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CRS – What is it?

Many people in Cyprus who hold a bank account in the UK may have received, or will soon get, a letter from their bank asking them to self-certify their tax status. This may come as a surprise to some, whilst others will regard such a request with suspicion. However, this is now a necessary compliance procedure for the citizen of any country which has signed up to CRS – the Common Reporting Standard.

CRS is a standard for the automatic exchange, on a global level, of information about tax and financial holdings, developed in 2014 by the OECD (Organisation for Economic Cooperation and Development). Modelled on the US FATCA (Foreign Account Tax Compliance Act) legislation, the main purpose of CRS is to combat tax evasion.

As of August 2017, 102 countries have signed up to the standard, with 49 jurisdictions undertaking the first exchange in 2017, and the remaining 43 committing to 2018. In addition, the USA is undertaking automatic information exchange under the FATCA legislation.

While CRS has been criticised in some quarters for leaving open too many loopholes, the exclusion of a number of developing countries from its provisions, and for promoting, rather than preventing the use of tax havens, its introduction can be seen as a major step forward in the global fight against tax evasion.

The information to be exchanged is governed by a very detailed standard but, in essence, the following will be shared with respect to accounts held in Jurisdiction A by a tax payer resident in Jurisdiction B, and vice versa.

  • The name, address, Tax Identification Number (T.I.C. in the case of Cyprus), place and date of birth of each Reportable Person;
  • Account Number;
  • Name and identifying number of the reporting financial institution; and
  • Account balance or value as at the end of the relevant calendar period, or at the date of closure (in the event the account was closed).

The OECD has left it up to each jurisdiction to determine what accounts are reportable under the standard. However, to all intents and purposes, you can assume that if you hold an account in a bank or financial institution in another participating country within CRS, then its existence and value will be reported and shared with the relevant authorities in the country in which you are tax resident.

It also means that if you open a new bank account, invest in new financial products or change your personal circumstances in some way, then you will need to report certain details about yourself under the self-certification process.

Financial institutions are legally required to determine the tax residency status of all their customers, even if they are tax resident in the same country in which they hold their account (although typically in such cases details do not have to be reported to tax authorities for CRS purposes). The legislation applies to both personal and business customers, with sole traders treated as individuals for reporting ease.

Of course. individuals may be concerned about data privacy and security, given major cyber attacks and information leaks in recent years. Banks and other financial institutions will, naturally, assure their customers about their codes of secrecy and data protection protocols, but, cynics will point out, too often these have been breached in the past to offer complete peace of mind. Nevertheless, CRS reporting is here to stay.

Even if you choose to ignore the request for self-certification, the bank or financial institution concerned will use the information they already hold about you to try and establish your tax resident status. As this could have unfortunate consequences of the wrong information being shared with the wrong authorities, it is better to confront the situation upfront and self-certify yourself.

For many, even those not involved in tax evasion, CRS can be regarded as an unwelcome intrusion into areas they regard as private, namely details concerning their bank accounts and financial holdings. Nevertheless, CRS can be regarded as the next step on the road to global transparency with regard to tax and financial affairs. As such, if not welcomed, it needs to be at least accepted.

AML – The ever-growing monster

Last week I received an email from my Institute which contained, among other things, an anti-money laundering (AML) update, described as the “essentials” needed to inform one’s AML risk assessment, policies and procedures.

Looking for a quick update on the subject, I drilled down to the guidance notes issued only to find that these ran to a staggering 73 pages! Perhaps in another life I might have the time to read such a tome but I suspect, like most other accountants, we have too much else to do with our days (and nights), and cannot afford the luxury of ploughing through such texts.

It also occurred to me that AML has become a monster that keeps growing, showing no signs of stopping, This begs a few supplementary questions. Are we placing too much of a burden on sole practitioners and small accounting firms to stop money laundering? And should governing bodies start tailoring their advice to individual constituents, and stop assuming everybody works for a big firm which can afford compliance officers and extensive risk assessment procedures?

Back when I trained and first qualified as an accountant, money laundering was rarely discussed, if ever, more the stuff of movie scripts than an everyday concern. Perhaps it can be argued that controls back then were too lax and needed to be tightened-up, but, at the same time, is the world really more corrupt and dangerous than it was 30 years ago?

