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Trade Dollars with other startups. Book it as revenue

revswap.ai

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Re: Trade Dollars with other startups. Book it as revenue

#111

Post by mattnewton »

RobotToaster wrote: post #95
osullip wrote: post #91

Earlier quoted context omitted.

In Australia these kind of deals are treated like income. https://www.ato.gov.au/businesses-and-organisations/gst-exci... I am sure people avoid the tax element this way, but it's not a sustainable way to go. Let's say I do a website for $5,000 (putting aside that this a dead industry, and my career for the past 20 years) and the landscaper comes to do the work at my house. If he cuts a powerline, falls down a hole o…

I think the fact that it's treated as income is the point. My company builds your company a website, and "charge" $1,000,000 for it. Your company mows my company's lawn and "charge" $1,000,000 for it. Both companies now have $1,000,000 in revenue from this transaction.

But they also have 1,000,000 of expenses, at least some of which is probably deductible from income.

Re: Trade Dollars with other startups. Book it as revenue

#112

Post by cjbgkagh »

philipallstar wrote: post #109
cjbgkagh wrote: post #103

Earlier quoted context omitted.

Tax law is guilty until proven innocent. Investor fraud is usually brought as a civil case and takes a balance of evidence approach. Since enforcement is stochastic and rare these practices are pretty common. The freedom to do ‘whatever’ is really dependent on the discretion of the government and investors. Most companies can and do fly under the radar but have to be careful not to piss off the wrong people.

Okay but then why are we singling this out as tax fraud, if the justification is just "anything can be"? Why not claim that posting on HN is tax fraud?

Barter counts as income by many tax jurisdictions, if you don’t declare the fair market value of the exchange you are in violation. Most people don’t declare this and it is rarely ever enforced.

Re: Trade Dollars with other startups. Book it as revenue

#113

Post by elil17 »

scarby2 wrote: post #88
bryanlarsen wrote: post #69

Earlier quoted context omitted.

> The part that makes it not fraud is that both parties do actually do the work. It's far more nuanced than that. If you do the work but undervalue it, it's likely tax fraud. If you do the work but overvalue it, it's likely investor fraud. Even if you fairly value the work it still might be investor fraud. The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying y…

This isn't a good take. > If you do the work but undervalue it, it's likely tax fraud. A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. > you do the work but overvalue it, it's likely investor fraud. Quite possibly. Assuming this was done with the intention of misrepresenting your revenue and gaining investment. >The vendor may have be…

> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that.

That's simply not true. You may get a certain amount of leeway, but it has to be reasonable.

Re: Trade Dollars with other startups. Book it as revenue

#114

Post by scarby2 »

bloppe wrote: post #102
scarby2 wrote: post #88

Earlier quoted context omitted.

This isn't a good take. > If you do the work but undervalue it, it's likely tax fraud. A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. > you do the work but overvalue it, it's likely investor fraud. Quite possibly. Assuming this was done with the intention of misrepresenting your revenue and gaining investment. >The vendor may have be…

> If the work is performed for $1 or $5000 the government doesn't get a say in that What if you're getting paid in landscaping?

On a corporate level it doesn't really matter as you're only taxed on your profits/losses. If we do a service swap ultimately it's just adding a revenue item with a matching loss, and these are infact quantified.

As an individual interestingly it does matter because services received for free are considered taxable income (but businesses are not taxed on their income).

Re: Trade Dollars with other startups. Book it as revenue

#115

Post by throwaway613746 »

Swizec wrote: post #27

Services in kind is a pretty common business practice. You see this a lot at the SMB level especially outside of the US. Small businesses are cash strapped. So you find someone who needs your services and you need their services. Instead of exchanging cash, you exchange invoices and do the work. You build them, say, a $5000 website, they perform, say, $5000 of landscaping. At big boy levels this is often structured a…

[dead]

Re: Trade Dollars with other startups. Book it as revenue

#116

Post by glitchc »

Swizec wrote: post #27

Services in kind is a pretty common business practice. You see this a lot at the SMB level especially outside of the US. Small businesses are cash strapped. So you find someone who needs your services and you need their services. Instead of exchanging cash, you exchange invoices and do the work. You build them, say, a $5000 website, they perform, say, $5000 of landscaping. At big boy levels this is often structured a…

Tax laws may vary by jurisdiction. Often the in-kind contributions appear on a different line item from income on the balance sheet and usually go into a different box on the tax form.

