Hey Digital Nomads: Form an LLC for Your Business Before You Take Off
As a self-employed entrepreneur, solopreneur or freelancer, you have likely been planning this move for a long time. Maybe you wanted to hit the road earlier in the year, but the pandemic grounded you. Or maybe you’ve begun to work from home this year and you want to now take advantage of it and become a digital nomad. Or perhaps you’ve been a digital nomad for years and you’re ready to get back to it as cities and countries are opening up again.
However, before you venture off into the world, you may be forgetting one task you should highly consider adding to your list — forming a limited liability company (LLC).
Forming an LLC before you travel the world and work from these incredible, remote destinations will protect you and your business when you are preoccupied with exploring new lands and immersing yourself in different cultures. There are plenty of other reasons why forming an LLC is a smart business decision when you do not necessarily have a home base, and we are here to tell you why.
Why Digital Nomads Should Form an LLC
Whether you already have a gig or not, starting an LLC can give your business a professional appearance for your clients and it can easily be run from anywhere. You’ll get to work on your own terms while exploring all of the beauty the world has to offer. Luckily, forming an LLC can be accomplished easily.
An LLC is there to protect your business, as well as your personal assets. When you form an LLC, your business and your personal assets become separate if an issue arises. This is something to consider when you are away in remote lands, and a threat comes after your business. Being away could make it challenging to take care of a problem, and this is where having an LLC helps alleviate certain issues. When you form your LLC with Incfile, you have customer support whenever you need it.
You also have tons of flexibility when it comes to your LLC, meaning that if you need to assign certain business items to team members, you can quickly and easily manage this without a lot of paperwork. So if you are about to go cliff jumping for fun in Costa Rica, perhaps assigning your accounting to someone is the best move to make before doing so.
And when you are busy working (a.k.a. lounging on the beach sipping a margarita), the very last thing you even want to think about is taxes. Well, filing taxes is easy when your business is incorporated as an LLC: any earned income from your LLC gets coupled with your personal tax return and is taxed as usual. You do not need to stress about coming home to file those pesky tax returns; you can do so while sitting on your balcony overlooking the rainforest.
Your Checklist to Forming a Digital Nomad LLC
When you are about to set off for your worldly travels, you already have a long to-do list staring at you. Another list that you will need is a checklist for forming your LLC. Here is a quick and handy checklist to help you get up and running:
- Set up a legal business entity.
- Create an Operating Agreement.
- Obtain federal Employer Identification Number (EIN)/tax ID number.
- Trademark your business name.
- Register fictitious name or assumed business name (DBA), if necessary.
- Get business insurance, if necessary.
Those are just a few of the steps to follow when forming your LLC. Thankfully, Incfile can form an LLC for you, completing all of these steps and taking away the hassle and confusion. Our service is free — all you do is pay your state fee.
Bonus: Cheapest Places to Live When You’re a Digital Nomad
After getting your LLC started, it’s time for thrilling adventures (oh, and some work). According to Fast Company, there are more than 4.8 million Americans who classify themselves as a digital nomad, with an additional 17 million that hope to one day make the transition.
That being said, traveling the world is not cheap, but that doesn’t mean you can’t see some unique places, take in the culture, try new food and have some fun while running your business. In the new world we’re currently living in, there may be more to consider as you scope out a low-cost option. With some borders closing and countries not allowing entry, it could limit the number of places you can visit. This has caused many digital nomads to either travel domestically or venture out into the world that is still open.
What Do You Need to Consider?
Here are a few key things to think about as you plan a digital nomad lifestyle and find a cheap place to stay.
- Logistics. Internet access, food and shelter, and transportation needs are your most basic logistics to figure out. Research ahead of time your housing options, if you’ll need a Wi-Fi hotspot, where you can purchase groceries and essentials, and how you can get yourself from point A to point B.
- Money. When you are a digital nomad, you’re essentially traveling the world, spending your money on various economies. The form of money you need to carry will depend on where you are. For instance, many in the states utilize credit cards. But if you travel internationally, payment methods can vary. It’s always a good idea to convert money over to the currency used by the country you are planning on visiting. You should speak with your bank to see if you are able to pull money from your account and use your credit cards wherever your travels may take you. If you can, let your credit card company know you will be out of the country so that all purchases made on your card will be approved. For extended stays (generally several months), it may be a good idea to open a bank account where you are staying. This can help prevent any potential bank fees associated with pulling money out of your U.S.-based bank internationally. You can then deposit money from your business into the account and utilize it how you see fit.
- Length of Stay. How long will you be staying? Depending on your time frame, your visa may only be good for a certain number of days. Most countries will renew your visa, but you should still research your location to get all of the details. The benefit of being a U.S. citizen is that you can be out of the country for as long as you want without losing your citizenship and will be able to return to the states without hassle.
- Current Mortgage/Rent. If you own or rent a home, you need to cover your monthly payments. Sure, you could sell your home and not worry about the mortgage when traveling, but many people want to have a “home base” waiting for them when they return. Keeping your home means you’re still on the hook for your monthly mortgage payments. Those who rent can typically break a lease for a fee (make sure your contract says so first), but then you need to find a place to store your belongings. Or, you can simply continue to pay the rent if your travels are only for a short period. Sometimes subletting your place is an option too as a renter or owner. In some rare instances, your landlord may allow you to freeze your payments until you get back while still holding your apartment for you.
