5 Principles for Running Securely in a Multi-Cloud Environment By Travis Wilkins

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AWS has long ruled the cloud platform game. But today more and more companies are branching out and using additional providers as well. Often this isn’t a matter of replacing one with another, but of different business requirements (such as managing risk and costs) being suited to different cloud vendors. Other factors for using more than one provider center on the fact that vendors work to price their offerings competitively and continually add new features. Additionally, many organizations that run Windows are offered free Azure credits. So why not take advantage and reduce your overall cloud costs?

There’s nothing wrong with running a multi-cloud environment — in fact doing so may be part of a well-crafted strategy — but when you do so, you want to make sure that you are taking appropriate security precautions. In this post, we’ll cover five principles you should strive for when you make the move to a multi-cloud environment. But first, let’s take a look at the major players.

The Public Cloud Market: Three Major Players

Three major players dominate the public cloud platform world: Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform. AWS has been in the game the longest, and they have captured the largest market share with 57% of the market running their apps on AWS. Microsoft has 34%, and Google has 15% of the market running apps on their cloud platform.

The article Public Cloud War: AWS vs Azure vs Google provides an excellent rundown on how the three compare when it comes to these major factors:

  • Computing power
  • Storage and databases
  • Networking
  • Pricing

If you are trying to decide how much and which aspects of your environment to run in each of these services, this article will give you a clear breakdown.

Now, let’s talk about what it takes to secure your multi-cloud environment.

How to Run Secure in a Multi-Cloud Environment

1. Avoid ShadowOps

It’s all well and good if the entire organization has agreed that it makes sense to run multiple cloud environments with different vendors. If the benefits of doing so outweigh the costs, then by all means, take advantage of the competition to reduce costs and get the features you need. That said, a lot of organizations wind up with several separate AWS accounts that are unconnected or a bunch of different instances scattered across AWS, Azure, and Google. This can happen when DevOps team members decide to do what is best for their particular use cases without looking at what is best for the organization as a whole.

As we explained in ShadowOps Isn’t Just Bad DevOps, doing so can make your organization significantly less secure. It’s interesting to note that by 2020, a third of successful attacks experienced by enterprises will be on their shadow IT resources (2017 Gartner Security & Risk Management Summit). So whether the organization decides to stick with one cloud provider or distribute infrastructure across multiple, make sure that everyone has bought in and understands why this is the best approach for the organization. That will reduce the amount of ShadowOps going on, and in turn, improve your overall security posture.

2. Prioritize Visibility

No matter what cloud platform(s) you choose, you need to ensure that you have complete visibility across all your instances. This means that when you go to choose a cloud security solution, you should prioritize selecting one that offers deep visibility, ideally at the workload layer.

Signature-based monitoring is not enough in the cloud. You should focus on increasing visibility through behavior-based monitoring instead. In other words, you want a solution that is able to hold a magnifying glass to behaviors across all your instances and quickly detect anomalous behavior.

Your security solution should be able to:

  • Identify untrusted system modifications
  • Catch threats with behavioral monitoring of users and processes
  • Immediately detect anomalous user, process, and file activity

If you have complete visibility across your cloud instances, then it becomes irrelevant whether you’re using AWS, Azure, Google, or a mix of the three. You’ll still be able to run secure.

3. Follow Best Practices

Each platform comes with its own set of best practices. So if you are going to run instances across multiple platforms, make sure to educate yourself about best practices for each. AWS offers a guide to best practices on their platform (and you can also check out our top 10 AWS best practices). Azure lists (and updates) a series of articles that cover various cloud security topics in depth, and Google Cloud Platform shares a list of best practices. Of course, there is a good amount of overlap, and some general rules apply, such as:

  • Know what is happening in your environment at all times.
  • Set up alerts (prioritized by severity) that will notify you in case of out-of-policy behavior.
  • Meet and exceed compliance requirements.
  • Practice good hygiene: Keep everything updated and patched.

Best practices shared by the cloud vendors themselves are a great place to start because they know their technology better than anyone, and they have a responsibility to educate and support their customers.

4. Focus on Automation

Humans are prone to error. Through 2020, 95% of cloud security failures will be the customer’s fault (2017 Gartner Security & Risk Management Summit). When it comes to security, human error can introduce all kinds of risk. Relying on machines to automate routine, repeatable tasks is a good way to ensure that you don’t damage your security posture, especially while running multiple instances across several cloud vendors.

We recommend that organizations leverage automation to become secure by design. To accomplish this, you should focus on:

  • Updating your governance rules for the cloud
  • Understanding the shared responsibility model (which we’ll cover below)
  • Adopting a continuous risk treatment approach

Running in the cloud enables your DevOps teams to go faster. It enables continuous integration and continuous development cycles that can give you a real leg up on the competition. But it can also introduce risk, so you want to make sure you leverage automation to ensure that all security best practices are being managed efficiently and with minimal margin for error.