Re: Trade Dollars with other startups. Book it as revenue

#117

Post by stymaar »

scarby2 wrote: post #88
bryanlarsen wrote: post #69

Earlier quoted context omitted.

> The part that makes it not fraud is that both parties do actually do the work. It's far more nuanced than that. If you do the work but undervalue it, it's likely tax fraud. If you do the work but overvalue it, it's likely investor fraud. Even if you fairly value the work it still might be investor fraud. The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying y…

This isn't a good take. > If you do the work but undervalue it, it's likely tax fraud. A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. > you do the work but overvalue it, it's likely investor fraud. Quite possibly. Assuming this was done with the intention of misrepresenting your revenue and gaining investment. >The vendor may have be…

> A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that.

Whether it you think it should or not depends on your personal preferences, but in practice the government does get a say in anything that it deems to be an undue way to reduce your taxes.

Barter would be much more common if it was a legal way of avoiding taxes.

Re: Trade Dollars with other startups. Book it as revenue

#118

Post by throwaway667555 »

copperx wrote: post #62
throwaway667555 wrote: post #54

Earlier quoted context omitted.

You can't put your finger on it because money is merely an accumulator and medium of exchange of economic performance. The performance of services in exchange for other services without money is a perfectly valid economic exchange that can and should be booked to revenue of each of the parties, if actually performed. Loans without any economic performance of services generate circular meaningless cash flows yeah, but…

That's a bit jumbled. You can gain clarity one level up the abstraction layer. Money is a note that means a debt is owed.

When comparing promises between businesses to pay versus promises between businesses to perform services, it is irrelevant that fiat currency is a federal reserve note rather than, say, bottle caps. Irrelevant.

Re: Trade Dollars with other startups. Book it as revenue

#119

Post by nine_k »

scarby2 wrote: post #88
bryanlarsen wrote: post #69

Earlier quoted context omitted.

> The part that makes it not fraud is that both parties do actually do the work. It's far more nuanced than that. If you do the work but undervalue it, it's likely tax fraud. If you do the work but overvalue it, it's likely investor fraud. Even if you fairly value the work it still might be investor fraud. The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying y…

This isn't a good take. > If you do the work but undervalue it, it's likely tax fraud. A company can value it's services as it chooses. If the work is performed for $1 or $5000 the government doesn't get a say in that. > you do the work but overvalue it, it's likely investor fraud. Quite possibly. Assuming this was done with the intention of misrepresenting your revenue and gaining investment. >The vendor may have be…

[dead]

Re: Trade Dollars with other startups. Book it as revenue

#120

Post by brandensilva »

bryanlarsen wrote: post #69
Swizec wrote: post #27

Services in kind is a pretty common business practice. You see this a lot at the SMB level especially outside of the US. Small businesses are cash strapped. So you find someone who needs your services and you need their services. Instead of exchanging cash, you exchange invoices and do the work. You build them, say, a $5000 website, they perform, say, $5000 of landscaping. At big boy levels this is often structured a…

> The part that makes it not fraud is that both parties do actually do the work. It's far more nuanced than that. If you do the work but undervalue it, it's likely tax fraud. If you do the work but overvalue it, it's likely investor fraud. Even if you fairly value the work it still might be investor fraud. The vendor may have been chosen not by merit, but by its willingness to accept an exchange of services. Saying y…

If that is fraud then company evaluations are fraud too. Case in point SpaceX and it's smorgasbord of other companies rolled into it to save them.

Who protects the consumer when they have been gutted of any power?

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