Starting a Business as a Digital Nomad: What You Need (Address, LLC, etc.)

To successfully start a business as a digital nomad, you need to establish a solid foundation for operating globally while maintaining professionalism. Here’s a quick breakdown:

• Form an LLC: A U.S. LLC offers personal asset protection, tax flexibility, and credibility. Popular states include Wyoming (low costs, no state income tax) and Delaware (strong legal protections).
• Set Up a Virtual Address: A virtual business address ensures legal compliance, protects privacy, and builds trust with clients.
• Open a Business Bank Account: U.S. business accounts like Mercury or Relay simplify transactions and payment processing.
• Handle Tax Compliance: Stay on top of federal, state, and international tax obligations. Use tools and professionals to manage filings.
• Streamline Payments: Use platforms like Wise or Revolut for international transactions to reduce fees and manage currencies.
• Manage Mail Digitally: Virtual mailbox services keep you connected regardless of your location.

Starting your business before traveling ensures smoother operations, fewer legal hurdles, and more time to focus on your work. With these steps, you can maintain a professional presence while enjoying the flexibility of a nomadic lifestyle.

Choosing the Right Business Structure

Picking the right business structure is a big deal for digital nomads. As mentioned earlier, nomads often face challenges like banking restrictions, credibility issues, and navigating cross-border taxes. The structure you choose can help tackle these hurdles effectively.

In the United States, there are over 23 million sole proprietorships and a similar number of LLCs currently operating. While there are plenty of options, not every structure suits a location-independent entrepreneur. For many, LLCs stand out as the best choice.

Why LLCs Work Best for Digital Nomads

LLCs offer several advantages that make them particularly appealing to digital nomads. They protect your personal assets by creating a legal separation between your personal and business finances, shielding you from business-related debts and lawsuits. On top of that, LLCs give you flexibility in how you’re taxed – you can choose to be taxed as a sole proprietorship, partnership, S-Corp, or C-Corp. This flexibility allows you to adapt your tax strategy as your business grows.

Another perk? LLCs enhance your credibility. Clients, vendors, and financial institutions are more likely to trust and work with a legitimate business entity, which can make securing financing or setting up payment processing much smoother. Plus, compared to corporations, LLCs require less paperwork and fewer administrative tasks – an undeniable benefit when you’re managing your business across time zones or dealing with spotty internet.

Where to Form Your LLC

For many, forming an LLC in their home state is the easiest and most cost-effective route, as it avoids the hassle of registering as a foreign LLC in another state. However, digital nomads should weigh factors like costs, tax obligations, and privacy before deciding.

Wyoming is a popular choice, with a filing fee of $100 and annual renewal fees starting at about $60. The state has no income tax, strong privacy protections, and no residency requirements. Wyoming was also the first state to introduce LLCs back in 1977, which has cemented its reputation for business-friendly laws.

"For digital nomads who want a low-cost, tax-friendly, and flexible U.S. business structure with strong privacy protections, a Wyoming LLC is often the best choice." – Rick Mak, 30-year veteran businessman

Other states offer distinct advantages as well. Delaware is known for its strong legal protections and specialized business courts, while Nevada stands out for its asset protection laws and lack of state income tax.

Here’s a quick comparison of popular states:

How to Form an LLC

Setting up an LLC is straightforward and can often be done online. Most digital nomads can complete the process within one to two weeks, depending on the state.

• Choose your formation state. Think about your long-term goals, tax situation, and privacy needs.
• Conduct a name search and appoint a registered agent. Make sure your desired LLC name is available and meets state requirements (it must include “LLC” or “Limited Liability Company”). A registered agent, who receives legal documents on your behalf, may cost anywhere from $0 to $300 annually.
• Prepare and file your Articles of Organization. This document, which includes key details like your LLC’s name and registered agent, is submitted to your state’s business office. Filing fees range from $35 to $500.
• Draft an Operating Agreement. While not required in every state, this document outlines how your business will operate and costs around $200.
• Obtain an Employer Identification Number (EIN). This IRS-issued number is essential for taxes and opening a business bank account.
• Open a business bank account. Keeping personal and business finances separate is crucial for liability protection.
• Secure any necessary licenses and permits. These vary by industry and location, with costs ranging from $50 to $300.

