vBarter - Operating Accounts
Posted by Bruce Kamm on August 28 2012 02:25 AM

As recommended by Harold Rice a CPA knowledgeable about barter exchange operations and proper recordkeeping for the IRS, an exchange should maintain five operating accounts:

General Operating Account - for all trade dollar income and for all trade dollar tax deductible expenses. If there is a profit at the end of the year, you can prepay expenses, or transfer the trade to the Member Loan Fund account. This is the account that would be presented in the event of an audit.
Inter-account Transfer account - temporary account that starts and ends each year with a zero balance. Used to buy products and services, and then sell to members. Supports and maintains commerce. At the end of the year any positive balance is transferred to the General Operating account as a profit. This is not an asset account.
Member Loan Fund account - used instead of Reserve Account to transfer trade to or from a closed account that has a positive or negative trade balance. This is an unrecognized bad debt account.
Retail Sales account - zeroed out monthly. Used if you have a showroom to track monthly sales and pay sales tax. Transfer any balance to the Inter-account Transfer account at the end of each month.
Reserve Account - for monthly trade fees, interest charges, late fees, etc. Use to pay members, post trade adjustments, credits, etc. At the end of the month, transfer balance to General Operating Account.
NOTE: When transferring members from another exchange, create an account in the name of that exchange and post trade from the exchange account to the members to provide members with the balance they had from the other exchange.
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