Digital Nomads: TRUiC Shares The Latest Trends in 2021
Working remotely has become the new way to earn a living for millions of people around the globe. Another group of workers, digital nomads, have chosen a location-independent lifestyle that is reliant on technology to stay connected.
According to TRUiC research, the AI-powered incorporation resource used by new startups globally, digital nomads favour the US for their business incorporation, marketing services and web hosting, no matter where they choose to live. Unlike their remote working counterparts, digital nomads don’t stay in one geographic area, but move around their countries or explore the world as they work. The number of U.S. digital nomads grew by almost 50% in one year, rising from 7.3. million in 2019 to 10.9 million last year.
Where are Digital Nomads Choosing to Work?
Even though opportunities for digital nomads to work overseas decreased during the pandemic, Americans took advantage of the fact that some countries offered special visas for newcomers. These include nearby paradises like Barbados and Bermuda or other countries, further afield, like Estonia and Georgia.
The invitations for them to go and work in these countries enticed them with benefits. These were beneficial for both the digital nomads (paying lower taxes) and the economies of these hard-hit countries, who lost huge revenues because of the lockdowns and the effect on their tourism industries.
Digital nomads do not only move overseas. Many have fled the cities they usually work in, finding refuge in quieter locations across the U.S. They work, take advantage of business opportunities, and explore the countryside.
More than 17 million people in the U.S. aspire to become digital nomads. They plan to either work in countries where remote jobs are available or to take their existing work and travel.
Earning Enough to Travel
Popular belief dictates that digital nomads require a large budget to travel as they work. But research shows that even though only 16% earn more than $75,000 a year, their minimalistic lifestyle allows them to pay for travel expenses, accommodation, and spaces to co-work in. It’s a great help that many of them don’t have to pay regular household bills like rent, gas, car payments, utilities, and other items.
How Digital Nomads Can Start a Business?
Digital nomads don’t only work for other people. Many decide to work for themselves, taking advantage of many business opportunities allowed by online connectivity. Besides freelancing jobs, there are opportunities to do affiliate marketing, selling digital products, creating a drop shipping company, and content creation for blogs relating to their experiences.
Choosing a business structure
The structure of a business is a vital step to making it a legal entity. The most common business structure is an LLC because it is cheap to set up and maintain. An LLC also protects the owner’s personal assets and one of the best legal structures to get a digital business off the ground. Some people also choose to start a sole proprietorship, but it has none of the benefits of an LLC.
Who receives the official documents for the business?
Being a digital nomad does present some unique circumstances for any new business. One of the first is where the business will receive official documents. The services of a registered agent are vital to every business to receive compliance notifications, important tax or legal obligations.
Remote work and taxes
Wherever a business is run, it is still not exempt from paying taxes in the U.S. The filing requirements change if a person is holding more than $10,000 in a bank account in a foreign country. In some circumstances, renting a house in another country is tax-deductible, and for U.S. citizens living abroad for 330 days a year, tax relief may apply to part or all their earnings. “Foreign Earned Income Exclusion,” allows Americans living abroad to exclude an amount of $100,000 a year from their U.S. tax liability. European nations like Greece and Spain are desperately trying to lure remote workers to top up falling tax revenues associated with an ageing population. Indeed some EU nations like Cyprus and Hungary resist G7 tax fixing , however they are all subjected to EU VAT and related red tape that makes the EU less competitive. This means that the US, Bahamas, BVI, Singapore and Hong Kong are stronger contenders for incorporation. Ultimately, people may live in sunny countries - but they will not necessarily incorporate their businesses where they live.
Choosing a domicile
Wherever a business person decides to work, the establishment of a domicile is essential. The domicile does not have to be the place they are currently living in. Texas is a popular state to establish a domicile in because of three legal advantages. The two that affect digital nomads most are that there is no minimum time required to establish a domicile, and state income tax does not apply.
Texas LLC formation is great for digital nomads planning to work abroad, but the state of Texas has also attracted many digital nomads from across the U.S. (and yes, Tesla moved it’s official headquarters to Texas too). It offers low monthly living costs, scenic areas to explore, and a great environment for business networking opportunities.