Seen from the prism of today possibly, but, if the lens is slightly adjusted, it can be argued not. The threat of terrorism obviously dominates many political and news agendas now, but the 7os and 80s had their own share of terrorist activity, both in the Middle East and elsewhere – Northern Ireland, Spain and South America to name but a few.

Then there is the so-called war on drugs which is often cited as the starting point for money laundering regulation, as lawmakers attempted to seize the proceeds of crime. But illegal smuggling of contraband or banned substances has been going on from time immemorial, be it tobacco, alcohol, tea or even salt. There is nothing new under the sun.

What has changed is the attitude of governments and legislators to such matters. Gone is the presumption of innocence which used to form the basis of the legal systems of most developed countries. Now accountants, lawyers and other professionals are required to assume clients are guilty unless proved otherwise. In other words, until proper due diligence is carried out, a new – or even existing client – should be regarded with suspicion.

Furthermore, professionals are now required to report any suspicious activity or face criminal and regulatory sanctions. In  the UK, for example, the Proceeds of Crime Act (POCA) legally obliges accountants, and other professionals, to know their clients and submit a suspicious activity report (SAR) to the National Crime Agency if they have any reason to suspect that money laundering or terrorist activity is taking place.

Gone are the days when the relationship between accountant and client was almost as sacrosanct as the confessional or as guarded as that between doctor and patient. Now the accountant has been press-ganged into the role of informant, with the threat of criminal penalties if they fail to comply. And much AML legislation rides roughshod over personal privacy rights and data protection laws, in the same way that the requirement by banks to report on their own customers has been described by the American Civil Liberties Union as the coercion of private businesses “into agents of the surveillance state”.

This is not to abdicate the responsibility of the accountant or any  other professional to prevent money laundering or other criminal activity taking place. Rather it is a plea to regulators to trust more in the integrity and personal ethics of the professionals in the front-line. Old-fashioned as such notions might be, many people practicing a profession have worked long and hard to get to where they are now, and are proud to be able to add their qualifications after their name. They do not want to risk their reputations by working with a dodgy client, or one whose business practices they dislike. Simply put, they have too much to lose.

Equally, this is a plea to the accounting bodies and other regulators to issue guidance that is sensible and appropriate to its audience. Sending out 73 pages of guidance is too much because people just do not have the time to read and absorb this volume of material. Practical advice could be condensed to twenty pages or less, which means that practitioners would be able to digest it easily, Brevity is not only the soul of wit, it is also the key to effective communication.

Unfortunately, I suspect that my objections may fall on deaf ears, and that I may be like King Canute fighting against the tide. Nevertheless it is worth asserting that the world is not inherently a more dangerous or corrupt place than it used to be, that most clients are honest, hardworking people just trying to make a living, and that they do not deserve to be treated with suspicion from the get-go. And it should also be said that most accountants and other professionals do have their own moral code, and do not want, or need, to be involved with criminals, and their activity.

 

How not to win friends and influence people

Prior to 2013, Cyprus had a reputation as an investment-friendly country, with the lowest corporate tax rate in Europe, a light regulatory environment, and a thriving banking, accounting and legal infrastructure to support business activity.

Of course, the events of March 2013 when Cyprus had to appeal to the international community for a bail-out, the 10% haircut applied to all bank deposits in excess of €100,000, and the near-collapse of the banking system undermined that reputation very swiftly. However, ignoring media hysteria about the country as a centre for money laundering and other corrupt practices, Cyprus has tried very hard in the past 4 years to get its house in order.

The bail-out was exited early and all loans repaid (compare and contrast with Greece, for example!); the banking sector has been reformed and strengthened – even if the issue of NPL (Non-Performing Loans) remains the elephant in the room; tax laws have been tightened and reporting requirements made more stringent, so much so that Cyprus has been an early adopter of legislation such as CRS (the OECD Common Reporting System), which seeks to develop a single global standard for the automatic exchange of information between tax authorities.

Cyprus remains, in theory, an attractive place in which, and from which, to do business. At 12.5% its corporate tax rate rivals Ireland as the lowest in Europe (and without the Irish barriers to entry for small businesses). It has a highly educated work force (Cyprus has the highest number of graduates per capita in Europe), whilst salary levels are 30% lower than Western European equivalents.

