Becoming a digital nomad will allow you to explore the world and still be able to bring in an income. You will be able to enjoy a lot of freedom and travel to wherever you want no matter where your interests take you. If you want to try to build streams of income by running your own business, you will need to do things a little bit differently since you don’t have a permanent address. Here’s your ultimate guide to starting a business as a digital nomad.
Decide What Type Of Business You Want To Start
You will be pleased to find that there are all sorts of businesses that you can start as a digital nomad. Some of these businesses include:
When trying to decide what type of business you want to start, you do need to figure out the overlapping circles of what you are passionate about and what skills or abilities you possess. Having the freedom as the advantage of a digital nomad, you shouldn’t try to run a business that you neither have a lot of interest in nor are able to secure stable income.
Register Your Business As A Digital Nomad
In order to register a business as a digital nomad, you do need to have some sort of address, such as a post office box. This doesn’t need to be a place that you are actually living at, but it should be somewhere that you can get mail. You may be surprised to find that many digital nomads wind up registering their business in a country that they aren’t a resident of. This has to do with the fact that there may be greater tax benefits to registering their business in a different country than the one that they have citizenship in. These are some of the most common countries for digital nomads to register their business in:
Estonia– As one of the most digital countries in the world, Estonia allows non-Estonian citizens to register their business online and access digital solutions from anywhere in the world thanks to the e-Residency programme. More and more entrepreneurs have their businesses established in Estonia due to the ease of doing business and benefits they receive from becoming e-Residents.
Singapore- Many digital nomads find that registering their business online is pretty easy in Singapore. The economy is fairly stable, and there are a variety of tax incentives to starting a business there. Besides, digital nomads don’t have to pay taxes for the first three years of incorporation.
Hong Kong- This is a great country to register your business in if you are worried about taxes. They don’t have sales tax, and digital nomads can easily register their business virtually.
Belize- A lot of digital nomads choose to register their business in Belize. This is because it only takes a few days for their business to get completely registered if they have a remote bank account. This country also offers asset protection and low taxes.
Choose The Type Of Legal Structure For Your Business
For those digital nomads that want to register your business, you do need to choose a legal structure for your business entity. Here are the most common forms of legal structures for digital nomads’ businesses:
Sole proprietorships- Digital nomads may decide to register your business as a sole proprietorship if you don’t want to deal with a lot of document requirements. The main disadvantage of registering this way is that the business isn’t legally separated from the business owner.
Partnerships- It is common for couples who run the same business to register as a partnership. It will give you the same amount of ownership to the business, but you may both be held liable if something goes wrong. Just like with a sole proprietorship, there is no legal separation between your personal finances and the ones related to your business.
Limited liability companies- A limited liability company, or LLC, offers the most protection for digital nomads. Their personal finances are completely protected, but a lot of digital nomads avoid registering as an LLC because they don’t want to have to deal with fulfilling registration requirements, like filling out the articles of organization.
The best company legal structure for digital nomad will greatly depend on how much protection you want and how many assets you have.
Some Key Considerations To Manage Your Business As A Digital Nomad
If you’ve already figured out what type of business you want to start and how you’ll register, you are well on your way to becoming a digital nomad entrepreneur. However, you do need to keep these key considerations in mind so that you can effectively manage your business while you are traveling:
Taxation- The taxes you will have to pay will vary greatly with the country that you register with. If you choose to register in the United States, you should set aside at least 20% of your income so that you can pay self-employment taxes. Wherever you decide to register your business, you do need to find out the tax rates for those that are self-employed, and you should make sure that you put money aside every month so that you will have enough funds available to pay these taxes when the time comes.
Marketing- In order to be successful, you will probably have to do a great deal of marketing to promote your business. Fortunately, there are a variety of different ways that you can do this no matter where in the world you travel to. It’s crucial that you utilize social media to promote your business and increase your visibility in front of your potential clients.
Accounting- A lot of digital nomads struggle with accounting. Since they’ve never ventured out in this type of business, they may not be sure what they need to document and how to manage it all. You should save all of your receipts and invoices that are related to your business. Having thorough accounting records requires consistent upkeep, but this will prove to be very helpful when you need to file your taxes.
Business processes- Your business processes will be a lot different than they would if you operated an actual brick-and-mortar business. Especially if you’re working solo, processes like sending invoices, filing taxes, communicating with clients, etc should be optimized and even automated to boost the efficiency.
Starting a business as a digital nomad will allow you to have the freedom that you’ve always dreamed of. In order to make the transition go smoothly, you do need to keep the above information in mind. It may take a little time to get your business started, but it will be worth all of the effort so that you can travel the world at your own leisure while still bringing in an income.
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