I was seated on my bedroom floor last week, sorting clothes into two piles in preparation for my upcoming move to Asia. One was stuff to keep. The other was full of ugly sweaters from 2001, destined for Goodwill.
No matter where you’re going, moving is physically and emotionally draining. It’s hard having to decide which parts of your life to bubble wrap and take with you and which to leave behind. When you’re moving abroad, though, that sorting-and-packing struggle is just one piece of the challenge.
The droves of freelancers and entrepreneurs choosing to live and work abroad have more tools at hand than ever before for building businesses and supporting themselves. But before taking off, these “digital nomads” have a handful of planning and legal issues to sort through. That may feel intimidating, but as somebody who’s managed to pull it off, I’ve found there are ways to minimize the paperwork and headaches so you can take off and start earning those paychecks sooner. These are the logistical issues you’ll need to consider, and how to tackle them.
“Will I need my Magic Bullet in Hong Kong?” I wondered while downsizing my apartment into two suitcases. My first task was to sort through the knickknacks and other items I’d been hoarding for years before taking off again. Before packing your candle collection, ask yourself two questions:
- Will this weigh me down?
- Would I be upset if I never saw this item ever again?
Sorting through my room, I realized there were only a small number of items I couldn’t do without. As for the rest, I’ll be packing them up and storing them with some very generous friends or using a monthly storage and pickup solution like MakeSpace.
When you decide to work for yourself, you need to figure out whether to set up a company (this guide can help) and which business licenses you may need. That can be tricky enough in your home country but may get even more difficult abroad. There are many types of business entities, and a lawyer can help you pinpoint which structure offers you the best protection and tax benefits.
Soheila Yalpani, a consultant who moved from California to Berlin, decided to incorporate in Estonia. Yalpani says the country has become a popular choice for international entrepreneurs because of its smart use of technology to streamline the setup process and cut back on red tape. “Not only can you file your taxes online” in Estonia, she says, “but the simple tax framework has 0% corporate tax on undistributed profits, 20% tax on distributed profits, and 20% income tax.”
Fahim Farook, CEO of the app developer RookSoft, chose to incorporate in Dubai after learning about its “Free Zones,” economic zones set aside for the government for free trade. “The process itself was very simple,” Farook says. “We arrived in Dubai on a tourist visa and went to the free zone where we wanted to register our company. We then filled in the paperwork, paid the fees, and went back to our hotel. Two days later, we received the company registration documents via courier.”
Business taxes can leave you wanting to hide under the covers until April 15 has passed. You may be able to escape the country, but if you’re an American, you have to declare your worldwide income if you’re making over $10,000 a year (or $400 from self-employment). Greg Dewald, founder of the expat tax firm Bright!Tax, explains.
Starting off, I made the mistake of trying to do my own taxes and lost countless hours filling out forms. Looking back, it may have saved me money, but the opportunity cost far outweighed the upfront monetary savings I should’ve spent on business development. Moving forward, I’ve enlisted the help of an accountant to help make tax time easier.
A CPA who specializes in expat taxes can help you claim items like the Foreign Earned Income Inclusion, with which you may be able to claim housing expenses–including rent, utility bills, insurance, and parking–as tax deductible up to 30%.
How much does an accountant cost? Digital media consultant Alyne Tamir pays her accountant around $500 a year to handle everything, yet she advises entrepreneurs not to choose a CPA based on price alone. “You might save $200 now but lose $20,000 later because your CPA missed something. When it comes to finances, I value experience over price,” she says. “When choosing a CPA, ask if they have experience with your lifestyle and finances. If not, ask them to suggest someone who can help.”
On my last trip abroad, I forwarded my mail to my
secretary mother who very graciously helped sort through bills and scan important documents for me. (Here’s how to set up mail forwarding with the U.S. Postal Service.) On my next trip, though, I’ll be using a more scalable option, like Scan Mailboxes or PostScanMail. This will digitize all my important documents and put them in a central, accessible location.
Since starting my marketing agency while traveling abroad, FreshBooks has been a godsend for invoicing. Not only can clients pay with a click of a button, but we can also manage all payment processing within a simple interface. I’ve used the platform in combination with DropBox and Google Drive to run my business paperlessly from anywhere in the world.