5. Uphold the Shared Responsibility Model

Finally, make sure you understand the shared responsibility model. We’ve written before about its implications and the state of the model today. 79% of businesses experienced risk that have actually translated into significant operational surprises in the past 5 years (2017 Gartner Security & Risk Management Summit). The bottom line is that when you take advantage of the public cloud — whether AWS, Google Cloud, Azure, or a combination — it’s up to you to secure everything in the cloud. You can count on AWS, Google, and Microsoft to secure the cloud itself, but you must make sure that your applications, data, and other systems are fully secured in the cloud. If someone logs into production without permissions and does something to put your organization at risk, that’s on you. So make sure you understand exactly where your responsibility begins and ends, and uphold it.

Final Words . . .

We think it’s great to see more organizations taking advantage of the competitive marketplace around cloud platforms today. While AWS has taken a clear lead, it’s worth exploring your options to understand which public cloud is right for your organization to accomplish its objectives.

As long as you keep security best practices at the forefront and take steps to ensure visibility across your cloud environments, you’ll be securely on your way to realizing the benefits of public cloud without getting tripped up by any potential drawbacks.

If you’d like to learn how the Threat Stack Cloud Security Platform® can help secure your cloud environments, please contact us today for a demo.

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How Do Businesses Activate Their Customers? By Keith Catanzano

Data analytics continues to rise in popularity within the business community. It is increasingly common to see data science used in marketing, sales, customer support and risk departments.

These departments use data science to unify data about their customers (or prospects). This allows them to segment and understand their customers’ behavior. For marketing, sales, and customer support (and perhaps certain elements of risk), the end-goal of customer analytics is to activate an audience so that they do something.

How do businesses activate their customers? If internet searches are an indicator, it remains a battle between email and social media (just click on http://ift.tt/2uTqXx6 to see). But 2River’s annual survey of customer engagement tools and technology shows a more detailed story when you look “under the hood”.

Starting in 2013, 2River has surveyed advertising, customer service and marketing professionals in the United States about the tools and technologies they used to engage their customers.

2River asks them what tools they use and how well the tools perform. 2River also asks them to identify emerging trends in their industry. The results of our 2016 survey are in.

Social media and email marketing tools are far and away the most used tools for engaging customers. 70% of our survey participants use each technology. That is comparable to feedback we heard when we started this survey in 2013.

There was very little change in the use of text messaging and marketing automation tools (around half of our audience use each tool…about the same as we heard in 2013).

The least popular tool for engaging customers continues to be online coupons. Only 26% of survey participants in 2016 told us they use online coupons. This is a slide that continued over the past couple of years. In 2013 only 34% of our participants used online coupons.

Social media monitoring technologies was an area of significant drop off in this year’s survey. 64% of our audience in 2016 use technology to monitor social media in order to engage with their customers. This is down from 72% of our participants when we started in 2013. This trend may reflect a decreasing demand for tools to monitor social media as AI and analytics tools for social media marketing and ad placement have improved.

The full research report from the 2016 Customer Engagement Tools survey is available at http://ift.tt/2vLsXDZ

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Using Artificial Intelligence to Deliver a More Personalized Customer Experience By Lars Holmquist

The explosive growth of structured and unstructured data, along with the availability of new technologies such as cloud computing and machine learning algorithms, have made the expanded use of artificial intelligence (AI) in banking possible. According to Goldman Sachs, AI will enable $34 billion to $43 billion in annual “cost savings and new revenue opportunities” within the financial services sector by 2025.

With more data accessible than ever before, banks are actively working on opportunities to better integrate machine learning into their businesses. However, this does not have to mean a less personalized experience for customers. Rather, it is crucial for customer loyalty that, even with decreasing face-to-face interactions, customized interactions are the norm.

We researched the banking motivations of the affluent middle class in the US, UK, Brazil, China, India, Italy, Singapore, and the United Arab Emirates. When it comes to this highly desirable segment, nearly two-thirds expect greater recognition and reward from banks for their loyalty. We found that those who feel loyal to a bank are 72% more likely to purchase a product from them in the future, and 70% would be prepared to recommend a banking brand to their friends and family. Furthermore, if a customer purchases additional products through their bank, over half are less willing to switch provider.

There are several opportunities for AI to meet this desire for personalization: recognize customers, offer personalized digital experiences and relevant rewards, and build loyalty by offering suggestions based on customer behavior.