- Taxes. Should you be out of the country when estimated or yearly taxes are due, be sure you have an accountant or CPA who has access to your books or accounting software and is able to pull all of the data needed to complete and file your taxes. Incfile provides a Business Accounting and Tax service that can handle all the logistics for you. However, keep in mind that if you travel and are outside of the U.S. for more than 330 of the 365 days of the year, you qualify for what is known as “Foreign Income Exclusion.” This means you are not taxed on your first $100,000 of income. Anything above will depend on your tax bracket for the amount above the $100,000 (and it will only be federal tax that is owed).
Low-Cost International Locations for Digital Nomads
Before deciding on any location to travel to, be sure to look into current travel restrictions. Each month has seemed to bring on new challenges, such as required quarantines if traveling to a new state or country, or simply not being able to enter a country at all. Check with government and state websites to find the latest information.
The international locations below have been compiled based on how much it would cost to stay in the city for one month — the cost factors in food, shelter, transportation and Wi-Fi.
It should be noted that the situation with the pandemic is dynamic and always changing. The travel restrictions for any of the locations could change at any moment. Before deciding on one of the locations below, check to ensure they are allowing non-residents the ability to enter and if any type of two-week quarantine is required.
1. Ko Lanta, Thailand
Cost Per Month: $360
Thailand is a beautiful island full of fantastic scenery. You can explore the rainforests, beaches and fine Thai cuisine. Many people flock to Thailand, and Ko Lanta can provide you with amazing places to visit while still allowing you to run your business effectively.
2. Ubud, Indonesia
Cost Per Month: $452
Ubud is a city full of places where you can cowork while taking in everything the city has to offer. If you are a vegetarian, this is a perfect location based on the local food preferences.
This location may need to be put on the back burner for the time being unless you have a valid visa or are a resident. Due to the pandemic, travel into the country is suspended. However, that’s not to say things will not open up any day.
3. Da Lat, Vietnam
Cost Per Month: $600
Da Lat has stunning architecture at every turn. If you are into one-of-a-kind buildings unlike anything you’ve ever seen, this is a stop you should consider during your travels. Due to its European feel, many call Da Lat “Little Paris.”
While locations are starting to open up gradually, Vietnam is currently not allowing entry to their country unless you are a citizen. But putting this location on your “must-see” list is definitely a good idea.
4. Goa, India
Cost Per Month: $650
The location in Goa, in particular, would be Palolem. If you are looking for a beachy area with all of the amenities such as cafes and places to eat, this is a must-visit location. With many different locations to work from, you can keep things fresh. Palolem has also been said to be where many people go to “find their inner peace.”
5. Pokhara, Nepal
Cost Per Month: $650
The landscape and backdrop of this city are simply stunning. Not only do you get to experience life with a lake, but you also get a gorgeous mountainous background and plenty of hiking trails. With tons of places to eat in the city, you can fill your stomach while you work and then sit and take in the lake’s views to relax and unwind after a long day.
If you are planning to travel into Nepal, it should be noted that entry will not be granted until October 16, 2020, due to the pandemic.
6. Siem Reap, Cambodia
Cost Per Month: $690
If you are looking to experience some incredible pieces of history, Siem Reap should be on your short list. Not only do you get to visit the famous temples of Angkor Wat, but you can also meet other locals in coworking locations that are said to have high-speed Wi-Fi. Set yourself up for a “day in the office” and then venture out to taste the local food at the vast array of cafes and restaurants.
7. Chiang Mai, Thailand
Cost Per Month: $700
The most expensive city on our list (even though it’s still incredibly inexpensive for a month’s stay) is Chiang Mai. Not only do you get an astonishing city atmosphere with some of the best massages in the world, but you also get a jungle adventure in. Chiang Mai also has many coworking spaces where you can run your business without a hiccup.
That said, travel restrictions will not allow entry for the time being. They are hoping to open shortly, assuming improvements in the infection rate are decreased.
Should none of these cheap locations excite you, there are several countries such as Barbados, Estonia, Georgia and Bermuda that are nearly begging digital nomads to come and visit through visa regimes. They are offering up their beautiful beaches and internet access to those who wish to come. The only restriction is that many require you to have health insurance and proof of a designated monthly income in order to take advantage of their generous offer.
U.S.-Based Locations for Digital Nomads
If you want to stay in the states, but want a change of scenery, there are some great options. However, the cost to live in these locations for several weeks or even months is drastically higher than the international locations mentioned above. But if staying in one place is not the life for you, domestic travel is currently allowable with a mask and social distancing guidelines in place. Here are some great cities to consider.
Note: The monthly costs below can drastically decrease if you don’t need the most exciting spot to rest your head at night.
1. Miami, FL
Cost Per Month: $4,246
If you are a digital nomad who likes to work hard and party hard, Miami is the place to be. With amazing architecture and entertaining nightlife, Miami is a hot destination spot not only for tourists but for digital nomads as well. With various coworking spots around the city, you can change things up often if you wish to work in different places and get a change of scenery.
2. New York City, NY
Cost Per Month: $4,975
While being one of the more expensive places to visit, New York City is one of those locations that has the ability to motivate everyone who walks the streets. With cafes and coworking spaces at what seems like every turn, you’ll have plenty of places to visit, work and explore.
3. Austin, TX
Cost Per Month: $3,661
With 50 hiking trails, 205 parks and 14 nature preserves, Austin is the perfect place for those who like to go out and explore nature. Known as a city where many startups begin their entrepreneurial journey, you have the ability to meet up with and network with many new business professionals who are full of great ideas.
Start Your New Business with Incfile
If you’re ready to venture out as a digital nomad, start by incorporating your business with Incfile. Our business formation packages include a lifetime of customer support, online access to your incorporation documents and your first year of Registered Agent service for free. Check out our online business formation packages — for $0 + state fees — to form your business today.