Being a digital nomad has its perks: enriched traveling experience, excitement, social life, new business opportunities, new cultures, and more. And trust me, as someone who loves traveling back and forth with the proper business gadgets ready to deliver, it’s thrilling to be able to take your work with you everywhere. The downside, however, is mostly related to handling the business itself. Not all destinations have a solid WiFi connection, or a safe one for that matter, as hacking attacks have increased in areas with free public Internet connections. And let’s face it, it is certainly challenging to deal with taxes, accounting, and financing. Check out my recommendations below for digital nomads looking for intelligent taxing solutions.
I’m always happy to add more resources to the mix, as I feel an article is never done. If I’m missing out on some amazing tips or tools, drop me a line (subject: I Want To Suggest a Resource for Your Post) or a Tweet @roxanasoi, and let’s connect. :)
Opening a Company in An Overseas Country as a Non-Resident
In recent years, the US has opened its doors to international solopreneurs looking to open an LLC or C-Corporation at minimum costs, involving an almost tax-free benefit in the long run. States such as Nevada and Wyoming have plenty of offers for non-US residents. There are plenty of other examples, but for this section alone, I’d like to focus on the US.
Note: This is the way to go if you want to escape your own country’s tax limitations, or just place your business in a better geographically-branded position. There have been cases of clients expecting cheaper product/service prices just because the business HQs were based in Eastern Europe, Asia or South America, for example.
I checked out this website to learn more about the process of opening an LLC in the state of Wyoming, for example, and it seems that “you do not have to be a US citizen to own or be a part owner of a C-Corporation or LLC. The only limitation is that you cannot start or be an owner of an S-Corporation.”. Opportunity is available for residents from most countries, though some countries are blacklisted, such as Cuba, Iran, North Korea, Western Balkans, Burma, Sudan, Liberia, Zimbabwe. You can also check if your name or company is blocked on the OFAC list, here.
The process takes approximately 7 days, with same costs involved for US and Non-US residents. The only difference is non-US people must pay the FedEx costs for documents shipping to your current location. Your LLC can be linked to a US bank account or a bank account in your country of residence. Those interested in opening a US bank account need to go to the US in person to have their ID verified and background checked, and the process sometimes involves having a residency permit in the state/country/region of your business choice.
Good news for non-US residents working with clients outside of US: you get a tax-free option for your revenue streams for Nevada and Wyoming. However, there are some taxes involved in your country of residence, depending on tax laws. Remember, you can open a company in US, but you need to have a residency permit or to go there in person to get a US bank account, so the backup plan is to open a business bank account where you are currently living. For example, in some European countries, traveling outside the country for more than 6 months means you do not have to pay VAT for your company dividends at the end of the year. While in other countries, having a business bank account there implies paying some taxes to the government.
You can interact with fellow nomads and solopreneur travelers in this Facebook group related to taxes, to get a better idea regarding what to expect from different countries if you can’t afford a lawyer’s consulting fees in the early stages.
Handling Finances with Intelligent Finance Solutions
It’s excruciatingly painful to handle your company’s finance. Probably why I’ve been seeing accountants and bookkeepers in an entirely different light in the past decade. To cut the chase, here is what I recommend for digital nomads wanting to take control over their company’s cash flow.
Paypal Premier and Paypal for Business
If you’re as serious as I am about this stuff, you’ll want to upgrade your Paypal plan.Both Paypal Premier and Paypal for Business allow you to send and receive all payment types, even payments from customers without a Paypal account, under your own name, a company’s or a group’s name. You can send, request money, accept payments (national and international) on your blog/website, use their auction tools, download payment logs and use the Paypal Debit MasterCard BusinessCard. To top it off, you can accept an unlimited amount of credit card payments, implement recurring payments and paid subscriptions for your products and services, give your collaborators or employees limited access to your Paypal account and have access to the customer service call center 24/7.
Accounting Software Solutions
I’ve tried many of them. You have a complete tutorial of what Due.com can do for you in one of my previous articles, but I don’t believe I’ve mentioned QuickBooks too often. If you haven’t heard of QuickBooks, you’ll just have to google it. News in town is they have just launched their accounting software in the UK, with business plans in GBP. You can check out more on the QuickBooks UK page.
A bit about QuickBooks and why it works well with digital nomads and remote businesses. The accounting software can be incorporated in WooCommerce, Shopify, and other e-commerce apps, as well as plenty of retail platforms. It works very well with Amazon products and apps. There are three membership plans: Self-Employed, Essentials, and Plus. The first one works best for freelancers, the latter for digital businesses. Here is a list of what you can do with the help of this software:
- Estimate Tax Payments
- Quick HMRC Self-Assessments
- Separate your business transactions from personal ones
- Auto-track deductible mileage
- Invoices to be created and sent on the go, and bank transactions to be downloaded automatically
- Snaps and sorts of receipts
- Free mobile apps and variations of number of users from 1 to 5
- Tracking and calculations of VAT
- Managing of bills, payments, CIS deductions and more
- Payroll run
- Availability for Multiple currencies
- Manage stock
- Create budgets and purchase orders
- And track costs by project, geo-location, budget, as well as track employee or collaborator time
They also have a goldmine worth of advice on their Small Business resource center. Favorite sub-sections include “First year” for newly founded startups; Funding and Finance, and Cash Flow.
Intelligent Banking Solutions
A startup called NextPayments is working on an ATM and banking system solution in Australia and New Zealand for contractors, employees and team members. This implies a set of management technologies which can grant users a unique log ID, under a configurable user access platform. The user can control access to multiple functions, based on the user’s role in the organization. The technology is briefly explained in this video.
The ATM system works with physical headquarters better. It literally is an ATM machine which can be placed at the main entrance, offering employees or collaborators the option to: deposit, withdraw money, and replace paper bills at lower fees compared to the regular ATMs. However, this is something to look out for in the future, especially for digital nomads. We all crave for a way to control the bank fees we are paying in every country we set foot in.
As much as you can from this post (pun intended). Bottom line: give yourself a chance at a better, more balanced cash flow and tax control in your company. Look for countries or states that offer tax-free solutions, because even if we have large pockets, it doesn’t hurt being frugal in business. Be smart and try out accounting software solutions like Due, QuickBooks, Paypal. Look out for intelligent banking technologies, they really are the future. And last, but not least, enjoy your lifestyle, it is worth every penny.
Image source: Pixabay