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 that 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.
Digital Nomad business formation guide
In this guide, we'll explore everything you need to do to work remotely through your own digital nomad business.
Understanding the world of the digital nomad
Information on taxes and finances for your digital nomad business
Key digital nomad statistics
Hiring remote employees
Questions you should ask to see if you're ready to start a digital nomad business
Checking off marketing and administration tasks
The best legal structure for your new organization
Resources for your digital nomad business
The various rules and regulations you will need to follow
And much more
By the time you've read through our complete digital nomad business guide, you will have all the information you need to set up and manage a thriving venture. Let's get into it.
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:
Where you provide a storefront for people to purchase from you. They make the purchase and your supplier sends it to them directly.
You provide an online application that your customers pay a monthly subscription to use.
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
Like an ebook, online course or other resource that customers pay for.
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.
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...
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:
The ability to sell your products or services as a digital nomad. We covered this above.
You need the ability to over-communicate to your clients and keep them happy over email, phone or chat.
Keeping clients and customers happy is vital to long-term success.
You have to be comfortable with working from the local coffeeshop, the beach, your AirBNB room or somewhere else.
Staying on top of finances and ensuring you have enough coming in crucial to your peace-of-mind.
Client needs can change fast. Marketplaces evolve. You travel. The ability to deal with changing circumstances is critical.
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 professional skills 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. In this blog post, we'll help you analyze if your digital nomad business idea is a good one, conduct market research and build a business plan.
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:
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.
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.
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.
This is a more complex type of business and isn't generally recommended for smaller organization.
These are the largest and most complex types of businesses and are far more than the average entrepreneur or business owner will need.
As a digital nomad, you will have some unique circumstances for how you're going to set up your business. To start with, we recommend an LLC — the combination of a low administrative overhead and liability protection is 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.
Limited Liability Company is the perfect choice for a Digital Nomad
Use Incfile’s Registered Agent service so that there’s always 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 form 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.
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 they 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.
We’ve got a complete guide to everything you need to do to set up an LLC, and we can start one for your consulting business today. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.
Once you've legally created your digital nomad business you'll need to get some other things in place.
What kind of bank account will you get? How do you find the best business credit card? Figuring out how you’ll manage your finances and pay taxes as an ex-pat are all important things to consider, so your digital nomad business stays in the green.
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.
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?
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.
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.
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.
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.
A Clear and Comprehensive Guide to Starting Your Business the Right Way
Connecting with other business owners in your industry can be incredibly helpful. Here are some of the best social media groups:
There are plenty of forums and online discussion groups for digital nomad businesses. Start with these:
Here are some really great online tools for managing your digital nomad business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.
Please note: This page contains affiliate links and we may receive a commission if you make a purchase using these links.
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 ...