The significant perk of working remotely is that you could be anywhere in the world and it won’t affect your work. You could be spending time with your family & kids or enjoying the Sun in Bali. Your business will still run as smooth as it was when you were present in your home country. But is that really where the buck stops?
You will come across endless articles about how working remotely is a dream come true (and I bet it is), but are you really investing your money right and getting the maximum returns?
If you are a remote start-up, taxes are probably not the thing you might worry about at the moment. But if you make hundreds and thousands of dollars while working remotely, and still haven't given some attention to your taxes, then you are probably doing a lot wrong.Remote workers often end up paying more taxes because of the nature of their work but this can be avoided. In fact, remote entrepreneurs can avoid more than half of their taxes legally if they are getting heavily taxed.
If you are working remotely you will generally pay taxes to the state where you do the work (the "physical presence" rule). Your employers also pay taxes on wages (paid to you) to the same state, even if the employer has no physical presence there.
If you are living in a country/state with a high tax rate, imagine the amount of money you’d have to give away to the government. You can end up giving away more than half of your money. And while there is not much you can do about the taxes that your employer pays, there is a lot you can do about the taxes that you pay.
Andrew Henderson, founder, Nomad capitalist, created the Flag Theory. He believes in going where you are treated the best. The theory revolves around the concept of having a second passport, and an offshore bank account or even hosting your website offshore. And every time you base a part of your life in a new country, you plant a ‘flag’. Watch Andrew Henderson talk about the Flag Theory.
You, like a whole lot other remote entrepreneurs, are doing a lot wrong that is costing you (or will cost in the future) a lot more money. Wouldn’t you want to save some extra thousand dollars that you are probably giving away and not even realizing it?
The problem here is that people intentionally get themselves stuck in a very limited geographical sphere. If you have the mindset that traveling to places like Africa and Asia is crazy, you might be missing out on some great deals. To save big on taxes you need to:
The remote work strategy works for both established remote entrepreneurs and startups. Starting your business in a country that treats you the best enhances your success rate. Imagine how much money you would save if you start your business in a country with lower tax rates. And why would you want to wait until you are making thousands of dollars to save more money anyway?
Andrew Henderson, founded Nomad Capitalist to help people 'go where they are treated best'. He says “We have governments expanding their reach over our lives, power being consolidated by an elite few and a more volatile, unpredictable global economy."
Today, with the advent of the internet, a globalize world economy and opportunities are available to everyone. All you need to do, willing to adapt to these changes.
I am a content writer, working remotely for the past 3 years.
I write about remote work, marketing, and analytics.
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