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Why Digital Nomads Should Form an LLC; Your Guide to Company Formation in the US

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Read this article to find out the benefits of forming an LLC, and the easiest way to do it remotely. 

What’s an LLC?

LLC stands for Limited Liability Company. It’s the ideal company structure for digital nomads because it has the best of both worlds. Liability protection and flexibility. 

What is Liability Protection?

Limited liability means that, in case your business gets in financial trouble, your personal assets will be protected. And, in case you get into financial troubles, your business will be protected. Why? Because the moment you incorporate, is the moment you and your business are treated separately, even though you are working together. 

You might think that you’ll never get into financial troubles because you don’t have loans or suppliers. But all it takes is one lawsuit from a client. One mistake on your side can have detrimental consequences and affect your remote work. 

You don’t want to ruin both your personal and your business finances at the same time. 

What Flexibility Does an LLC Provide? 

Unlike a Corporation, an LLC is easy to run. There isn’t a lot of paperwork, you don’t need to have a customer service, but having a health insurance is recommended. You can easily implement changes in the structure. Filing your taxes is straightforward. 

Read More: Different Company Structures & Their Pros and Cons

Are You a Digital Nomad?

What does it mean to really be a digital nomad? If you’re location independent because you run your business 100% remotely, and you take advantage of this by changing your location and travel whenever you want; then you’re a digital nomad. 

The term officially refers to someone who is always on the move, likes traveling, and works online. But it’s commonly used to describe anyone who is working remotely, whether they travel a lot or not. 

digital nomad

Why Digital Nomads Avoid Incorporating?

Most digital nomads don’t like paperwork, structures, and commitments. That’s why they work the way they work. They value freedom and aren’t fans of traditional working conditions. 

Incorporating a business might sound rigid and bureaucratic to you. You’re not alone. It scares a lot of nomads and digital entrepreneurs. But there’s a lot less paperwork involved than you think, and it’s a great business move, especially if you are living in a different country every other month.

People who choose this lifestyle and form an LLC are completely independent.

You can set up your LLC in 10 minutes. You can do this 100% remotely with a specialist service like businessanywhere.io

Why You Should Incorporate an LLC

Apart from limited liability, an LLC has more benefits. 

Business Bank Account

With a business bank account, you can separate your finances from your personal finances, making it easier to file tax returns. It’ll also separate your personal finances from your business, again, protecting your assets. 

If you incorporate in the US, you can open a US business bank account. This will make it easier for you to take payments from US clients, without paying fees. 

Best US Banks for Foreign Transactions and International Transfers 

Credit Building for Your Business

When you incorporate an LLC, open a bank account, use a business credit card, you’ll build credit for your business. If you ever want to expand in the future, get financing, a loan, or work with a big supplier, then you’ll need a good credit rating. 

The good thing is that your personal credit score will be separate from your business’. So, again, you’re protected. 

Professionalism

Having a business bank account, and a registered LLC means you come across as more professional. Your company name will be on the checks you write, your official correspondence, and so on. 

How to Incorporate an LLC Remotely

You can incorporate your LLC in minutes. All you have to do is fill out an online form, and our business registration service will take care of the rest. 

Find Out How to Incorporate an LLC in the USA

Why You Should Incorporate in the USA

When you incorporate in the US, you’ll choose which state you’d like to incorporate in. Each state has its own rules and regulations. Tax rates, privacy laws, and business conditions vary from state to state. 

Some states, for example, charge no income tax. This is a huge benefit. 

Which State is the Best for Business Registration

What to Do After Incorporating

After you incorporate your LLC, there are a few things you should do. 

  1. Register with the IRS; read our guide for non-resident aliens here.
  2. Open a bank account.
  3. Register for a virtual mailbox

Start working on further developing your business. 

Why Digital Nomads Should Form an LLC

Digital nomads, who work remotely while traveling the world, can experience many benefits when forming a Limited Liability Company (LLC). We came up with a couple of reasons why these people need to form an LLC.

Liability protection: An LLC protects personal assets in case of legal or financial issues relating to the business. If the business is sued or incurs debt, the owner’s assets will not be at risk.

