When does it become selling?

[MickeyRat]

So far, I've been strictly a hobbiest and I've never taken money for my soap. I give it away to just about anyone that will take it. Now I have a crazy situation. I stayed at an Airbnb and left a few bars for my host. He's a dedicated host and he will do just about anything to make staying in his places better for his guests. He LOVES my soap and he really wants me to make soap he can leave for his guests. This guy is persistent.

So, is there a way to do this without selling? Could he buy some ingredients for me? Could he buy equipment, funnels, bowls, etc.? Even if I'm not charging him anything, when he leaves it for his guests, is he selling?

 

[KimW]

While bartering sounds like a good option, my concerns would be insurance and labeling. Both because you never know what a guest might be allergic to, and in the end you'll be the one liable for your soap, even if the soap is provided by the Airbnb host. Just my thoughts.

ETA: I didn't answer the ultimate question. Selling, by definition, entails the exchange of currency for a product. So, if you barter you aren't selling. However...see my original blah, blah, blah.

 

[ImpKit]

While bartering sounds like a good option, my concerns would be insurance and labeling. Both because you never know what a guest might be allergic to, and in the end you'll be the one liable for your soap, even if the soap is provided by the Airbnb host. Just my thoughts.

ETA: I didn't answer the ultimate question. Selling, by definition, entails the exchange of currency for a product. So, if you barter you aren't selling. However...see my original blah, blah, blah.

Technically may not be selling, but as you say: liability. If you make the soap then you are liable for it. Your own personal liability insurance (found on your homeowner's and/or renter's insurance policies typically) won't provide you products liability for your soap, at least not for this situation (if you remain STRICTLY a hobbyist and never accept goods, services, or money in trade, it MIGHT be covered).

If you aren't interested in procuring the necessary insurance policy or rider, then I would caution against this kind of barter. It's flattering but risky. And AirBnB is ALREADY an insurance nightmare / risk. Honestly I would encourage the guy to learn to make it himself. If you'd be willing you could even give him your recipe so he is making the exact same formulation. Show him the books, sites, and YouTube videos he'd need to learn the process. Maybe you'll make a soapy friend!

 

[KimW]

Technically may not be selling, but as you say: liability. If you make the soap then you are liable for it. Your own personal liability insurance (found on your homeowner's and/or renter's insurance policies typically) won't provide you products liability for your soap, at least not for this situation (if you remain STRICTLY a hobbyist and never accept goods, services, or money in trade, it MIGHT be covered).

If you aren't interested in procuring the necessary insurance policy or rider, then I would caution against this kind of barter. It's flattering but risky. And AirBnB is ALREADY an insurance nightmare / risk. Honestly I would encourage the guy to learn to make it himself. If you'd be willing you could even give him your recipe so he is making the exact same formulation. Show him the books, sites, and YouTube videos he'd need to learn the process. Maybe you'll make a soapy friend!

Great suggestion to teach him to make his own soap, Impkit!

 

[earlene]

So far, I've been strictly a hobbiest and I've never taken money for my soap. I give it away to just about anyone that will take it. Now I have a crazy situation. I stayed at an Airbnb and left a few bars for my host. He's a dedicated host and he will do just about anything to make staying in his places better for his guests. He LOVES my soap and he really wants me to make soap he can leave for his guests. This guy is persistent.

So, is there a way to do this without selling? Could he buy some ingredients for me? Could he buy equipment, funnels, bowls, etc.? Even if I'm not charging him anything, when he leaves it for his guests, is he selling?

Good to see you again, MickeyRat. It's been awhile.

 

[amd]

I have a friend who has an airbnb that I provide soap for. I texted her quick and fortunately she wasn't doing anything and replied back quickly. She said in this case, although it may vary from state to state or by insurance, the soap becomes her property and her legal responsibility if something goes wrong with a guest. This is one of the reasons she asks me to clearly label the soap with the ingredients so that her guests can make informed choices. (She does also offer other choices of commercial soap or travel size body wash, but in the 9 months that she has put out my soaps, only one or two guests have taken the other options.)

Liability aside, if you're not interested in "selling" and getting paid for your time, knowledge and skill, then I would set it up as a reimbursement for COG. Figure out how much it costs for however many batches your friend wants, and he can reimburse you for that cost only. Be very upfront about how much you willing to make for him - if his airbnb is well trafficked it may be more soap than you're willing to make, so set limits that are manageable for you. Say you have the equipment, time and materials to make 3 batches at once, and you're comfortable doing that once a month, then tell him that is what you'll do. Or every 3 months, whatever. Make sure he understands the wait time for soap - I have to remind my friend of this almost every time she orders and she's finally catching on, she ordered her spring themed soaps in January, lol. If you're on the fence, I say try it for six months and if it's not working for you, it's your perogative to tell him no.

