Tech Reviews

Going From Freelancer to Digital Nomad: 6 Tips to Get Started

While only two years ago remote work was all Greek to many people, nowadays even those who never considered changing their office work routine have learned to be flexible. The cause may not be the most pleasant one, but the fact remains that many people have come to realize the benefits (and the freedom) of remote work.

However, remote workers come from all walks of life and perform different types of work. Basically, there are three categories of remote workers:

  1. Freelancers
  2. Digital nomads
  3. Office workers who have gone remote

The latter category seems to be the easiest to comprehend, as many people have been forced to work from home due to the recent pandemic, after all. However, the first two still appear to be unknown to many traditional workers, so let’s take a look at them.

Digital Nomads

Digital nomads are people who work while traveling. It may sound ideal, but it is an expensive lifestyle. For that reason, many digital nomads set a base in one country where taxes and costs of living are low and plan their travels from there.

Like everyone else, digital nomads also need to save some money to enjoy the freedom the lifestyle offers. Now, some digital nomads run their own businesses, but there are also many others who work per project or remotely for one or more companies.

Nicholas Rosenfeld. Director at Making A Will says “Gig workers especially need to work hard to establish a stable client base as relying on random projects for the foreseeable future with the competition getting fiercer isn’t the best of strategies.”

The main difference between a freelancer and a digital nomad is that the first may freelance anywhere and doesn’t travel all the time, and the second works from a different country or even “countries” all the time.

Freelancers

Freelancers work from anywhere, but usually don’t relocate to other countries. The moment they do, they become confused with digital nomads. The lines aren’t always clearly set. If there is a cheaper country with lower taxes a freelancer would like to experience, it’s logical they will relocate there, at least for a while.

Sasha Quail, Business Development Manager at Claims UK believes “As long as a freelancer doesn’t travel more than usual (and certainly not all the time), they are still considered freelancers.”

Going From a Freelancer to a Digital Nomad

For freelancers who want to “upgrade” their career and become digital nomads, it is critical to secure a stable client base first. There are two options at their disposal:

  • Working as individuals (with or without registering a sole proprietorship)
  • Running a business (registering a business at home or abroad)

When deciding whether to register a company (sole proprietorship for self-employed individuals or other types of businesses – usually a LLC – for larger scope of operations), there are two chief things to consider first:

  • Visa requirements
  • Taxes and health insurance contributions

Basically, the whole process boils down to:

  1. Planning your finances ahead
  2. Deciding whether to relocate or not
  3. Deciding whether to register a company (sole proprietorship or LLC)
  4. Picking a health insurance plan
  5. Gathering necessary documentation and leaving copies with someone trustworthy back at home
  6. Choosing the right apps and tools

Visa Requirements

Since the onset of the pandemic, many countries have come up with the so-called digital nomad visas, in an attempt to boost their economies. It’s fair to say that some countries were offering such packages before the crisis, notably Lithuania, which started the trend.

All of these visas have certain requirements. Since EU countries are offering access to residency to non-EU citizens, they have set the bar high. There are minimum wage requirements (which vary greatly from country to country), starting capital requirements, and health insurance requirements.

Daniel Carter, SEO Manager at Manhattan Tech Support says “Some countries are an exception and offer access to the public health insurance system for additional tax benefits (e.g., Northern Macedonia), while others don’t require health insurance at all (e.g., Georgia). EU countries, for the most part, require an investment of €30k in health insurance plans.”

Of course, if you’re planning to country hop rather than register a business anywhere, you can use the travel period that doesn’t require a visa. Many people travel this way, as investments in health insurance and income taxes pose a considerable expense.

At any rate, just be sure to not only learn about requirements for your intended destination, but also about its culture. Spend some time online, or you can even look into cross-cultural training.

Taxes and Health Insurance Contributions

As mentioned above, you need to consider the best health insurance plan when traveling. According to Olivia Tan, the co-founder of CocoFax “If you’re planning to relocate and register a business in a country, only then will you need to consider the stellar sums required by their government.”

Still, even if it’s not required to have a health insurance plan, it is still a good idea to think about your health in advance. Nobody wants to find themselves in an alien country without any idea how to access a doctor in case of an emergency.

The choice of life insurance plans is, thankfully, getting less complicated because an increasing number of insurance companies have become to realize they need to offer different plans to remote workers (of any kind). Obviously, you’ll need to consider various factors as you’ll want to be covered in any country you’re visiting, which means targeted health insurance plans have become a necessity

You can always ditch the insurance plan if you’re not relocating but are simply enjoying regular workations — it all depends on your lifestyle plans.

As for the taxes, the issue is no less complex. Different countries have different tax rates so it is absolutely crucial to compare offers before setting out. In addition, there are two U.S. taxes to consider, namely the annual Federal Tax Return and the state taxes for expats. Above all, just be sure you know which forms to file.

Unless you’re from Alaska, Florida, Nevada, South Dakota, Texas, Washington State or Wyoming, you’ll have to pay state income taxes no matter where you are if:

  • You lived in the state for any duration during the tax year
  • Your immediate family lives in the state while you’re abroad
  • You have a permanent place of residence in the state
  • You keep your voting rights, ID card or driver’s license in the state

If you have state residency, keep in mind that other income may also be taxable (pension, retirement income, and other government benefits).

Conclusion

If you’re earning sufficient funds, the line between a freelancer and a digital nomad can go smoothly. Unless you’re planning to relocate and establish a business elsewhere, you can even enjoy traveling while working without worrying about taxes and health insurance plans (other than a travel insurance plan, but that’s also optional).

The main question is what kind of lifestyle you’re planning to lead. For some people, relocating may be a cheaper option, while for others, it’s perfectly fine to live in the U.S. and travel to other countries, staying at each for as long as a visa-free regimen is valid. Additionally, there are so many options on getting a remote job.

There are many choices, so everyone can pick a perfect plan.

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