However, there are a number of ways that Cyprus continues to let itself down, not least in terms of its bloated government sector, archaic civil service, and working practices that belong more to the 19th than the 21st century.

To cite a few examples.

In 2011, as a short-term measure to boost dwindling state coffers, an annual levy of €350 on all Cyprus companies was introduced. Six years later, what was intended to be a temporary tax remains in place, with no sign of being repealed. This is very short-sighted and it discourages investment; the money it raises would be dwarfed by the wealth which would be created, direct and indirect, by would-be investors.

Whilst the official language of the country is Greek, most business is conducted in English. Contracts are written in English, invoices drafted in it, emails and other communications are usually in  English, and most business discussions take place in it. Most professionals have a high degree of spoken and written English, whilst it is the lingua franca of the international business world. Despite this, many official forms are only written in Greek, government websites offer only partial or incomplete transactions, whilst many civil servants will stubbornly refuse to speak English, even if they can probably speak it very well.

This is just perverse and counter-productive. If you want business to invest in your country, make it easy for them to communicate with you.

Government departments and their practices are hopelessly outdated; thousands of words could be devoted to the subject of the vast over-manning (or “over-womanning” as many of these employees seem to be female) of these departments, and their continued reliance and addiction to paper records in the digital age. However, this is beyond the scope of this current post.

Illustrative perhaps of these practices is the use – or misuse – of email. If you have a problem with the Social Security department or they need additional information, you can either fax them (an outdated technology in itself), send it by snail mail, or deliver it to them in person. Forget email or scans – they are not allowed individual email accounts, and do not have access to a printer anyway. And, if they do have an email account, chances it won’t work properly.

During a recent encounter with the VAT department, I was asked to supply details of my company bank account when applying for a VAT refund. Three different email addresses were supplied to me in the course of my interaction with the VAT department, and three different email addresses failed to connect, despite a flurry of follow-up calls to verify spellings, hyphenation etc.

Then there is the culture of the front-line staff who deal with the public. Rather than a “can-do” attitude, many adopt a “won’t do” or “can’t be bothered” stance. This includes the staff at Companies House who would not accept a change in company directorship because one document was in English; a Nicosia municipality who insisted on imposing a punitive event tax on a non-profit organisation; or the tax authorities who have designed an annual tax declaration so complicated that the average PhD student would struggle to complete it.

Any Cypriot could give you myriad examples from their daily lives of the incompetency, intransigence and unhelpfulness of their civil servants. This is not to condemn the people themselves, many of whom are good, friendly folk outside work. Rather it is the culture and mindset of the government apparatus which is to blame. Civil servants are not empowered, they do not have the tools to do the job, and are not incentivised for the right behaviours. This needs to change if Cyprus is truly to succeed.

There is a popular image of a Palestinian carrying an image of Jerusalem on his back, like a turtle with a shell. This is akin to the private sector in Cyprus which is encumbered by the government and civil service, weighing it down and hampering its movement. If Cyprus truly wants to become a hub for investment, then it needs to take steps to modernise the civil service, adopt 21st century practices, and foster an attitude of cooperation and willingness to help.

Then we can really say that Cyprus is open for business.

 

Cryptocurrency Valuation

For a commodity that is less than ten years old – the first bitcoin was mined as recently as 2009 – the market for cryptocurrencies has been volatile, with wild periods of growth followed by sudden slumps. Nevertheless, the underlying trends are upwards. In April this year, the total market capitalisation for all cryptocurrencies was US $25 billion; two months later that figure had grown to over US $100 billion. There are now over 900 cryptocurrencies available on the internet.

It looks like then that cryptocurrencies are here to stay, but will continue to suffer peaks and troughs in value before markets mature in understanding and transparency. Bitcoin, for example, hit an all-time high over the weekend of US $5,000 a coin, but has since fallen back quite sharply after the Chinese Central Bank announced a ban on organisations raising funds using initial coin offerings (ICOs), which they deem as illegal fundraising. Although this announcement does not affect bitcoin directly, it did inspire negative market sentiment against the virtual currency sector, causing traded prices to drop.