Credibility: Having an LLC gives a digital nomad’s business more credibility and professionalism, showing potential clients and partners that the business is legitimate and serious.

Tax benefits: LLCs offer flexible tax options, allowing business owners to choose between being taxed as a sole proprietorship, partnership, or corporation. This can result in significant tax savings for digital nomads.

Banking and payment processing: Many banks and payment processors require a formal business structure, such as an LLC, to open a business bank account or process payments. This can make managing finances much easier for digital nomads.

Brand protection: By forming an LLC, digital nomads can protect their brand name and domain name. This prevents others from using their business name or website, which can be especially important if the business gains popularity.

Perpetual existence: An LLC has a perpetual existence, meaning it can continue to exist even if the owners change or pass away. This can provide peace of mind for digital nomads who want to create a long-lasting business legacy.

Separation of personal and business assets: An LLC creates a clear separation between personal and business assets. This helps to avoid the commingling of funds, which can lead to legal or financial issues.

Flexibility in ownership and management: LLCs offer flexibility in ownership and management. They can have one or multiple owners, who can choose how the company is managed. This can be especially beneficial for digital nomads who want to work with partners or investors.

Privacy: Forming an LLC can provide a degree of privacy, as personal information is not made public. This can be important for digital nomads who value privacy or operate in sensitive industries.

How can digital nomads form an LLC?

Forming an LLC company as a digital nomad is fairly simple and can be done online. Here are the basic steps:

Choose a state: LLCs are formed at the state level, so the first step is to choose the state where you want to form your LLC. Many digital nomads choose to form their LLCs in the state where they reside or where they have a physical address.

Name your LLC: Choose a unique name that is not already taken by another business in the state where you plan to form it. You can check the availability of your desired name on your state’s Secretary of State website.

File articles of organization: The next step is to file articles of organization with your state’s Secretary of State office. This document contains basic information about your LLC, including its name, address, and owners.

Obtain an EIN: An Employer Identification Number (EIN) is a nine-digit number that the IRS issues. You can obtain an EIN online through the IRS website.

Draft an operating agreement: An operating agreement outlines the structure and management of your LLC. While it is not required by law, it is highly recommended to have one in place.

Register for state taxes: Based on the state your LLC is formed in, you may need to register for state taxes such as employee withholding tax or sales tax.

Overall, forming an LLC as a digital nomad is a relatively straightforward process and you can avoid many of these steps by contracting our services. Business Anywhere helps you register your business in 14 days, depending on the plan you choose. 

What are the benefits of a digital nomad lifestyle?

Flexibility: Thanks to the Internet connection, digital nomads can work from anywhere in the world . This means they can choose where they live, travel to new places, and work independently.

Work-life balance: Digital nomads can balance work and leisure time in a way that works for them. They can take breaks to explore new destinations, pursue hobbies, or spend time with family and friends.

Cost savings: Digital nomads can save money on living expenses by choosing affordable destinations to live and work in. They also do not have to commute or pay for office space, which can be a significant cost savings.

Exposure to new cultures: Digital nomads have the opportunity to get to know new cultures, learn new languages, and connect with people from around the world.

Skill development: Digital nomads often develop valuable skills such as self-motivation, time management, and adaptability. They can also attend online courses and workshops.

Entrepreneurial opportunities: Digital nomads have the freedom to start their own businesses or work as freelancers, which offers them more options than traditional jobs. 

Summary

An LLC is the best option for digital nomads. People who choose this lifestyle never go back to traditional jobs. We recommend incorporating in the USA, even for non-resident aliens, because some of the states in the US provide huge benefits like no income tax.

Register Your LLC Today!

Click here to start.

About Author

Rick Mak

Rick Mak

Rick Mak is a 30-year veteran businessman, having started, bought, and/or sold more than a dozen companies. He has bachelor's degrees in International Business, Finance, and Economics, with masters in both Entrepreneurship and International Law. He has spoken at hundreds of conferences around the world during his career on entrepreneurship, international tax law, asset protection, and company structure. Business Anywhere Editorial Guidelines

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