Increased access to rewards

One challenge banks face is that their loyalty program members often accumulate loyalty currency without being able to redeem due to a lack of reward attainability or capacity issues such as limited availability of airline inventory. To address this issue, AI could use transaction data to suggest instances when customers could spend points and help to deliver timelier, location-based rewards.

For example, if a customer uses their credit card to book a flight, the loyalty system could trigger an offer for a discounted meal at the airport on the day of departure. By making it easier for banking customers to take advantage of the benefits offered by loyalty programs, AI can help boost customer engagement, encourage repeat business and even generate incremental revenue for financial organizations.

Time for more personalized interaction

AI can also free up contact center employees to act in a more consultative capacity. If chat bots are trained to automatically handle common calls, customer service agents would be freed to provide a more personalized recommendation service based on a real conversation. Financial organizations could use these human interactions with customers to offer improved financial advice and planning and capture additional lifestyle data for future product and service offerings.

Easy access to information

Although more customers are now comfortable using digital financial services, some still want face-to-face interactions with their banks. When we asked how the global mass affluent customer likes to bank, more than a quarter (26 percent), said that they prefer to visit a branch, 24 percent bank via an app, 29 percent favor using a website, and 21 percent showed a preference for the phone.

Much of the talk about AI in banking has been about how technology can replace some functions currently performed by humans. However, AI could also help banks serve their customers more effectively by giving them easier access to relevant information.

This year, U.S. Bank announced the formation of an artificial intelligence enterprise solutions unit, which sits inside its payments, virtual solutions and innovation group. The bank has begun experimenting with how AI can serve customers that have product, service or loyalty program related queries that are not frequently asked. Machine learning will ensure that over time these less typical queries have ready made responses versus the current situation where advisors often have to consult experts in another department to provide immediate advice.

If AI could contain an encyclopedic knowledge of U.S. Bank’s offerings, advisors could quickly provide relevant information, enhancing the overall customer experience. It is worth noting that customer experience is most often cited as the reason customers feel loyal to a brand and remains critical to retaining profitable customers.

Financial services brands need to work harder to understand their customers, to engage with them, to reward them appropriately and ultimately retain them. Through the effective application of AI, banks can leverage technology to offer enhanced products, services, communications and programs that achieve the ultimate in customer behavior – devotion to a brand.

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Hire Innovators and Keep Them Innovating By Daniel Burrus

Free-Photos / Pixabay

Leaders who want to see their organizations leap far ahead of their competition are usually deeply involved in any number of employee activities and programs.

That’s understandable, but a high level of involvement can often become counterproductive.

However tempting it can be to have a finger in as many pies as possible, leaders of organizations that truly excel are keenly aware of the importance of authority and thoughtful direction—and, just as important, the value of also allowing others sufficient freedom to try new things and do their jobs as only they know best.

Admittedly, that can be easier said than done.

Challenging Times? Greater Control!

As I mentioned at the outset of this blog, a high level of control may well be many leaders’ default setting. That can be particularly true when an organization faces a specific challenge or is trying to cope with difficult market conditions. The thinking goes, when the going gets tough, a leader needs to take charge more than ever.

Unfortunately, that can often prove to be the least effective strategy. As a telling example, several years ago CSC Germany, a division of the $17 billion international IT consulting and services firm, responded to poor financial performance by boosting control and levels of oversight. The company only continued to struggle. However, when leadership did the opposite—less control and greater employee autonomy—the outcome was a resounding success. The company later implemented the strategy in other areas of the firm, using peer group supervision and in-house coaches instead of a heavy-handed top/down structure. Employee performance and company results blossomed.

A Sense of Ownership

If you peel the onion a little bit, it’s not difficult to understand why CSC—and other organizations that have effectively loosened hierarchical grips—have enjoyed vastly superior performance when employees have greater individual freedom. One obvious benefit is a sense of ownership that derives from autonomy. Employees who are, in effect, trusted to do the right thing naturally feel a greater stake in an organization’s success and respond accordingly.

(Note that that differs from a sense of empowerment—a key distinction. Empowerment implies granting of freedom, like a king generously offering his subjects greater rights. By contrast, autonomy isn’t a “gift”—it’s policy that’s built into an organization’s working philosophy.)

The success that autonomy can bring can be all the more dramatic when coupled with several of the central components of my Anticipatory Organization Model. For instance, one key principle is the essential value of organization-wide everyday innovation. As technology continues to accelerate change in every level of our personal and professional lives, innovation—both in terms of industry-shifting blockbusters as well as everyday innovation—is an organizational imperative.

Consider: Which sort of environment better encourages pursuit of innovation—one where only a few leaders come up with the innovative ideas or another where people have the individual freedom to implement inventive solutions to everyday problems and have a process where they can share their process, product, or service innovation and know their ideas will be considered?