Many experts expect, however, that this is a short-term issue, and the underlying trend for bitcoin is up. In part this is because of its very nature. One of the features of bitcoin is that there is a finite number of them – 21 million – a figure derived from the assumption that people would “mine” (discover) a set number of transaction blocks daily. Every four years, a new cycle of bitcoin is released, which is half that issued during the previous cycle, as does the reward which miners get for discovering new blocks.

This means bitcoin is never subject to inflation – you cannot dilute its buying power by creating more because there is no more available once the 21 million have been released. It is estimated that 94% of all bitcoin will be released by 2024, and that the total supply of 21 million will have been mined by 2140.

One of the areas which is struggling to catch-up with cryptocurrencies is accounting, where governing bodies have yet to provide any definitive guidance on how to account for holdings of bitcoins, or other cryptocurrencies, or transactions denominated in them. In part, this may be due to confusion as to what they are in nature.

Although they are talked about as currencies, some leading economists claim it should not be regarded as cash or an equivalent, because of its inherent price instability, and limitation on the number of transactions that can be traded each day, due to the process of protecting the security of its blockchain. Moves to change the way that transactions are processed have met resistance from those in the bitcoin community who wish to preserve its anonymity and traceability.

And, at a more atavistic level, cryptocurrencies are digital, virtual in nature. You cannot handle a digital coin like you can with one in your pocket or purse.

If treating them as cash or cash equivalents is not suitable, then the alternative is probably to treat holdings as some form of asset. Again there is some resistance from investors and economists to treat a cryptocurrency as a financial asset – one that is held for long-term growth in value – because of its extreme volatility to date. Perhaps the closest approximation then is to treat bitcoin or another virtual currency in the same way that gold or any other commodity is currently classified in financial statements. This would mean that holdings of bitcoin, or the equivalent, would be classified as either inventory or intangible assets.

For businesses that happened to hold a virtual currency or to trade in them as part of its business, this means that the holding would need to be measured at either purchase price or fair value of the goods or services provided at the time of transaction. However, for a virtual currency trader, it would make more sense to measure its digital holdings at fair value through the profit and loss account.

The fact that there is no official accounting guidance yet on how to value cryptocurrencies and transactions denominated in them suggests that regulators and governing bodies are still coming to grips with the issue. However, despite the volatility and negative connotations which are sometimes attached to them, bitcoin and the many other digital currencies now available show no sign of going away, and the recent news that major banks are collaborating in creating their own virtual coinage, shows they are now becoming mainstream. The accounting profession will need to catch up.

What is benchmarking?

The objective of benchmarking is to understand and evaluate the position of a business or organisation relative to best practice either from within their industry or sector, or in a broader context, and to identify areas for performance improvement, and the means of achieving it.

By looking outwards, a business can help understand how their processes and operations compare to others, and identify improvements they can make within their own organisation. The process can also foster a learning culture within a company.

Benchmarking consists of four key elements:

  • A detailed understanding of existing business processes;
  • Analysing the business processes of others;
  • Comparing business performance with those others; and
  • Identifying and implementing the necessary steps to close the performance gap.

One error often made when benchmarking is to limit yourself to competitors or firms within your industry or sector as your yardstick. This is a mistake because you are cutting yourself off from valuable learnings which may be available from firms operating in completely different sectors or regions. A logistics company, for example, could learn about customer service from Google or Amazon.

To be effective, benchmarking should not be a one-off exercise but an integral ongoing improvement initiative, enabling a company to keep on top of evolving best practice.

There are 7 main types of benchmarking – strategic, performance or competitive; process; functional; internal; external; and international.

Strategic Benchmarking

This is used when a business wants to improve its overall performance and entails examining high performers to understand their long-term strategies, and general approaches. High level aspects of performance are considered, such as core skills and strengths, new product and service development, market positioning and how they adapt to changes in the external environment. By its very nature, strategic benchmarking may be difficult and time-consuming to implement.

Performance or Competitive Benchmarking

This type of study is used to measure a company’s position relative to the performance characteristic of key products and services, with benchmarked companies typically those operating in the same sector or industry.

