As our world becomes more globalised so does the nature of our business partnerships – entrepreneurs within businesses can hail from several countries, not just one. This can be challenging for businesses – how can you run a business when its key people live in different countries?
Entrepreneurs come in all shapes and sizes – some are idea makers, whilst others are idea doers. Some like to be office workers, others are digital nomads who relish the aspect of remote working.
Finding the right talent to ensure a business succeeds is nothing new or revolutionary. What is changing is the search for talent – no longer are companies finding talent from within their own city; instead, they search globally for the best. That’s where nomad working is a huge win.
Remote working and the rise of digital nomads
The number of digital nomads has grown exponentially – in the US alone it has grown 37% from 1995 to 2017. Companies are now outsourcing and hiring freelance entrepreneurs who specialise in specific fields from software developers, to designers, writers, journalists, and engineers. As well as saving companies money on employee taxes, health benefits and other overheads, what they have in common is that they share a passion for the work they do, and they deliver great work no matter where they are in the world.
Countless new companies have been birthed by these remote entrepreneurs, as they find like-minded people around the world to partner with. Marketers have joined with software developers to launch online products and services to niche markets; graphic designers have worked with web developers; niche manufacturers have found innovative product designers who want to get their great idea to their audience at the right price.
But how can a Ukrainian software engineer, an American marketer, a German consultant and an Indian sales guru work together as entrepreneurs if they live in different countries? Where should their company be based, and why?
Estonian e-Residency has been a hot topic in the digital nomad community over recent years.
The small northern European nation of Estonia became the first place in the world to offer digital residency in 2014, meaning that anyone can base their finances and businesses there, no matter which countries they actually live and work in.
Estonian e-Residency is great for digital nomads and entrepreneurs who need a location-independent business, but also want the credibility and benefits that come with having a limited company based within the European Union.
Because Estonia has an advanced digital infrastructure, everything needed to run a company there can be easily accessed online. All you need is an internet connection. You don’t even need to speak Estonian – all online documentation is in English.
How do I become an e-Resident?
As of May 2015, it is possible to apply for e-Residency online.
The average processing time for e-Residency application is one month, but the document delivery may vary based on demand and pickup location. For example, in temporary pickup locations like Singapore and San Francisco, it can take a maximum of three months.
To apply for Estonian e-residency online, you’ll need:
- Your name and identifying information
- A scanned passport photo
- A scanned copy of government-issued identity documentation
- A minimum of one paragraph describing your interest and motivations behind applying for e-Residency. This helps the Police and Border Guard Board with risk management and the background check
- Payment of the state fee: 100 Euros (€) via Visa or Mastercard.
More information is available on the e-Estonia website here.
Once your application has been approved, you can collect your Estonian e-Resident ID card from your nominated pickup location.
Please note that e-Residency does not mean actual residency. It’s not a visa, a right to remain, or an identification card or citizenship, and nor does it come with any of the social rights that local Estonians have. And it should not be seen as a way of avoiding tax.
In return for your fee, you’ll get an ID card that is based on ‘chip and pin’ technology, which you can plug into your computer whenever you need to authenticate your identity, when signing documents or accessing services. To do that, you’ll need an ID card reader (included in the e-Residency card package) that plugs into your computer’s USB (and download some free unique software).
You can read more about e-Residency benefits here.
OK great, but what about setting up a company?
Just like when you incorporate a business entity in any other country, you need an address in that country – but in Estonia, the address can be a virtual one.
You can register a company online at the Company Registration Portal, which doesn’t take very long, using your Estonian E-Card. (You’ll get all the software needed to access this when you collect your e-Residency card).
Then, as e-residents, you’ll need an Estonian business bank account. Feedback from people who have already acquired one has been very positive about LHV Pank – and again, a business service provider can help with your address and connecting you with a bank to make the process smoother.
At the moment, it’s still necessary to travel to Estonia in order to apply in person for an Estonian business bank account. While this is not ideal, the reason is that banks each have their own criteria for deciding which businesses are likely to have their applications for an account approved or rejected. Encouragingly, these criteria generally favour companies that have clear business goals and are seen as trustworthy, particularly by demonstrating their commitment to compliance and accountancy.
And a large number of e-residents have decided that the journey is worth it. Some combine their business trip with a short holiday, whilse others visit the country for just a few hours. (You can get from the airport to the bank in under 10 minutes in a taxi).
Of course, no one wants e-residents to be rejected after taking the time and expense to travel, so it’s recommended to speak to a business service provider before booking any travel to Estonia to open a business bank account.
Why using a business service provider makes it even easier
Compliance can be a headache for any business and the entrepreneurs behind it. If you register your Estonian business through a business service provider, compliance is not something you need to worry about. Business service providers handle literally everything, from registering your expenses, to filing tax returns, to paying VAT and keeping your books in order. (LeapIN’s most expensive plan is €99 a month – a bargain compared with hiring or using individual accountants).
Your business service provider will help you set up your company and provide guidance through the e-residency and company opening process, including assisting you and your fellow entrepreneurs in opening a bank account. Once the applications for e-residency have been granted and you have opened your company and a business bank account, you’ll never need to return if you don’t want to.
While it’s easy to establish a new company in some countries, the procedures are still lengthy and complicated in others. A US study recently said that the cost of starting a business in the US can be anywhere between $3,000 and $30,000. If you include the setup fees and the cost of using a business service provider in Estonia, the amount can be as little as €300.
Estonian e-Residency is a great option for digital nomads, and entrepreneurs who live in different countries. For a small investment of time and money, you’ll get an EU-registered business that you and your fellow entrepreneurs can access online anywhere, wherever you work in the world.
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