Another component of an anticipatory organization is yet another form of freedom—freedom to fail, and all the better if that failure occurs quickly. A commitment to innovation naturally implies a comfort level with failure—and, if people have the freedom to fail and learn quickly from their missteps, innovation can only benefit.

Somewhat ironically, an organization that affords its employees significant autonomy also builds stronger ties with those employees. Think about it: If you’re an employee who sees the freedom to innovate as a means to further yourself both professionally as well as personally, why would you look elsewhere for long-term employment opportunities?

Every leader on the planet loves success and a competitive advantage. Creating a culture that values continuous innovation and has the freedom to implement inventive solutions to everyday problems, as well as look for and share any game-changers they can see, can accelerate innovation, improve results, and turn rapid change into a competitive advantage.

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How Disney’s Mobile App Transformed Their Park Experience By Kevin Cain

The home of Mickey, Minnie, and happy ever afters, the Walt Disney theme parks have always had a special allure for children and adults alike. But in recent years the happiest place on earth has gotten even better. The reason isn’t because there’s a new cast of characters or because some spectacular new ride has opened, but rather thanks to the release of one particular Disney mobile app.

To be clear, Disney isn’t a newbie when it comes to apps. The company has dozens of them, most of which are highly popular games and puzzles featuring some of its most famous characters. As a user, you can create your own stories, sing karaoke, win prizes, and send emojis. Disney even has apps for posting themed gifs, child-friendly messaging, and viewing unlimited Disney content across multiple devices. Yet in recent years it has really been the My Disney Experience app that has proven to be a game-changer for both the company and park goers.

my disney experience.jpg

What Is My Disney Experience?

In 2013, Disney launched its ambitious MyMagic+ digital platform, consisting of four main components: MagicBands, FastPass+, the My Disney Experience mobile app, and the PhotoPass Memory Maker. The project was aimed at integrating digital infrastructure into the park experience, and the company committed $1 billion to the initiative. Practically speaking, what this meant was that guests could use a wristband or smartphone to enter the park, pay for rides, buy food, enter their hotel rooms, book restaurants, and access maps. Wi-Fi had to be installed across Disney resorts to allow use of the apps, and the locks on over 28,000 hotel room doors were upgraded. While the wristbands have had a rocky start and won’t be rolled out in international Disney resorts, the app has continuously improved over the years and has been transforming the park experience since it was launched.

What it does

The way that Disney sometimes describes the My Disney Experience app is that it has “features to help you plan and play.” That’s a pretty spot on. It’s basically a one-stop-shop that lets park visitors do everything from purchase tickets and merchandise and find their way through the parks with step-by-step navigation and directions, to making FastPass+ selections and checking reservations and schedules.

Among its features are the My Resort Dashboard, which gives access to all accommodation details, including room location, transport options, and a direct line to the front desk. The interactive GPS-enabled map helps visitors navigate the park and spend less time trekking to what they want to visit. You can also pre-book tickets and reservations, get wait times for attractions, and show times for fireworks and parades. Plus, you can easily share your itinerary with friends and family when you organize reservations and activities using the My Plans feature. By using the app, you can also download, edit, and share Disney PhotoPass photos on your mobile device throughout your vacation. You can even pre-order food and pick it up when it’s ready.

To operate, the app will request access to the phone’s camera to scan credit cards for purchases, link tickets and passes to the account, and scan and link PhotoPass cards. It also comes with the option to receive push notifications for information relating to the park visit or resort stay, and comes in customized versions for international parks like those in Shanghai and Hong Kong.

What’s in it for Disney and for visitors?

By making visits more efficient and more personalized, Disney has clearly got its eye on guest dollars. That makes sense. Create an easier, more enjoyable experience for the whole family, and they’ll be more likely to come back.

Remove the long lines for rides and restaurants with a pre-booking system, eliminate the need for hotel room keys and tickets, and make it simple to get to the attractions and you’ve got happy guests who’ll open their (digital) wallets. The problem with the Magic Kingdom has always been logistical. As its popularity increased, so did the crowds. Yet the efficiencies that the app creates have helped Disney manage its resources better and enhanced the overall experience for visitors.

In fact, the company was able to accommodate 3,000 additional daily visitors during the 2013 Christmas holiday season by effectively managing advance reservations for rides that were in high demand. Creating a vacation management system has clearly made good business sense. And that’s before you factor in the public’s increasing expectations to have goods and services literally in the palm of their hand.

Disney’s mobile apps: A new way to experience the magic

New attractions and maintenance aside, the My Disney Experience app is probably one of the most revolutionary changes the Disney Parks have ever undergone. As we’ve seen, putting the power of mobile vacation management in its guests’ hands has been an incredibly smart move. That’s because any time that you can make the happiest place on earth even happier, all at the touch of a button, it’s a win-win for everyone.