Process Benchmarking

This type of benchmarking focuses on specific critical processes and operations, and targets are companies delivering similar work or services in a way identified as best practice. Process benchmarking can often deliver substantial short-term improvement benefits.

Functional Benchmarking

By benchmarking against companies operating in different business sectors or areas of activity, ways can be found of improving similar functions or work processes, often leading to dramatic performance upturns (in part, because looking outside your existing industry can give you a broader perspective on business challenges, and how to solve them).

Internal Benchmarking

This is used to compare business units or operations from within the same organisation – for example, country or regional operations. There are a number of advantages with internal benchmarking:

  • There are less issues around access to data and information;
  • Standardised data is more readily available; and
  • Less time and resources are usually needed.

However, there is one major drawback. Operations in different parts of an organisation are likely to be more heterogeneous in terms of functionality and performance than those of an external competitor or industry peer. This means there are likely less learnings to be had than with external benchmarking.

External Benchmarking

This involves analysing outside companies that are known to be best in class and have leading edge processes and practices. It is used to get an understanding of best practices and ideas which can be implemented within your own company. However, comparable data and information can take time to collect – much of it is confidential and these companies are not going to make this readily accessible to their competitors! – and process into credible findings which can be translated into actionable recommendations.

International Benchmarking

This is a hybrid of some of the previous benchmark processes, and is used to compare against best practitioners from elsewhere in the world, perhaps because there are insufficient local candidates to produce valid results. Whilst globalisation and technological advances now favour this type of benchmarking, it can take time to collect data, and “national” differences may need to be taken into account.

Albert Einstein famously said “once you stop learning, you start dying”. This is as true for businesses as individuals. Benchmarking is a way to learn from the best, steal or borrow their ideas, and improve the performance of your business. To ignore what others are doing is a sure way to stagnate and, ultimately, to die.

Live Product Streaming

For the past decade, several times a year, Apple has livestreamed new product launches. These have become legendary, must-see events, attracting not only top technical journalists from around the world, but existing and potential new customers as well, eager to see the latest product offerings from the technology giant. The result is a wave of news, traditional and digital media coverage which is of incalculable benefit to Apple (and its shareholders!).

They are by no means the exception. Thousands of businesses are now realising that, with live streaming demonstrations, they can create an immediate buzz around new products that is much more effective and cheaper than traditional marketing campaigns.

Live broadcast, live broadcasting, LiveStreaming Devices, live video streaming, live hd streaming are now just some of the terms that form part of the lexicon of this new marketing phenomenon. But, how do you get started, and why should you consider live streaming for your next product launch?

Apple’s events are successful for three reasons: they are normally showcase great products, the delivery is great (this doesn’t happen by accident, they practice for weeks honing their script and presentation skills), and they create an air of suspense ahead of time. There are no leaks, but plenty of teasers about what new products are in store.

You may not have the resources of an Apple, or Google (who also host renowned live product launches), but that does not preclude smaller companies following their lead. As with many things, proper planning and preparation is key.

If you have a new product to launch, who is going to talk about it? Apple’s product launches work so well because they get people from a range of disciplines – software, engineering, design as well as senior management – to talk about them. Find people from your company who can come across in a live stream as friendly and engaging way, and take another leaf from Apple’s book – emphasise what the new product can do for your customer, not how well it is made or what technology it incorporates.

Consider incorporating pre-recorded videos to enhance the content of your live stream event, and product demos should be considered a must. Having somebody actually try out one of your new products live is the best way to build confidence that it works.

From a technical perspective, you need a live streaming set-up. First of all, check that your venue has sufficient internet speed to stream in full HD quality. You will need a software or hardware encoder, cameras with sufficient high resolution, and the right audio equipment. You will also need somebody to operate the equipment. If you do not have in-house staff capability, there are many third-party providers who can provide the technical support you need to host such an event.

It is also important to select a live stream service provider (or Online Video Platform). Whilst YouTube and Facebook offer live streaming services, they are not suitable for businesses, so find a professional video platform which can provide appropriate security, restrict access to live streams, and assist with the branding of your products or company in the video.

Above all, practice, practice and then practice some more before you live stream a product launch. Make sure that the equipment works, that there is no lag or latency on the line because of internet speeds, that cameras are of the right resolution, and the audio quality is top notch.  There is nothing guaranteed to sink an online product launch more than streaming or technical glitches, so get these ironed-out before you launch.

