Contra dealing is the exchange of goods through a barter-agreement between two parties without the exchange of cash. Contra dealing can offer a more efficient way to run your business however it only really makes sense if you are gaining a service that you will already be in the market for otherwise you are wasting your time and money.
There are numerous benefits to this type of transaction and the increasing growth of the digital economy means that the barriers to contra dealing are being removed and more businesses are becoming involved in its practice. Indeed there are many different websites acting as a marketplace for contra dealing.
All this begs the question, which services and products will actually work in the contra dealing world. Luckily the possibilities are only limited to your imagination.
Marketing is a profession that is well suited to contra dealing. It can be tailored to the organisation you are in partnership with. It can also be a good way for a small business to get some exposure without having to invest a huge amount of capital. The best practice in this type of contra deal is to trade pound for pound. This gives you the clarity over what you are spending and what you receive in return.
Many practical trades lend themselves well to contra dealing and if the work is likely to be ongoing it can offer a good way to keep costs down and maintain good business relationships. Also the value of your service or product may be much larger for the other party, meaning you can both engage in a mutually beneficial relationship.
A plumber, for example, may offer a kind of retainer service to their landlord in exchange for a rent discount or another form of remuneration. You must keep in mind that even though no money is exchanged in contra dealing for tax purposes it must still be recorded as a transaction.
As a consultant you may come into contact with different businesses that all have different skills and expertise; what’s stopping you leveraging this in your favour through contra dealing your services for theirs? This can help you make use of clients and establish a long term relationship with them beyond your initial working relationship.
You could approach an IT company you are doing business consulting for and potentially trade IT support and maintenance for an ongoing consultancy project. This reduces the operating costs for both parties.
Where can you go for the Best Contra Dealing Advice?
Contra dealing is a simple concept initially; however, there are many different caveats and obscurities that you must know, from how to record the dealings for your tax statements to how to create an air-tight contra dealing contract.
If you have any further questions on the uses of contra dealing do not hesitate to get in touch. We will talk you through the process of initiating a contra deal and the common pitfalls to watch out for when you are taking your first steps.