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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

#121

Post by danielmarkbruce »

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.

lol, no, unless you are saying "revenue" as in "revenue under my made up accounting system".

Under ASC 606 you can't just allocate any old number you like. On top of this, no auditor would sign off on what you suggested. The IRS would be looking at you and get you on tax fraud, you'd likely be committing securities fraud, bank fraud, wire fraud and 26 other things I can't think of, assuming you are a business of any size at all.

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

#122

Post by singleshot_ »

mannanj wrote: post #89
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…

And who chooses how to value unique, innovative and visionary work?

Article 1 judges in US Tax Court?

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

#123

Post by frankfrank13 »

I interviewed at a startup, really early stage, who claimed to be on track for $100k ARR. We all know "ARR" is bullshit, but I didn't suspect the ~$10k monthly to be bullshit. It turns out this was $10k pre-discount, and this product was ~FREE for YC companies, who made up ~100% of this companies customer base. So revenue was $0, or very close to it.

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

#124

Post by hapless »

brandensilva wrote: post #120
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…

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?

SpaceX and Tesla’s not-so-arm’s-length transaction are like, textbook cases for fraud

It amazes me investors or the sec will put up with it

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

#125

Post by singleshot_ »

osullip wrote: post #91
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…

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…

> No paperwork, no contract.

Two adults, a legal subject, sufficiently specified, offer, acceptance, consideration, mutual assent… a contract.

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

#127

Post by andix »

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 you do the work but undervalue it, it's likely tax fraud

Probably not, it's just giving a discount. Nothing wrong with that. Many companies sell goods or services below cost. To gain other benefits like market share, or new customers. Why not do it to get something else essential from another company?

> If you do the work but overvalue it, it's likely investor fraud

It probably depends on the situation. If it's mainly used to inflate sales figures and scam investors, then probably yes. If it's just a "good deal" then probably not.

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

#128

Post by nitwit005 »

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

#129

Post by andix »

elil17 wrote: post #113
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…

> 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.

No, it doesn't have to be "reasonable". Its only illegal if it is used to cover up some other illegal thing.

For example giving huge discounts below cost only to family members, which is more or less like paying them money without paying taxes for it.

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

#130

Post by kube-system »

scarby2 wrote: post #114
bloppe wrote: post #102

Earlier quoted context omitted.

> 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).

There are corporate taxes on revenue in some situations
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