Streaming new product launches can be a great promotional tool, creating a level of interest amongst customers that traditional marketing just can’t achieve. However, not only do you need to get the human element right – having a presentation that is engaging and information, for example – but the technical side needs to be up to the job as well. Making sure you have the right equipment, of sufficient quality and operated by people who know what they are doing, will help go a long way to ensure your live stream product launch is a success.

 

 

 

Banking giants partner to create a new cryptocurrency

Cryptocurrencies like bitcoin, were created in part as a means of avoiding traditional banking, with its regulatory framework, KYC requirements and high transaction fees. Ironic then that six of the world’s leading banks have now partnered with a number of other financial institutions to create their own cryptocurrency.

The science of cryptography was born during the Second World War out of the need to secure communications that could not be intercepted by the enemy – think of German Enigma machines and codebreakers such as Alan Turing. Moving to the digital age, cryptography has evolved to become a way of securing information and money online, as well as a means of communication as well.

Evolving from this, and starting with Bitcoin in 2009, cryptocurrencies have been created, a form of digital money designed to be secure and, in most cases, anonymous, because information about transfers and purchases is processed using virtually uncrackable code.

A cryptocurrency uses decentralised technology to let users store money and make secure payments online without the need to go through a bank, or even use their name. Running on a distributed public ledger – a consensus of shared, replicated and synchronised digital data which is spread across multiple sites, countries or institutions – also known as a blockchain, a record is maintained of all transactions which is held and updated by all currency holders.

It is the blockchain concept which the banks have been studying, particularly from the viewpoint of security. Banks not only have to keep money secure, they need to keep transaction records safe, whilst ensuring the verification process does not delay the movement of capital.

Swiss banking giant UBS, began exploring the clearing and settling global transactions over a blockchain back in 2015 using a digital coin – known as the “utility settlement coin” – and they have now been joined on the project by Barclays, HSBC, Credit Suisse, MUFG, State Street and Canadian Imperial Bank of Commerce.

The new cryptocurrency is planned for an initial limited release towards the end of 2018, and the banks have already begun discussing the cryptocoin with central bank regulators.

The anonymity and security of a cryptocurrency are both its major strength and, for its detractors, its major weakness. For its proponents it allows online trade to flourish free from the threat of government manipulation or high transaction fees, whilst its decentralised nature means it is available to everyone, with no need for users to have a bank account. Opponents, on the other hand, will point out that bitcoin has become the currency of choice for drug dealers and other criminals.

With the major banks now planning their own digital coin, it perhaps is a symbol that cryptocurrencies are no longer a fad, and can be considered legitimate. At the same time, such banks and financial institutions must work with central banks, which implies a degree of supervision and regulatory oversight which is the antithesis of the concept behind a cryptocurrency.

Russia has announced plans to restrict the trading of bitcoin to qualified investors, whilst several states in the US, including California, Illinois and Florida, are looking to implement new rules for businesses offering digital currency services.

It is worth remembering that bitcoin was created as recently as 2009, and that the market for cryptocurrencies has been volatile, with wild periods of growth followed by sudden slumps. Nevertheless, the underlying trends are upwards. In April this year, the total market capitalisation for all cryptocurrencies was US $25 billion; two months later that figure had grown to over US $100 billion. There are now over 900 cryptocurrencies available on the internet.

It looks then that cryptocurrencies are here to stay but whether those who buy, sell, or own them will have to accept a degree of legal or financial oversight that is against all the fundamental principle of a digital currency – that those who hold or trade them remain anonymous – is yet to be seen.

Domain Names simply explained

Domain names were created because, without them, the Internet’s addressing system really does not work very well. While each computer on the Internet has its own IP (Internet Protocol) address, these are just a string of numbers separated by a dot, such as 165.166.2. Remembering the IP addresses of web sites in this way is virtually impossible, so to make things easier, the domain name system was created.