If you’d rather not handle the paperwork yourself, online filing services can simplify the process for $39 to $79. For more complex setups, legal assistance may cost between $1,000 and $1,500. In total, forming an LLC typically costs a few hundred dollars upfront, with ongoing fees depending on the state. Considering the legal protections, tax benefits, and credibility an LLC provides, it’s a worthwhile investment for most digital nomads.

Next, we’ll cover how to establish a virtual business address to complete your professional setup.

Setting Up a Virtual Business Address and Mail Handling

Once your LLC is established, the next step is securing a stable business address and streamlining mail handling. If you’re a digital nomad, relying on your ever-changing location for legal documents, business correspondence, or customer communication simply isn’t practical. That’s where virtual business addresses and mail handling services come in – they provide a consistent, professional solution to keep your business running smoothly.

Why a Virtual Business Address Matters

A virtual address isn’t just a place to receive mail – it’s a cornerstone of a professional and legally compliant business. For starters, LLCs in the U.S. are required to have a physical address for registration, tax filings, and receiving official correspondence. A virtual address fulfills this requirement while also safeguarding your personal privacy.

Beyond compliance, a professional address helps build trust with customers. For instance, with 90% of Americans shopping online at least once a month, displaying a credible business address on your website, invoices, or marketing materials can make a big difference. Plus, virtual addresses are cost-effective, offering pricing tiers to match different business needs. As remote and flexible work structures become more common – currently adopted by 25% of U.S. businesses – virtual addresses have become a go-to solution for maintaining a professional presence.

Once you’ve got your virtual address set up, the next step is simplifying mail management with a virtual mailbox service.

How Virtual Mailbox Services Simplify Mail Management

Virtual mailbox services take the concept of a virtual address to the next level by digitizing all your mail. Here’s how it works: your mail and packages are sent to a verified street address, where they’re scanned and uploaded for you to manage online.

When new mail arrives, you’ll receive a notification. From there, you can view, forward, or store your mail digitally – all without needing to physically handle it. These services work seamlessly with major carriers like USPS, FedEx, UPS, DHL, and Amazon.

Some standout features include unlimited mail scanning, global forwarding, check deposit options, and secure document storage. To get started, you’ll need to complete USPS Form 1583, which authorizes the service to handle mail on your behalf.

With your mail sorted, it’s equally important to have a registered agent to handle your legal and state-related communications.

The Role of a Registered Agent

A registered agent is your LLC’s official point of contact for legal documents, tax notices, subpoenas, and other government correspondence. Every state requires LLCs to designate a registered agent with a physical address in the state where the business is formed.

The agent’s job is critical – they ensure you receive time-sensitive documents like compliance deadlines, service of process (legal papers related to lawsuits), and tax notifications. Missing these communications can lead to serious issues, including losing your LLC’s good standing or facing default judgments in legal matters.

For digital nomads, hiring a professional registered agent ensures that these vital communications are handled reliably while maintaining your privacy. When selecting a service, look for prompt communication, dependable service, and extras like compliance reminders or help with annual report filings. Most registered agent services cost between $99 and $300 per year, and many offer coverage across multiple states – ideal if you plan to expand your business.

Compliance Requirements for Digital Nomads

Running a U.S.-based business while traveling the world comes with its fair share of compliance challenges. Missing deadlines or failing to file necessary documents can lead to hefty penalties – or worse, legal trouble. To stay on top of your obligations, you’ll need to understand the rules and set up systems that work wherever you are.

Annual Reports and State Filings

Each state has its own requirements to keep your LLC in good standing. Most states ask for an annual or biennial report to update essential details like your registered agent, business address, and member information. For instance, California has a mandatory $800 franchise tax due within four months of forming an LLC – even if your business hasn’t started operating. On top of that, the penalty for failing to file returns on time will increase to $525 for returns more than 60 days late in 2025, up from $510 in 2024.

