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How to Start a Digital Nomad Business

There's a great appeal to being able to work from anywhere
in the world, and those who take advantage of this remote-working
lifestyle are called "digital nomads."

The barriers to entry for international travel and starting a business are all but gone,
and digital nomads are at the forefront of combining these two areas to create
successful enterprises they can operate from anywhere in the world.

Whether it's running a dropshipping business from Bali, developing a successful
software application from Rio De Janeiro or selling digital products from Seoul,
there's vast opportunity for those with ideas, vision and an entrepreneurial spirit.

Of course, it's not all new horizons and worldwide customers — running a digital
nomad business can be a big challenge. That's why we put together this guide to
give you all the information you need to start a digital nomad business and enter
the world of the adventuring entrepreneur.

There's a great appeal to being able to work from anywhere
in the world, and those who take advantage of this remote-working
lifestyle are called "digital nomads".

The barriers to entry for international travel and starting a business are all but gone,
and digital nomads are at the forefront of combining these two areas to create
successful enterprises they can operate from anywhere in the world.

Whether it's running a dropshipping business from Bali, developing a successful
software application from Rio De Janeiro or selling digital products from Seoul,
there's vast opportunity for those with ideas, vision and an entrepreneurial spirit.

Of course, it's not all new horizons and worldwide customers — running a digital
nomad business can be a big challenge. That's why we put together this guide to
give you all the information you need to start a digital nomad business and enter
the world of the adventuring entrepreneur.

We will explore everything you need to do to setup your digital nomad
business and maximize your chances for success. We'll cover:

  • Understanding the world of the digital nomad
  • Key digital nomad statistics
  • Questions you should ask to see if you're ready to start a digital nomad business
  • The best legal structure for your new organization
  • The various rules and regulations you will need to follow
  • Information on taxes and finances for your digital nomad business
  • Hiring remote employees
  • Checking off marketing and administration tasks
  • Resources for your digital nomad business
  • And much more

Understanding the World of the Digital Nomad Business

So, what is a digital nomad business? There are lots of definitions, but we think a digital nomad business is one where you can run the business from anywhere in the world with an internet connection, sometimes even when you're on the road.

For example, a digital nomad business might be:

Dropshipping business

Where you provide a
storefront for people to
purchase from you. They
make the purchase and your
supplier sends it to them
directly.

Software as a Service
(SaaS) company

You provide an online
application that your
customers pay a monthly
subscription to use.

Affiliate Marketing
Website

Where you provide expert
advice and reviews of
products. If people click your
links to buy the products from a
retailer, you get a percentage of the order as revenue

Information Product

Like an ebook, online course
or other resource that
customers pay for.

Freelance Service

Like copywriting, web design
or graphic design.

In fact, the only requirement to being a digital nomad is the ability to work remotely from anywhere. That means
developers, creatives, sellers, marketers, freelance writers, gig providers and more can all be digital nomads. The idea of
the "gig economy" and the digital nomad go hand-in-hand.

Key Digital Nomad Business Background Data and Statistics

So, what are the stats and background information on digital nomads and how these changes in business will impact the way we work? Glad you asked...

It's estimated that there will be around one billion digital nomads by 2035

  • The 30% of the U.S. population who spend some time
    freelancing in 2017 will grow to over 50 percent by 2035
  • 90% of digital nomads and location independent workers are
    happier than when they were working in an office environment
  • Nearly 40% of people in 2015 described themselves as
    a "digital nomad"
  • Nearly 60% of people saw a rise in income once they became a digital nomad
  • Nearly 80% of people said they would not go from being a
    digital nomad back into a more traditional job role

Questions to Ask Before You Start a Digital Nomad Business

Is Digital Nomad Entrepreneurship For You?

Being a digital nomad has big risks and big rewards. On the risk side you have to deal with a large amount of uncertainty in terms of cash flow, projects, clients and more. On the reward side, you get to work from anywhere, succeed entirely on your own merits and have the satisfaction of creating a business that helps others be successful.

What Are the Main Skills, Expertise and Experience to be a Successful Digital Nomad Entrepreneur?

If you want to be successful as a digital nomad, here are the main skills you need to have:

A professional expertise/skill

The ability to sell your products or services as a digital nomad. We covered this above.

Excellent communication skills

You need the ability to over-communicate to your clients and keep them happy over email, phone or chat.

Customer relationship nurturer

Keeping clients and customers happy is vital to long-term success.

Ability to work from anywhere

You have to be comfortable with working from the local coffeeshop, the beach, your AirBNB room or somewhere else.

Financial flexibility

Staying on top of finances and ensuring you have enough coming in crucial to your peace-of-mind.

Dealing with change

Client needs can change fast. Marketplaces evolve. You travel. The ability to deal with changing circumstances is critical.

The Right Type of Digital Nomad Business for You

If you want to be a digital nomad, the most important question you need to ask is what type of business you can successfully run remotely. If you already have a professional skill like coding and development, design, writing, video production or photography, these are all perfect candidates for turning your skill into a digital nomad business and traveling the world while working.

If you don't have a skill like that, you will need to find a type of business you can run from any location. Those types of businesses are not likely to be service driven, as you would have to learn to carry out the service at the same time as starting up a business — not an easy task.

Fortunately, there are plenty of ideas for those types of businesses — selling online through marketplaces like Amazon or eBay, creating information products, affiliate marketing, blogging, social media marketing and more.