Domain names can be described as the address of the Internet in humanly readable form. Each domain name is unique in its own way, but all have three common elements:

  • A top level domain (TLD), known sometimes as an extension or domain suffix;
  • A domain name (or IP address); and
  • An optimal subdomain

 

The top level domain is the formal name for the suffix that appears at the end of a domain name. In the early days of the Internet, seven generic top-level domains were created – .com, .org, .net, .int. .edu,.gov, and .mil – and these continue to have great authority on the web now, although there are actually over 1,000 possible TLDs from which to choose.

 

One example of this is:

Amazon.com and

Then there are the country- code TLDs. Nearly every country has its own two letter TLD name – such as the United States (.us) and the United Kingdom# (.uk). For these TLDs special rules apply, such as who can authorise and issue them, the renewal dates and procedures for transferring them to another owner.

Domain names are the second level of a domain’s hierarchy. Domain names on a specific TLD (called a root domain) are bought and obtained from a register. They can be regarded as representing the unique location of a website, as with the following examples:

bp.com (where bp is the domain name)

shell.com (again shell is the domain name)

Internet search engines use the keywords in domain names, but gone are the days when internet marketers could stuff keywords in to their domain names and hope to rank highly on Google! Their algorithms are now specifically designed to spot such tactics and to penalise them accordingly.

The term root domain typically refers to the combination of a unique domain name and a top level domain to form a complete website address. The root domain of a website is the highest page in the site hierarchy – usually the homepage. Whilst individual pages or subdomains can be built off the root domain in theory, to be part of the website each page url must include the same root domain.

An example of a root domain is:

Lifehacker.org

All the pages on a single website have the same root domain. No website can have the same root domain as another.

Subdomains are the third level of a domain’s hierarchy, and are part of a larger top level domain.

The most common subdomain is www, as in the following example:

http://www.ey.com/ where the www part is the subdomain.

However, with the following site, there is no sub-domain:

https://domains-index.com/

The problem is that as the Internet has exploded, there are literally millions of domains out there, and for internet marketers looking to undertake market research, create customer lists and identify potential customers, the task has got too big for humans to undertake alone. For example, according to the Q4 2016 Domain Name Industry Brief, there are approximately 329 MM domain names registered in ccTLDS (country TLDS), gTLD (generic TLDS), and new GTLD zones (new domain strings which are being created by ICANN – the Internet Corporation for Assigned Names, a non-profit which essentially regulates the naming convention and boundaries of the Internet).

Making Money Online

According to statistics reported by the US Bureau of Labor Statistics, there were more than 18.3 million home-based businesses in the US alone in 2011, generating US $427 billion a year in annual revenues (according to Entrepreneur Magazine). Separate studies show that a new Home-Based Business is started every 12 seconds, and that 70% of Americans would prefer to be self-employed.

This is against a backdrop where corporate downsizing has seen swathes of traditional jobs disappear whilst telecommuting has become more accessible and productive because of the Internet. The Digital Economy continues to expand apace every year, and with that growth more online money opportunities are continuously being created.

Those who work from home will point to the advantages it confers such as more freedom and less stress. No more time wasted on the daily commute, no boss or office politics with which to contend, no need to dress-up or clock in by a certain time. You get to choose your own hours, manage your own schedule, and take holidays when you want. At least in theory! This leaves you more time for family and friends, and personal projects.

There is also the opportunity, provided you have the drive, self-discipline, and time management skills, to make a lot of money online, with the advantage  you get to keep all of it (well, with the exception of the bit you have to give to the tax man!) The harder you work, the more you can earn.

A whole host of new opportunities are now available for online workers. Programmers, website and graphic designers are continually in demand, both from existing corporations looking to outsource projects, and from start-ups and small businesses looking to enhance their digital footprint. Freelance writers (included related disciplines like proof-readers and copy editors) are always needed to write articles, blogs, product reviews and social media posts, because of the voracious demand for online content. Then there are the online marketing and PR jobs, data entry, virtual assistant and tutoring gigs. Even some senior management roles can now be performed remotely. The list is virtually endless, and limited only by the ability, and, in some cases technological capability, of the individual. The entry requirements are also minimal – you just need a computer and an internet connection.