Starting March 26, 2025, LLCs formed or registered on or after this date must also file an initial Beneficial Ownership Information (BOI) report within 30 days of state approval. Older entities have until April 25, 2025, to comply. Ignoring this requirement could result in civil fines of $591 per day (up to $10,000) or even two years in jail for willful violations.

Once you’ve handled state filings, it’s time to tackle your tax obligations.

Tax Obligations for Digital Nomads

If you’re a U.S. citizen or green card holder, you’re required to file a federal tax return no matter where you live or earn your income. For non-resident aliens owning LLCs, the rules are even more complicated. Single-member LLCs must file Form 5472 along with a pro-forma 1120. These forms can’t be e-filed – they need to be mailed or faxed to the IRS office in Ogden. Missing this filing can result in a $25,000 penalty, which increases every 30 days after the IRS sends a notice. Non-resident aliens also typically use Form 1040-NR to report income, with deadlines of April 15, 2025, if wages were withheld, or June 16, 2025, otherwise. Late filings incur a 5% monthly penalty on unpaid taxes (capped at 25%), plus interest starting April 18, 2025.

State taxes add another layer of complexity. While states like Wyoming don’t have personal or corporate income taxes, others – such as California, South Carolina, Virginia, and New Mexico – are known for pursuing income taxes from expats even after they’ve left the U.S.. Additionally, self-employed digital nomads are subject to a 15.3% self-employment tax (12.4% for Social Security and 2.9% for Medicare). However, the Foreign Earned Income Exclusion (FEIE) offers some relief, allowing you to exclude up to $126,500 of foreign-earned income for the 2024 tax year.

Managing Compliance While Traveling

Once your filings are in order, staying compliant while traveling requires a mix of preparation, tools, and professional help. Use digital calendars with reminders set 60–90 days ahead of deadlines to avoid disruptions. The IRS has extended its acceptance of digital signatures on certain forms – like Form 8453, 8878, and 8879 – through October 31, 2025, making remote filing more manageable.

Consider hiring an expat-focused CPA or enrolled agent (EA) to navigate treaty benefits, secure extensions, and avoid penalties. As Adam Nubern, a digital nomad and founder of Nuventure CPA LLC, advises:

"Pay attention to state-specific laws, which can vary vastly from state to state. They can also vary based on the type of money you make, whether it’s salary or freelance." – Adam Nubern, Digital Nomad, Nuventure CPA LLC

Keep detailed records in real time, including travel dates, where your income was earned, and entry/exit logs. These records will help you defend your tax claims and avoid double taxation.

For legal documents requiring notarization, remote notary services are increasingly essential. As Nubern also notes:

"If you’re curious about becoming a digital nomad, you should scratch that itch. There are tons of folks to help you figure out tax compliance along the way." – Adam Nubern, Digital Nomad, Nuventure CPA LLC

Finally, build redundancy into your compliance systems. Work with multiple service providers, ensure you have backup internet access, and create contingency plans for urgent matters. Staying ahead of potential challenges will help you focus on the perks of the digital nomad lifestyle without unnecessary stress.

sbb-itb-ba0a4be

Setting Up Banking and Payment Solutions

Once your compliance systems are squared away, the next step is setting up reliable banking and payment structures. For digital nomads, managing finances – especially when dealing with U.S. business banking requirements and international transactions – requires thoughtful planning.

Opening a U.S. Business Bank Account

Having a U.S. business bank account is key to keeping personal and business finances separate, simplifying payments, and building credit. However, non-residents often face challenges due to strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Starting in 2025, banks are expected to tighten requirements for non-U.S. resident LLC accounts even further.

Fortunately, some institutions like Mercury, East West Bank, Silicon Valley Bank, and First Century Bank are more welcoming to non-resident LLC owners. Mercury, for instance, offers no maintenance fees and useful financial tools, though it now requires a U.S. address and has stricter approval processes.