If you're stuck for inspiration, here's a list of more than 500 ideas for a digital nomad business.

There are also plenty of marketplaces where you can offer freelance services as a digital nomad — some of the most popular are UpWork, Freelancer, Fiverr, 99 Designs and Toptal. Big gig economy marketplaces like AirBnB, Uber, Lyft and Taskrabbit can also provide plenty of opportunities. Just because you are offering services through another business marketplace doesn't mean you're not a business in your own right.

Finally, becoming a digital nomad comes with its own set of challenges. You must be extremely focused and very flexible, roll with internet delays and be comfortable with living and working in an isolating environment.

You can also find additional guidance in understanding if a digital nomad business is right for you. If this blog post, we'll help you analyze if your digital nomad business iead is a good one, conduct market research and build a business plan.

Choose the Right Business Structure and Register Your Digital Nomad Business

Now you have all the background information for your digital nomad business, it's time to make it into a reality. That starts by choosing the right structure or "legal entity" for your business. In the US, there are four main business structures. They are:

Sole Proprietorship

This is the "default" business
structure and is what your
business will be if you decide
not to create a more formal
structure. We don't
recommend this type of
business as it doesn't give
you the legal protections you need.

Limited Liability
Company or LLC

The most common type of
business entity. An LLC is
fast, simple and inexpensive
to setup and maintain. It
protects your personal
finances and assets and is a
great way to start your digital
nomad business.

Series LLC

This is a special type of LLC
entity that's only available in
certain states. It allows you
to create "mini" LLCs, each
with their own limited
liability and separate assets,
under the umbrella of a
master LLC.

S Corporation

This is a more complex type of
business and isn't generally
recommended for smaller
organizations.

C Corporation

These are the largest and most
complex types of businesses
and are far more than the
average entrepreneur or
business owner will need.

Special Considerations for Setting up a
Digital Nomad Business Entity

As a digital nomad, you will have some unique circumstances for how you're going to setup your business. To start with, we recommend an LLC — the combination of a low administrative overhead and liability protection are great for your peace-of-mind. Secondly, you will probably want to take advantage of our Registered Agent service - it means there will always be someone available to receive official documents, even if you're out of the country.

Next, you have more choice than most entrepreneurs on which state to from your LLC in. If you're going to be in your home state and running your LLC from there for any period, that's the best place to base it. If not, you can choose to form your LLC almost anywhere. In those cases, forming it in a business-friendly state like Delaware could be a great idea.

Finally, think about the addresses you're going to use in the U.S. for your company. Could you use a parent or relative's house? Do you want to receive documents other than official legal documents (that would go to your registered agent) there? Answering these questions ahead of time will make setting up your digital nomad business much easier.

Special Considerations for Taxes as a
Digital Nomad Business

  • Living and working outside the U.S. does not exempt you from having to pay U.S. taxes.
  • There may be extra filing requirements if you hold more than $10,000 in a non-U.S. bank or investment account.
  • 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 hey earn from U.S. tax liability.
  • Foreign housing may also be deductible in certain circumstances.
  • Check with the government in the country where you're earning money to see what your tax filing and liability is going to be there, and hire a local accountant

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you've still got questions, we've answered them to help you choose the right business structure.

In most cases our recommendation would be to create an LLC. We've got a complete guide to everything you need to do and we can set one up for your digital nomad business. LLC formation does vary from state to state, but we've got you covered, wherever you are.

Setup & Maintain Your Digital Nomad Business

Once you've legally created your digital nomad business you'll need to get some other things in place.

Business Location

Where are you going to run your business from? The joy of being a digital nomad is you can theoretically run it from anywhere, but you'll need to make sure you have all the necessary facilities — an internet connection, somewhere to work from, access to a phone etc.

Finances & Taxes

How will you run your finances while remote? What kind of expat tax breaks do digital nomads get? These are all important things to consider so your digital nomad business stays in the green.

Equipment

What equipment do you need to manage your digital nomad business apart from a laptop, computer, smartphone or tablet? What about transportation or specialized equipment? Make sure you understand exactly what you need to spend so you can write it off against business expenses. Grab extras of computer equipment such as chargers because these things are often hard to find or expensive in some international locations.

Marketing

Do you need to build a website for your digital nomad business? (We're going to always go with a YES for that one.) Should you have a logo designed professionally? Will you need business cards? Think through a professional brand and pieces that make your business appear official and professional when working remotely.

Processes

What business processes are you going to use to run your business efficiently and effectively? You will need to get good financial, client management and work management processes in place. How will you track projects and increase productivity? How will you work with others from afar — what chat client will you use? Does it have a mobile app too?

Software

Is there software that can help you manage and market your business? See our list of software at the end of this article for some great starting points.

Business Maintenance

Most states require businesses to file an Annual Report report once a year. You will also be expected to pay estimated taxes on what you plan to earn in the current business year. And, your federal, state, regional and city business licenses and permits may need to be renewed on a regular basis, typically once a year.

Our Start a Business Checklist will also help you get your digital nomad business going in the best possible way.

Conclusion

There's nothing like the freedom and satisfaction of running a successful digital nomad business. The combination of location independence, doing awesome work, keeping clients happy and seeing the world is a potent mix. Why not get started and ...

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