February 2, 2016
Written
by Bob Meyer, Editor of BarterNews
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From the desk of Bob Meyer...
02/02/2016
All
back issues of "From the Desk..." can be accessed by
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Three Ways Using Barter Can Lower Your Taxes!
Trade dollars are far more flexible than at first imagined. You can
use them to chisel away at the tax bill, and chip away at your
payroll. Here’s a look at three ways you can use barter to reduce
the revenues of the tax collector.
Capital
Gains
Consider the business owner who, knowing she would be selling the
property in the future, wanted to make improvements on her real
estate investment.
Because she did not intend to "roll
over" the property on a tax-free exchange, she would have a capital
gains tax on any amount she received above her basis. But with a
creative use of the trade dollars in her account, she was able to
avoid any gain on the sale. This was accomplished by increasing her
property value with trade dollars spent on improvements.
Consequently, when she finally sold the property her tax bill was
nearly eliminated with the increased basis. Wisely, she used trade
dollars to lower the tax liability, while at the same time making
valuable improvements that increased the property's marketability
and value.
Employee
Costs
Versus
Contractor
Costs
Every business owner knows it is less expensive to use independent
contractors than it is to hire employees. Because employees cost the
business owner FICA, worker’s compensation premiums and other
expenses, the cost of employees frequently soars above an average
cost of 25% of the actual payroll amount.
Independent
contractors, on the other hand, cost only the amount of their
contract fees, since they are responsible for their own employee
taxes.
An independent contractor who belongs to a trade
exchange, and who accepts trade dollars for (some) services has
created evidence of being in business — much the same as if he or
she has a business license or rents his or her own office space.
Because the aforementioned are things that business owners do,
an independent contractor who does them has shown a strong
indication of being a business owner. As opposed to someone who
simply performs tasks for another, yet claims to be an independent
contactor.
Employee Benefits
Business owners who have
workers with no chance of being classified as independent
contractors can still convert trade dollars into tax savings. By
setting up a Cafeteria Plan, under Section 15 of the Internal
Revenue Code, one can convert trade dollars to cash in several ways.
A Cafeteria Plan is a tax-qualified employee benefit that allows
employers to reduce employee wages, in order for the employees to
pay their own benefits with "before tax" dollars.
The
employees get benefits that they would otherwise have to purchase
with "after tax" dollars, while the employer gets a reduced payroll
and therefore reduced payroll taxes. First, by arranging for the
employees to have a Premium Plan under Section 125, the owner
withholds dollars from the payroll that are then used to pay
premiums for the health plans which the employees select.
If the trade exchange has an insurance broker who takes commissions
on trade (which usually amounts to one month’s premium per year),
the owner is able to pay that premium with trade dollars and
conserve the cash from the employees for the month in question.
Besides converting the trade premiums to cash, the owner has
also reduced payroll taxes! This "double whammy" effect is further
enhanced by the fact that employees are happier than otherwise,
since they are also saving taxes on the benefits they are paying for
under the plan.
Second, by setting up programs with trade
exchange members in the medical professions, the owner can further
reduce payroll taxes through the Cafeteria Plan. And at the same
time can convert the trade dollars spent into cash.
The
trick is to withhold the amount for the Cafeteria Plan from payroll
that the employee expects to spend each year on unreimbursed medical
expenses — such as deductibles or co-payments, or for dental
expenses where there is no dental plan. If the business owner then
pays the costs of the dentists, chiropractors or the medical doctors
with trade dollars, the firm has converted significant amounts of
trade into cash.
As an example, some employers provide that
the Cafeteria Plan covers annual physicals for employees, then
provides the on-site physician for the exam. Since they then pay the
doctor with trade dollars, the withheld cash from payroll amounts to
a very efficient conversion of trade to cash.
As we've seen,
a truly efficient use of trade dollars cannot only replace cash
expenditures, but it can generate tax or worker’s compensation
premium savings as well.
BarterNews.com — World's Largest
Depository Of
Barter Information
Hundreds of valuable articles,
techniques, and strategies are found in the following various barter
categories:
Travel,
Media,
Trade Exchange
Corporate Barter,
Offset & Countertrade,
Secondary Capital,
Real Estate,
Community Barter,
Restaurant & Entertainment
(The Barter
Categories are found on the horizontal bar at the top - 3rd
button from right.)
Money-Making Reports Available From BarterNews
Is Your Trade Exchange Missing Out On
Valuable New Business?
If
your barter company's listing on BarterNews.com isn't current, you
are definitely missing out on new business. The web site
BarterNews.com receives heavy traffic - with over 150,000 page-views
every month. Entrepreneurs and corporate executives check the
thousands of articles, the weekly "Tuesday
Report," and the "Contacts
Section" of our site. They use the latter to find barter
companies with which to do business.Is your barter company's listing up-to-date?
To keep your listing current is very easy. See the links below to (A)
update any changes to your company's listing, such as new location,
phone number, web site or other information, and (B) if your company
has not been listed.
Here's how to get on board:
To
make changes to your listing
click here.
For
new listings
click here.
Ways To Encourage Company
Trustworthiness
Adrian Gostick and Dana Telford, co-authors of The Integrity
Advantage, offer four guides to integrity in an organization:
→ Know that little things count.
Draw a line in the sand. Avoid
gradual slipping of standards. Everything a leader says and does
matters.
→
Keep your word.
Do what you say you'll do. Follow through is a
core marker of integrity. Treat promises seriously.
→
Mess up, 'fess up.
Be willing to admit you are wrong. Reward
honesty.
→ Create a culture of trust. Be
consistent with one set of rules for everyone. Be approachable.
Surround yourself with integrity.
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The Growth and Use of Secondary
Capital (New Money) Creates Unprecedented Wealth In Today's New Age
Of Possibility
There are many forms of secondary
capital — which can be defined as any financial instrument that
measures and communicates value in a common language. Would you like
to see and learn more about the many forms of secondary capital?
We have 70 free, informative and
inspiring, articles for you in our "Secondary Capital Section."
Check it out...
www.barternews.com/secondary_capital.htm.
Get New Money-Making Ideas And
Valuable Contacts!
You can
obtain useful, informative ideas and contacts in every available
back-issue of BarterNews.
Every
barter company in the world is listed on our web site,
click through to our Global List
of Barter Companies.
We welcome your
comments, questions, and observations.
Copyright BarterNews 2015. Redistribution of BarterNews
content expressly prohibited without the prior written permission of BarterNews.
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