 

[Babyshoes]

If you're in the UK, the rules are different, so be sure the advice you've received so far is relevant to where you are...

 

[Relle]

If you're in the UK, the rules are different, so be sure the advice you've received so far is relevant to where you are...

The OP is in the US.

 

[MickeyRat]

Thanks for the replies folks. I'm still not sure where I'm going with this. Don't worry about over committing. If I give him any, it'll just be what I'm willing to make. I'm comfortably retired. I'm not looking for a new career. My wife wants some smaller soaps. So, I'm going to try something next week to see how it turns out.

Babyshoes - Thanks for the reminder that I'm in an international venue. I should have specified that I'm in the US.

 

[Babyshoes]

The OP is in the US.

That has become apparent, but others looking for answers to this question might not be.

 

[Arimara]

@amd What's COG stand for?

 

[ImpKit]

@amd What's COG stand for?

Cost of goods

 

[KimR]

I recently stayed at an AirBNB in Bloomington, IN. Loved this small guest sized soap from a local shop that was left for my use. ~1.5 X 1.5 X .25" in a package that listed real ingredients vs proper chemical labels. Very little waste. Perfect size.

 

[Zany_in_CO]

@amd Excellent advice!

@MickeyRat I'm retired too. When I first started selling I promised myself if my hobby ever got to a point where it became more W-O-R-K then pleasure, I would quit selling. So, when it did, I did! LOL

I was in your shoes once. Bottom line, if you price it at exactly what it would be worth to you to provide soap for him, it will likely be more than the buyer wants to pay.
Put the ball in his court.

 

[MickeyRat]

I was in your shoes once. Bottom line, if you price it at exactly what it would be worth to you to provide soap for him, it will likely be more than the buyer wants to pay.
Put the ball in his court.

If I do this at all, my intention is to have it be on a friendly basis. I finally actually figured out what it costs me to make. So far, I've just had a vague idea. He knows that I'm going to some trouble for him. He's not placing an order, he's asking for a favor from a friend. If he wants to send me a gift, cool. If he doesn't, that's cool too. However, if I feel he's presuming on the relationship, I might not do him the favor next time.

 

[TheGecko]

So, is there a way to do this without selling? Could he buy some ingredients for me? Could he buy equipment, funnels, bowls, etc.? Even if I'm not charging him anything, when he leaves it for his guests, is he selling?

Don't you mean, "am I selling"?

Under the conditions stated above, the short answer is no...it would be no different if you were a cook in a restaurant or a volunteer at a charity shop. the taxman will not come after you, even if you were being reimbursed for the cost of ingredients. However, if you are being compensated for your labor...either in cash or 'like' (discount on room rate, box of chocolates)...then that would be considered "Other Income". But it is doubtful that the taxman will hunt you down.

But you do have an issue of product liability. I have a company that buys soap from me and sells it under their own label. If for any reason one of their customers was injured by the soap...I could still be sued, even though my name is not on the soap.

Selling, by definition, entails the exchange of currency for a product. So, if you barter you aren't selling.

Not true.

IRS Tax Tip 2013-29, March 8, 2013

Small businesses sometimes barter to get products or services they need. Bartering is the trading of one product or service for another. Usually there is no exchange of cash. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services.

The IRS reminds all taxpayers that the fair market value of property or services received through a barter is taxable income. Both parties must report as income the value of the goods and services received in the exchange.

I currently issue and receive two Form 1099-Bs (Proceeds from Broker and Barter Exchange Transactions) from my landscaper and hair dresser. In exchange for mowing my yard and trimming my bushes, and cuts/color...I provide bookkeeping services.

 

[cmzaha]

I would not worry about the Tax man hunting you down, but I would worry about liability. If someone were to sure believe me they will go right down the chain of command, so to say. They will start with the supplier and go down to the manufacturer. So please acquire insurance if you want to supply the AirBnB

 

[MickeyRat]

I would not worry about the Tax man hunting you down, but I would worry about liability. If someone were to sure believe me they will go right down the chain of command, so to say. They will start with the supplier and go down to the manufacturer. So please acquire insurance if you want to supply the AirBnB

That's the same risk every soap maker takes when they give their soap to a friend. It's the risk I take when I bring soap to the ladies at the dentist's office. I would think personal liability insurance covers this.

 

[VikingChick]

The IRS reminds all taxpayers that the fair market value of property or services received through a barter is taxable income. Both parties must report as income the value of the goods and services received in the exchange.

Geez. Leave it to the IRS to try to steal a piece of the action, even when there’s no money involved.

 

[TheGecko]

Geez. Leave it to the IRS to try to steal a piece of the action, even when there’s no money involved.

Barter has the same value as money.