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The Freelancer’s Totally Fun, Definitely Not Boring Guide to Taxes By Dan Shewan

You know what’s awesome about freelancing? Almost everything. Pants are optional (mostly), pets make better coworkers than most people, and you can listen to Kenny G as loud as you like without fear of mockery or reprisal from colleagues. (Ahem.)

Know what sucks about freelancing?

Paying taxes.

Freelancers Guide to Taxes

If you’re thinking of striking out on your own as a freelancer or launching your own business, you and you alone are responsible for making sure Uncle Sam gets what he’s owed.

Unfortunately, the U.S. taxation system is one of the most grotesquely complex bureaucracies in the world, and to the uninitiated, filing a simple return as an independent contractor can quickly become a Byzantine nightmare.

Today I’ll be guiding you through the fun and exciting world of taxes for freelancers. We’ll cover some general points before exploring some of the juicier stuff, like what you can (probably) write off as well as pitfalls to avoid. Before we get started, though…

First, A Very Important Disclaimer

Before we go any further, it’s important to note that this guide focuses exclusively on American taxation law; although some of the tips may apply if you live elsewhere, this guide is primarily for freelancers living and working in the United States and may apply to overseas contractors working for American companies.

Freelancers guide to taxes IRS building exterior with signage

Abandon hope, all ye who enter here…

I am not a lawyer. I am not certified by any bar association (insert drinking joke here), nor am I qualified to offer legal advice. Also, I am not a personal finance expert. As such, none of the content in this post should be considered a substitute for hiring an accountant or tax attorney who knows what they’re talking about. These are general guidelines only, and should NOT be taken as hard-and-fast rules about what you can and can’t do with your taxes as a freelancer.

Also, please note that for the sake of simplicity, all of the tips and advice below apply solely to federal taxes, i.e. money that you owe to the federal government. State tax law varies widely from one state to another, the complexities of which would obviously be impractical to get into here.

Freelancers guide to taxes Simpsons Lionel Hutz attorney business card

Pretty much.

If you are in any doubt whatsoever about any of the issues raised in this post, contact the IRS (or your state’s treasury office). Contrary to common misconception, most of the people who work for the IRS are actually really awesome, friendly, helpful people. Don’t be afraid to contact them directly if – and when – things get obscenely complicated.

Also note that the terms “freelancer” and “independent contractor” will be used interchangeably throughout the post, despite the fact that there are subtle differences.

With that out of the way, let’s get down to business. See what I did there?

How Do Taxes Work As a Freelancer?

The biggest difference between paying taxes as an employee and a contractor is that your taxes are usually withheld by your employer before you get your paycheck, whereas freelancers are on the hook for setting taxes aside themselves. We’ll get to more on this shortly.

Freelancers guide to taxes money in a Mason jar

Not sure what kind of savings account is right for you? Why not cram
your money into a Mason jar instead?

Another major difference is the actual rate of tax you’ll be expected to pay. This will change depending on how much you earn, as well as the deductions for which you’re eligible.

Basically, virtually every aspect of paying taxes as a freelancer depends on dozens of variables and personal circumstances. Awesome, right?

Not really.

Paying Quarterly Estimates as a Freelancer

Remember when we talked about how freelancers are on the hook for setting aside money to pay their own taxes?

Most independent contractors and self-employed individuals are expected to pay what is known as quarterly estimates to the IRS four times per year. I say “most” because – helpfully! – there are some exceptions.

For example, if you’re expecting to owe less than $1,000 in taxes for the fiscal year after income tax withholding (income that is subject to automatic withholding of taxes, such as salaried earnings), you don’t need to file quarterly estimates. Similarly, if your income tax withholding meets or exceeds 90% of your tax liability for that fiscal year, you don’t have to make quarterly estimate payments. For more information on requirements for quarterly estimates, check out this post at the TurboTax blog.

Freelancers guide to taxes IRS Form 1040-ES estimated tax

Quarterly estimates are exactly what the name implies – an estimate of how much tax you owe, paid once per quarter. However, you can’t just send the IRS a check whenever you like. There are clearly defined deadlines for quarterly estimate payments, and each payment period has its own payment due date:

Payment Period Due Date

January 1 – March 31 April 15
April 1 – May 31 June 15
June 1 – August 31 September 15
September 1 – December 31 January 15* of the following year. *See January payment in Chapter 2 of Publication 505, Tax Withholding and Estimated Tax
Fiscal year taxpayers If your tax year doesn’t begin on January 1, see the special rules for fiscal year taxpayers in Chapter 2 of Publication 505
Farmers and fishermen See Chapter 2 of Publication 505

As the IRS page on quarterly estimates states, even if you end up being owed a refund at the end of the fiscal year, you’ll still be penalized if you miss these payment deadlines. Late fees will also vary depending on how much you owe and how late your payment is.

