  • Keep all invoices and file in a systematic manner.
  • Perform reconciliations between individual barter records, Barter Exchange statements and payments book at least monthly.
  • Keep the barter reconciliations and the individual barter records for 5-7 years.
  • The Tax Office does not prescribe a defined method for preparing and maintaining a record keeping system, however, the record keeping system you keep should allow a tax officer to work out your tax and superannuation liabilities within a reasonable time. For example, a tax officer would be able to work out your barter related tax liabilities and credits by reviewing your Barter Exchange statements and barter sales and purchases records without having to reconstruct your barter transactions.
  • The types of records needed depends on the nature and size of your business. For example, if you have many transactions and source documents per day, it is beneficial to keep summary records such as cash receipts and cash payments books. This will help you to manage your business because you can monitor how much money your business is receiving and spending, and this will assist in identifying any cash-flow problems. It will also help you to complete your activity statements and tax returns correctly and on time.
  • Good record keeping is maintaining a good filing system of invoices and purchase documents, record transactions or summary totals into a cash receipts and cash payments book and reconcile these amounts to bank statements and BarterXchange statements on a regular basis.

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