Before applying, make sure you have all your paperwork ready – LLC formation documents, personal identification, and business records. Visiting the U.S. to apply in person can make the identity verification process smoother. It’s also a good idea to call ahead and confirm the specific requirements of the bank you’re considering.

Here’s an example: A software development company based in London formed a Delaware LLC to serve U.S. clients. Initially, they used Wise Business to handle client payments and establish a transaction history. Three months later, they moved to Mercury, and six months after that – during a trip to the U.S. – they successfully opened a traditional account with Chase by leveraging their established business activity.

If traditional banking proves too difficult, alternative options like payment processors or e-money institutions can fill the gap. For example, Relay partners with banks to provide FDIC-insured accounts. Once your account is set up, make sure to use it regularly and respond promptly to any verification requests.

Once your U.S. banking is sorted, it’s time to tackle the complexities of international payments.

Payment Solutions for International Transactions

Digital nomads need banking options that support multiple currencies, minimize international fees, offer global ATM access, and are easy to manage remotely. Multi-currency accounts are particularly helpful for holding balances in various currencies.

Wise is a popular choice for its competitive exchange rates, which align with the mid-market rate, and transfer fees starting at just 0.33%. It’s up to six times cheaper than traditional banks for international transfers. Though Wise is excellent for receiving USD, keep in mind it’s not FDIC-insured. Revolut offers similar multi-currency functionality with lower fees and extra features for daily banking, including free allowances based on your plan.

For businesses and freelancers, Payoneer is tailored to receiving payments from global marketplaces, with currency conversion fees ranging from 0.5% to 2%. While PayPal might have broader merchant acceptance, its cross-border fees are significantly higher.

To streamline your financial workflow, integrate payment platforms with your invoicing and bookkeeping tools. When managing client projects, consider strategies like requesting upfront deposits (typically 25–50%), breaking projects into milestones for phased payments, and setting clear terms for due dates and late fees.

After setting up banking and payment systems, the next focus should be on maintaining accurate financial records.

Bookkeeping and Financial Management

Keeping personal and business finances separate is crucial for accurate expense tracking and tax filing. A dedicated business bank account and credit card can help ensure clarity in your transactions.

Choose accounting software that fits your needs. Look for tools that allow real-time expense tracking, easy invoice generation, multi-currency management, and seamless integration with your bank accounts. QuickBooks Online is a versatile option starting at $25 per month, while Wave offers a free solution for small businesses and freelancers. FreshBooks, starting at $7.60 per month, is particularly strong in invoicing and expense tracking for service-based businesses.

For easy record keeping, take photos of receipts and store them in cloud-based applications. It’s also a smart move to calculate your tax obligations across different jurisdictions and set aside funds in a dedicated tax savings account. Using multi-currency accounts can help reduce conversion fees when managing expenses in various currencies.

Automating tasks like currency exchange – through platforms like Wise or Revolut – or outsourcing bookkeeping can save time. Tools for invoicing and expense tracking are also worth considering. Reviewing your financial statements monthly can help identify unnecessary expenses and keep you prepared for taxes.

For long-term financial health, explore retirement savings options such as Solo 401(k)s or Roth IRAs. Additionally, look into global health insurance plans. Staying informed about local tax laws in the countries where you work is vital for staying compliant and optimizing your financial strategy as a digital nomad.

Conclusion: Simplifying Business Setup for Digital Nomads

Timing is everything when setting up your business as a digital nomad. Preparing your business structure before you leave the U.S. can save you from unnecessary headaches down the road. Trademark lawyer James Hart underscores this point:

"The number one challenge is people wait until they already are in the foreign country to start setting this business up. That is a big mistake."

To hit the ground running, many successful digital nomads establish their LLCs, secure a virtual business address, obtain an EIN, and open a U.S. business bank account before they embark on their travels. This approach lays a strong foundation for operating globally, ensuring you’re ready to handle both professional and legal demands.