I’m not your mom, so I’m not going to tell you how to run your business. All I’ll say is that personally, I find maintaining two separate checking accounts works best; one for “regular” stuff like food and shelter and other things in Maslow’s hierarchy of needs, and another solely for quarterly estimates.

What Can I Write Off as Tax Deductions as a Freelancer?

A few years ago, I read an amazing story on a message board about an attorney who worked in Baltimore, Maryland. In addition to his regular office, this guy claimed to have bought a fax machine, installed it on his modest yacht, and wrote the entire thing – including the boat – off as a tax deduction because the addition of the fax machine allowed him to claim the yacht as “office space.”

Freelancers guide to taxes home office on a yacht

My kinda workspace.

Honestly, I don’t particularly care whether the story is true. It could go either way, really. What I love about this story is that people try to pull this stuff all the time, well-intentioned or otherwise. There have been some truly hilarious and bizarre write-offs over the years, many of which were successfully upheld in tax court after initial rulings to the contrary by the IRS. However, knowing exactly what you can and cannot claim as a deduction is tricky.

How Tax Deductions Work for Freelancers

People tend to get excited about tax deductions, and for good reason – but what are they?

Tax deductions are itemized reductions in the total amount of taxable income a person earns in a year.

Let’s say you earn $40,000 per year and claimed no deductions. In this example, the IRS would expect you to pay taxes on the entirety of that $40,000. Now let’s say that you’re a freelancer earning $40,000 per year and pay for your own private health insurance, which costs $5,000 per year. Because you can deduct (or “write off” the expense, to use a common expression) the entirety of private health insurance costs, this means the IRS would only expect you to pay taxes on $35,000.

The first thing you need to know about deductions as a freelancer is that most deductions are submitted as part of a form known as Schedule C Form 1040.

Freelancers guide to taxes IRS Schedule C Form 1040

Schedule C Form 1040 in all its glory

As with virtually everything relating to the American taxation system, there are few hard-and-fast rules regarding deductions – almost everything has caveats attached.

Take home offices, for instance. You can write off certain expenses as deductions, but for a home office to be a valid deduction, you need to use your workspace exclusively for business purposes. This means your workspace must be dedicated solely to work; you can’t write off a portion of your mortgage or rent if you work from your kitchen table, for example. Also note that even if you meet this criteria, you can only deduct a portion of your living expenses.

Freelancers guide to taxes working from home

Protip: This isn’t a “home office,” at least as far as the IRS is concerned.

The same principle applies for other business expenses. The IRS allows freelancers and self-employed individuals to deduct up to 50% of meal expenses if they were for legitimate business purposes (think meeting a potential client for lunch), but trying to deduct more than that could flag you for an audit.

Business Expenses That Freelancers Can Deduct

We’ve established that everything with the IRS is conditional and that only some expenses can be deducted – but what, specifically, can you deduct in the first place? Below is a summary of the kinds of expenses you can legitimately deduct as an independent contractor (with relevant caveats).

For the sake of ease, assume that any and all of the costs below are subject to the IRS’ determinations, including the percentage of these costs that can be deducted.

  • Travel and accommodation: If you travel for work, you can deduct at least some of your travel and accommodation costs as business expenses. This includes costs related to flights, cabs/ride-hail services, train fares, car rentals, and hotel/motel rooms.
  • Meals: As noted above, a portion of meal expenses incurred for business reasons are deductible in many circumstances.
  • Website costs: Expenses associated with maintaining your online presence – including website hosting fees and domain registrations – are deductible.
  • Vehicle maintenance and mileage: If you use a personal vehicle for your business, you can deduct some of the expenses related to vehicle maintenance such as wear and tear on your vehicle, as well as some fuel costs (typically calculated by mileage). There are two ways to deduct these expenses; a standard mileage option and an actual expense option. The standard mileage option allows you to deduct up to $0.535 per mile, whereas the actual expense option allows you to deduct a percentage of all vehicle maintenance costs, including lease payments, repair, new tires, registration, and insurance, among other costs. For more on the nuances of these expenses, check out QuickBooks’ excellent guide to vehicle deductions.
  • Software costs: As a freelancer, it’s likely that you need at least a few software tools to run your business. Fortunately, such expenses are deductible. This can apply to the outright purchase of one-off licenses as well as subscription-based programs.
  • Utilities: Similarly to home office-related expenses, certain utility costs can be deducted if you work from home. Electricity, phone bills, broadband access, and other utilities can be written off (in part) depending on your circumstances.
  • Unpaid invoices: Every freelancer I know has at least one horror story of a client that outright refused to pay. Although this is one of the most infuriating aspects of working for yourself, the IRS does sympathize and allows independent contractors to write off unpaid invoices as lost income. Also, it’s amazing how many freelancers I run into who don’t know this.
  • Healthcare coverage: There’s no getting around the fact that, for all the political rhetoric about “freedom of choice,” searching for and buying private health insurance coverage as a freelancer sucks. Fortunately, you can deduct the entirety of your privately purchased health insurance premiums on your taxes. Note, however, that you cannot deduct health insurance premiums if your insurance is provided through your spouse’s employer.

