With an estimated 1 billion digital nomads expected by 2035, we will see more business owners, remote workers and freelancers developing and managing their businesses on the road and all over the world — anywhere with an internet connection.
Digital nomads have the freedom and flexibility to run their businesses anywhere, which is a major benefit. However, they are not immune from the challenges that come with not having a home base. When you are constantly bouncing from city to city, it can be complicated to manage your personal and business finances.
Luckily, managing your money as a digital nomad does not have to be as difficult as it may seem. With technology and great resources like Incfile, you can find ways to manage your money no matter where you end up roaming.
Have a Financial Game Plan
Trying to figure out how much you are going to make, how much you should charge your clients, how much you are going to owe in taxes and how much you are going to spend while running your business and living abroad can be exhausting. But it’s an extremely important aspect of managing your money as a digital nomad.
First, take a hard look at your financial projections for your digital nomad business. Try to plan your financial year out by creating a money map, a spreadsheet or some other type of graphic that will showcase your finances and help you stay on track. You can even use accounting software to assist you if you do not know how to go about it yourself.
As a business owner, remote worker or freelancer, you may already know the reality of not always having a steady cash flow. This means you need to prepare as best as you can in case a dry couple months happen. Understanding your game plan will help you do so.
Set Yourself up for Success
After you make your financial projections, you need to start setting your digital nomad business up for financial success based on your predictions and goals.
That includes doing the following:
- Getting a business bank account
- Hiring a CPA and/or financial advisor
- Using an accounting software
- Saving up an emergency fund or general savings account
- Considering investing
Remember that you won’t have a brick and mortar bank with your information at every location you travel to. For the digital nomad, it’s all about mobile banking, which allows you to manage, send and receive money from anywhere.
Here are some virtual banking/financial options you should consider and how they can be used:
- Paypal: Send and receive money
- Quickbooks: Manage bills, track miles, manage income/expenses, pay employees and track time
- Payoneer: Send and receive money
- XE Currency: Calculate currencies on the go and check exchange rates
- Venmo: Send and receive money
- Trail Wallet: Track and manage your finances while traveling
- Xero: Manage your small business finances online
- Harvest: Track your time and send/receive money
- WorldRemit: Send money
Having these applications and websites at your fingertips will let you breathe a sigh of relief knowing your money is safe and sound.
How to Tackle Taxes as a Digital Nomad
Taxes for the digital nomad business owner should always be top of mind since they will definitely impact your finances no matter where you're working. Just because you may not live in the U.S. for the bulk of the year, that does not mean you are necessarily exempt from having to pay U.S. taxes. If you hold more than $10,000 in a non-U.S. bank or investment account, then there may be extra filing requirements too.
You should research what types of items can be written off by owning a digital nomad business. For example, foreign housing may be deductible in certain circumstances. And if you are out of the U.S. for 330 days a year, you may be able to get tax relief on some or all of your earnings. This includes the "Foreign Earned Income Exclusion," which lets Americans who live abroad exclude the first $100,000 or so that they earn from U.S. tax liability.
Take on Your Finances as You Take on the World
Tackling your finances and managing your money while roaming the world does not have to be overly complicated. As long as you set yourself up for success ahead of time, utilize applications and resources to assist and file those taxes properly, you will be in good financial shape.
Incfile is happy to assist you with your digital nomad business. We can provide you with everything from knowledge about your ongoing filing requirements to help with filing your business taxes. Everything we offer makes being a small business owner, remote worker or digital nomad as hassle-free as can be.