Virtual tools are your best friend here. For example, a virtual address – starting at $49 per month – offers a professional presence, while registered agent services (typically $100–$200 annually) ensure you stay compliant. Elena, a digital nomad who managed her Wyoming LLC across 14 countries, relied on these services to maintain her business operations.

Tax compliance is another critical piece of the puzzle. Automating compliance processes can make life much easier, especially when navigating the 183-day tax residency rule. It’s also essential to keep personal and business finances separate. With 66% of the 35 million digital nomads working full-time remotely, governments are stepping up their efforts to enforce tax laws for remote workers.

On the financial side, multi-currency business accounts can simplify international transactions and reduce costs. For instance, Marcus, a software developer living in Southeast Asia, cut his payment processing fees from 4.5% to 2.9% after setting up his Wyoming LLC. Similarly, Carlos, a digital marketing consultant, saw a 40% jump in his average project value within six months of forming his LLC – clients appreciated the added professionalism. By building credibility with a formal business structure, you can focus on delivering results instead of explaining your lifestyle.

Beyond formation, effective financial planning is essential. Budget for relocation costs, research visa requirements, and use budgeting apps to track your expenses across currencies. As the Deel Team puts it:

"Effective financial management is vital to the digital nomad lifestyle. You’re more likely to make the most of a new country with thorough research, planning, and preparation."

The digital nomad lifestyle is not just possible – it’s thriving. With 94% of digital nomads recommending remote work and companies reporting a 4.4% productivity boost from allowing employees to work from anywhere, this model has proven its value. The key to success lies in combining the right business structure with careful planning, dependable virtual services, and clear communication with clients about your availability and boundaries.

Whether you’re starting fresh or formalizing an existing setup, the steps are clear: establish your LLC, secure a virtual address, obtain an EIN, and open a U.S. bank account before you travel. With these elements in place, you’ll be free to focus on what truly matters – growing your business while exploring the world.

FAQs

Why should digital nomads consider forming an LLC, and what makes Wyoming a top choice?

Forming an LLC can be a great decision for digital nomads. It offers personal liability protection, keeps your personal and business finances separate, and can provide tax flexibility based on your specific circumstances. Plus, it’s an effective way to legally structure your business while enjoying the freedom of a location-independent lifestyle.

When it comes to choosing where to form your LLC, Wyoming often tops the list. Why? The state has no state income tax, ensures strong privacy protections (like not requiring member names to be publicly available), and keeps things affordable with low filing and renewal fees. Its straightforward, business-friendly legal framework makes it an attractive option for entrepreneurs who prioritize simplicity and cost-effectiveness.

What is a virtual business address, and why is it essential for digital nomads?

A virtual business address serves as a professional mailing address managed by a dedicated service. These services handle your business mail by receiving, scanning, and forwarding it, enabling you to access and manage your correspondence online from anywhere.

For digital nomads, having a virtual business address is incredibly useful. It offers a stable and professional location for business communication, even if you’re frequently traveling. This setup not only boosts your business’s credibility but also meets the requirements of banks and government agencies. Plus, it streamlines mail management without the need for a permanent physical address.

How can digital nomads stay tax compliant while running a business across multiple countries?

To stay on top of tax obligations, digital nomads need to figure out their tax residency status in every country where they work or spend significant time. If you’re a U.S. citizen, keep in mind that the IRS requires you to report your worldwide income, no matter where you live. The good news? You might be eligible for programs like the Foreign Earned Income Exclusion (FEIE), which can help lower your taxable income.

It’s also worth reviewing how your business is set up. For example, forming an LLC might be a smart move, depending on your situation. Don’t forget to dig into the tax laws of the countries you visit to ensure you’re following the rules. Partnering with a tax professional who specializes in international business can make navigating these challenges much easier – and help you steer clear of any costly penalties.

Related posts

• Integrating Virtual Mailboxes with Digital Nomad Lifestyles
• How to Set Up an LLC With a Virtual Office: Everything You Need to Know
• Business Formation Guide
• How Digital Nomads Save on LLC Formation