There are plenty of other things you can deduct, such as retirement contributions (ha), legal fees, and professional development expenses such as training programs and educational courses, to name a few. If in doubt, talk to a qualified tax professional.

What Happens If You Don’t Pay Your Taxes as a Freelancer?

Now that we’ve looked at paying quarterly estimates, deductibles, and what proposed tax reform could mean for independent contractors, it’s time to ask the most scary question of all – what happens if you don’t pay your taxes as a freelancer?

Freelancers guide to taxes Monopoly do not pass go

Maybe don’t go DIRECTLY to jail…

Firstly, remember when we talked about quarterly estimate payment deadlines? Well, if you miss these deadlines, the IRS will apply late payment fees and interest on your total tax liability for that fiscal year i.e. the total amount owed. These fees will be levied against you even if you successfully filed for an extension, so don’t assume that applying for an extension will spare you from late fees – it won’t.

There are two main types of penalties that the IRS applies:

  • Failure to file – a penalty applied if you fail to file a tax return for a particular fiscal year
  • Failure to pay – a penalty applied if you file a return, but fail to pay, your tax liability for a particular fiscal year

According to the IRS, the penalty for filing your return late is typically 5% of the unpaid tax owed per month. This penalty begins to accrue on the day after the filing deadline, and will not exceed 25% of the total tax liability owed.

Freelancers guide to taxes IRS late payment penalties

It’s funny because it’s true!

Failure-to-pay penalties are typically 0.5% of your unpaid tax liability. Similarly to the failure-to-file penalty, penalties for failing to pay your taxes by the due date begin to accrue the day after the payment deadline, and applies to each month or partial month that taxes are owed.

As we’ve established, there are few hard-and-fast rules when it comes to taxes. If you’re due a refund, for example, penalties for late filing or late payments will usually be deducted from your refund. Similarly, there are certain circumstances that might mean you won’t be subject to penalties at all. Again, if you’re not sure, contact the IRS directly or speak with a qualified tax professional.

Entering into Payment Agreements with the IRS

So you’ve filed your return (late or otherwise), calculated your liability, and – to your horror – have realized that you owe more than you can pay. What now?

Freelancers guide to taxes Uncle Sam recruitment poster

One option that may be available to you is entering into a repayment agreement with the IRS. This type of agreement allows a taxpayer to repay their tax liability from one or more previous fiscal years on a monthly basis. Payments can debited directly from a bank account, making it easy to repay your owed taxes regularly and without having to worry about mailing checks every month.

Although the IRS is generally very forgiving when it comes to repayments, there are some eligibility requirements for taxpayers hoping to enter into a repayment agreement. Check the IRS website for details on eligibility and how to apply.

Make an Offer-in-Compromise

Another option for repaying back taxes is making what is known as an “offer in compromise.” Basically, this is an offer to make a one-time, lump sum payment to the IRS that is typically lower than the total amount owed. For example, you could make an offer-in-compromise to pay $6,000 on a tax liability of $10,000. However, offers-in-compromise can be spread out over several payments as part of what the IRS calls “periodic payments.”

Freelancers guide to taxes poorly written IOU note

Unfortunately, there’s a little more to it than this.

It’s important to note that the IRS doesn’t have to accept an offer-in-compromise. If the IRS determines that you have the means to pay via an installment agreement, it will usually insist on this arrangement. In addition, the IRS may pursue other collection actions before agreeing to an application for an offer-in-compromise.

Declare Bankruptcy

This may be an option when all hope seems lost, but it should be considered the nuclear option.

Chapter 13 is the most common type of bankruptcy for taxpayers who cannot repay their tax liability. However, filing for Chapter 13 is a last resort for all parties involved – including the IRS.

Freelancers guide to taxes bankruptcy court building exterior

Try not to end up here.