Affiliate marketing is one of these opportunities. The principle is simple – you earn a commission by selling somebody else’s products or services. For the beginner, affiliate marketing can be an attractive position. There are minimal start-up costs, and you don’t need to come up with a new product or idea – you are promoting something that is already for sale. You also do not need any expert knowledge – you just need to know enough about the product or service you are promoting to market it to somebody else. Furthermore, it can be a great source of passive income which can earn you money time and time again. If you carry a link to the affiliate on your website, for example, and somebody clicks on it, you can continue to earn money as long as you carry their link.

Why would somebody pay you as an affiliate? The answer simply is that it is a great way to promote a product or service online, and a lot cheaper than other marketing channels like Google Ads. Commission is only paid when an affiliate makes a sale, and even if you are paying them 10%, or even 20%, for each sale, acquisition costs are a lot cheaper than other online marketing channels.

There is a huge array of affiliate programs for almost any product or service online. So, if you are prepared to work hard, push their links and promote a company and its services, there is the opportunity to make some serious commission through affiliate marketing.

 

Business Insurance – make sure you are covered

Business insurance covers any type of insurance taken out by a business to protect against operational losses. The type of loss that an insurance policy might cover depends on the insurance company, the wording of the policy and any local legal or financial limitation. It may also depend on the industry of the type of business for which the insuree wants coverage.

There are several broad types of business insurance. General Liability insurance protects a business against a variety of claims, which might include personal or bodily injury, damage to property, negligence, or a broad variety of other operational mishaps and accidents. Product liability insurance protects against consumer claims in the event that they suffer injury, illness or even death as a result of using products made or supplied by a business which turn out to be faulty or defective in some way. Key Person insurance – also known as Keyman Insurance – is a form of life insurance, and covers a business for financial losses that occur due to the death or incapacity for any length of time of an important member of the business. The CEO, for example, or a key research scientist.

Beyond these general categories, there are other types of specific insurance available which a business might consider taking out to insure itself against risk. There is commercial auto insurance, for example, that protects vehicles which carry a company’s personnel, products or equipment, and even employees who drive their own cars on company business. Professional Liability Insurance – also known as Errors and Omissions Insurance – protects a business which either fails to provide a proper professional service, or whose clients suffer loss as a result of professional advice that turns out to be wrong. This type of protection is not covered by general liability insurance policies so this is something that definitely needs to be considered if you are an accounting firm, lawyer, consultant, real estate agent or even hair salon.

Directors and Officers Insurance protects the directors and senior officers of a company against any actions they take which affect the operations or profitability of a business. Should the director of a company find themselves facing a lawsuit, for example, this type of insurance would protect the business against the resulting damages and legal costs. Then there is Data Breach insurance. Any business that stores sensitive or non-public information about clients or employees on computers, servers or in physical paper files is responsible for protecting that information. A Data Breach policy will provide protection against financial losses or legal action result from this information being released inappropriately.

Some types of insurance are compulsory. If your business, for example, relies on commercial vehicles for the transport of goods, or the provision of services, then you must have auto insurance to cover bodily injury to drivers, passengers and third parties, as well as any resulting damage, in the event of an accident. And, if you employ  staff of any kind, no matter how big or small your company is, then you must have some form of Employers’ Liability Insurance – or Workers’ Compensation – to provide cover in the event that one of your employees is injured or becomes ill as a result of working for you.

Beyond this, there are no mandated types of business insurance, despite the unscrupulous claims of some insurance providers and service providers which suggest otherwise. UK banks, for example, have been fined and had to pay billions of pounds in compensation for the mis-selling of Payment Protection Insurance (PPI) to their customers.

Choosing the right business insurer for you can be difficult, because few service providers excel in every type of business insurance. One might be a top provider of commercial auto insurance, for example, but offer relatively inflexible product liability coverage. Others might be geared to particular types of industry, or positioned to service large companies and multi-nationals primarily.

Faced with such a choice, your first step should be to review your business carefully and determine what type of insurance you actually need. Then you need to find an insurer that meets those needs. There are literally thousands of insurers and brokers to choose from, so do your research and compare them.

If you are a small or medium-sized firm make sure that your potential insurer really caters to this sector of the market, have sales staff that understand your business, are prepared to give you insurance that meets your needs, and are not trying to sell you unnecessary or excessive cover. Business insurance of some form or other is both a necessity and an investment. Make sure you are getting a good return on that investment.