I used mobile hotspots to stay connected from Rome or Budapest. At just a few dollars a day, that can be a great backup option when the nearest café or hotel Wi-Fi isn’t working out.
For phone plans, an option touted by many digital nomads is Google’s Project Fi. “It’s been a lifesaver while abroad,” says Sharon Tseung, founder of Digital Nomad Quest. “Without needing to get a new SIM card everywhere you go, you can keep the same phone number internationally at a low cost,” she explains. “The plans are priced at $20 a month for unlimited international texts and cellular coverage across 135-plus countries. International calls usually cost 20¢ per minute max, and data costs $10 per GB. Any unused data rolls over to the next month, so nothing goes to waste.”
When you’re moving from place to place, international credit-card fees can add up. While abroad, I keep my U.S. bank account, put everything on my credit card, and then pay off the balance each month. This prevents me from incurring exorbitant withdrawal and international fees when moving from country to country.
Jason Wuerch of Frugal For Less advises nomads to “get a credit card that has no foreign transaction fees and with a cash-back bonus on every purchase.” Personally, I use CapitalOne’s Venture Miles Reward card for this reason, but there are other options that fit this criteria, too. “If you’re looking to withdraw from an ATM,” Wuerch says, “there are a couple of debit cards that allow you to withdraw internationally absolutely free, as they reimburse you for fees.”
Stepping off a plane in a new country can feel overwhelming. Coworking spaces are making it easier for “solopreneurs” to meet one another during the course of their travels, particularly in these emerging global hubs for digital nomads.
When I took off to travel for five months, I turned to the likes of WeWork and Impact Hub to find office space and make new friends. Jongjin Choi, founder of Hive Arena, liked coworking spaces so much that he started his own after seeing an increase of expats working in Seoul. “When you stay or live in a new place for the first time, you often have trouble adjusting to a new environment.” says Choi. “But when you visit coworking spaces, you will have a chance to meet locals with similar interests to form a network and create great memories.”
If you hold a U.S. passport, you’re fortunate to be able to travel to 174 countries visa-free or with a visa you can pick up on arrival. While the visa process can be time consuming, Ajay Yadav of the housemate-finding platform Roomi developed some travel hacks to speed up the process. First, he advises, “Always have cash on hand. [At] many Southeast Asian borders, you won’t be able to find an ATM, and visa officials won’t accept credit cards.” You can’t count on finding ATMs in every airport in the region either, he says, so you should plan to carry cash with you.
“Always research the country’s visa and immigration laws ahead of time,” Yadav adds. “For example, applying for the Vietnam visa online can save you hours instead of applying in person. If you’re unable to get a visa ahead of time, always choose a seat in the front of the plane so you can beat the queue and cut down on visa wait time.”
Andrey Ryazanov, product manager at SmartAsset, which helps Americans manage financial decisions abroad, has another tip: “Whether you have a predetermined route for your travels or are being a true nomad, always make sure to carry extra passport-sized photos [of yourself] on your travels. There are a good number of countries that require them to receive a visa or charge you extra to get them taken on the spot.”
Some digital nomads have even found ways to travel with their four-legged friends. Pet laws vary from one country to another, but you can usually get the basic rundown on each country’s immigration page.
Nima Shei, founder of the health and wellness site Positive Med, has been traveling the world with her furry companion. “Being a digital nomad with pets has its own sets of challenges,” Shei admits. “The first issue is the documents you need for taking your dogs to a different countries . . . There are some countries [where] basically you have to eliminate from your list because dogs are not allowed.”
“Traveling to Canada, Mexico, and Costa Rica was very easy for us,” she says. “You only need a health certificate, which–although it’s costly–can be done within a day. When we took our dog from the U.S. to the EU, the process was a bit more complicated, as we needed international ISO microchips, which are new in the U.S.”
So yes, there are a number of hoops you’ll have to jump through before skipping town, but thousands of digital nomads around the world are doing it. And many find the logistical grunt work in the beginning is well worth it once you’re out there on the road.
Arianna O’Dell is the founder of Airlink Marketing, a digital agency that helps hotels, restaurants, and travel destinations attract and retain clientele.