Even if you don’t care how declaring bankruptcy will affect your financial future, there are several clauses that taxpayers must meet before filing for Chapter 13:

  • Taxpayers must have filed returns for ALL tax periods for four years prior to filing Chapter 13
  • During bankruptcy proceedings, taxpayers must continue to file (or apply for an extension) for all applicable returns expected
  • All current taxes must be paid while a bankruptcy case proceeds through the courts
  • Any failure to file the expected returns and pay current taxes owed may result in the case being dismissed

Again, this is not a decision to be made lightly. Filing bankruptcy is a big deal, especially in today’s society when virtually every metric of your perceived worth is tied to your credit score. If there’s really no other option, though, it may be worth considering. If you’re thinking about it, talk it over with a tax attorney first. In fact, if you’re thinking about doing anything mentioned in this post, talk to a tax attorney first.

Helpful Tax Resources for Confused Freelancers

We’ve barely scratched the surface of how potentially complex it can be to navigate taxation as a freelancer. To help you figure things out, here are some useful resources that you may want to check out:

  • US Tax Center at IRS: This IRS website offers a ton of information on virtually every tax-related topic you can think of, and the site is significantly easier to navigate than the main IRS site.
  • Freelancer’s Union: Although this non-profit organization is based in New York City, the Freelancer’s Union has some really excellent advice for self-employed individuals, and makes complex topics accessible and easy to understand.
  • Reddit: I know, I know, Reddit can be a five-alarm dumpster fire of online toxicity, but the /r/personalfinance and /r/tax subreddits can be valuable sources of information if you ask the right questions (and do a search of previously asked questions before asking your own, per the unspoken galactic laws of Reddit). As with everything else in this post, any and all advice you may receive from well-meaning redditors should NOT be taken as binding legal or financial advice, even if that person claims to be a lawyer or certified accountant.

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Why Businesses Need to Look Into Chatbots Today By Alex Debecker

3dman_eu / Pixabay

We can no longer deny it: the chatbot trend is under way. More and more people every day are being exposed to conversational agents in all sorts of sectors, from cooking chef chatbots on Facebook Messenger to Amazon’s Alexa in our living rooms.

Some businesses doubt chatbots are a real opportunity. Others doubt consumers even want to use them. Others also doubt chatbots will be part of our lives for much longer.

In this article, we will go over four research-backed data points that show why businesses need to look into chatbots today. If you find yourself doubting the chatbot trend, this article is for you.

Chatbots save businesses money

The data: by 2022, automated messages in the healthcare and banking could save $8 billion in costs across global businesses every year (Juniper Research).

Automating enquiries is the low hanging fruit chatbots are easily capable of picking up right now. It is widely assumed 80% of business enquiries are repetitive and require the same answers. Chatbots can pick these up and answer them automatically, 24 hours a day, seven days a week.

The Juniper research mentioned above focused on the banking and healthcare sectors but it is easy to extrapolate the savings chatbots could bring to other global sectors.

The lowdown: chatbots help businesses save money by automating repetitive tasks.

Consumers want businesses to use chatbots

The data: Although only 57% of consumers know what a chatbot is, over a third (35%) want to see more companies using chatbots to solve their queries (ubisend research).

Automating incoming queries not only save businesses money, but they also make consumers a happier. In the ubisend research above, consumers stated chatbots as the best way to ‘receive an instantaneous answer’ (69%).

Consumers now expect instantaneity from companies. We no longer want to wait two to three business days for an answer to our questions — we want it now.

The lowdown: chatbots satisfy our desire for instant personal care. Research shows a majority of consumers who have experienced this level of instantaneity are delighted and want more.

Consumers are happy to talk to robots

The data: 40% of consumers say it does not matter whether they are talking to a human or a robot, as long as they get help quickly and easily (HubSpot).

When it comes to consumer-facing chatbots, businesses tend to fear the impact of losing the human touch. The argument is that if your customers are talking to chatbots instead of people, they will quickly figure it out and (for some reason) hate you for it.

The data above shows this perception is mostly wrong. Most people do not care who or what answers them, as long as they get the answer. This HubSpot finding is confirmed by ubisend’s research which shows 19% of consumers do not believe having a human interaction is important when talking to business.

The lowdown: consumers want help, they do not care how you do it. The faster they get the help they want, the more they will love you for it. Chatbots are the way forward when it comes to instant, on-demand, help.

Chatbots are a new income stream

The data: Consumers would be willing to spend an average of £314.74 through a chatbot (ubisend research).

Chatbots are not just about saving money by automating tasks and servicing customers quicker. They are also about increasing revenue and opening new revenue-driving channels.

The research shows consumers are more comfortable than many realise when purchasing through a chatbot. Digging through the data also shows the younger generation is even more comfortable. The 26 to 36-year-olds are willing to spend 52% more than their elders, up to £481.15.

The lowdown: businesses have a lot to gain from automating the repetitive tasks. They also have a lot to gain from opening a new stream of income. Consumers are beginning to turn to chatbots and the first businesses to meet them there will be in the driving seat.

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