Did you form your company in a country other than the one you live in?
Background: I’m slowly working towards launching my first indie product (Konbini), and rather than forming a company for it in Serbia (where I actually live), I’m working on incorporating in Estonia through their e-residency program.
I’m doing this because, even though starting and running a small business in Serbia is relatively painless, I still see a bunch of benefits to it:
- An Estonian company can be managed 100% digitally, online, and from anywhere
- Actually establishing and running an Estonian company is easy and cheap, thanks to service providers like Xolo who can handle all the admin for an indie company for under $100/mo
- Estonian corporate taxes are reasonable (20%), apply only to profit, and only when you actually pay out dividends — any profit you reinvest into the company is tax-free
- Incorporating in Estonia makes it an EU company, which is important to some customers and makes it easier to build trust
Given that we live in the age of great tools like Estonian e-residency and Stripe Atlas, I wonder how many other indie hackers here have taken a similar route and started their company in a different country.
Note: If you live in a country where it’s easy to run a small business, you probably don’t see what what the fuss is about, but depending on where you live, starting and running a local company can be a huge pain and/or prohibitively expensive. This is why forming a company somewhere else is an attractive option for a lot of people.
Also note that if you’re going to do this, it doesn’t necessarily automatically free you from any tax obligations you might still have in your home country. Always consult a local tax expert to avoid nasty surprises down the line, and to make sure you’re not going to be taxed twice.
I wouldn't underestimate Singapore. Any foreigner can start a company there using tools like Sleek. 4.25% tax on the first 100K, then 8.25% on the next 100K, and then 17% for the rest, for the first three years of incorporation. Then 17% as of the fourth year. Plus, dividends are tax free.
That sounds pretty good! I haven't heard of Sleek before, but I have noticed that a lot of people in that region tend to incorporate in SG.
A few years ago I had seen a lot of Indian companies registering in Hongkong but lately, I'm seeing them moving to Singapore, Dubai, and the US.
HI, I think without registering you could also do online business in other country. Like a young man from our country is runing https://pakipackages.com/jazz/jazz-call-packages/ and generating alot of sales from the other country. While providing the information he is also earning from different ad networks like adsense.
You definitely don't need to form a company to run an online business!
That being said, there's a lot of benefits to doing so, and depending on what you're doing (e.g. taking card payments) you may need a company to be able to do it.
The biggest benefit, especially if you're working with business clients, is that forming a company shields you from liability if anything goes wrong (i.e. your company can be held liable, but not you personally).
We are from Taiwan but we incorporated in the UK mostly because we wanted to access the European market and international payment gateways like Stripe. We used Incorpuk (https://incorpuk.com) to incorporate and they are quite good for non UK residents.
Incorporating outside China and Taiwan is one of the best decisions we made for our startup as we were able to start sending Stripe invoice to our clients in the US and Europe from the first week of launch. We were also able to do some formal partnerships with some UK companies.
Yeah, access to Stripe is definitely a big factor for many people. Unfortunately this is one of the downsides of incorporating in Estonia through e-residency, compared to other options - Stripe supports Estonia, but if you register your company through e-residency, Stripe specifically requires the founder(s) to physically live in a country supported by Stripe. I don't know why they insist on this when they have no problem supporting basically the same setup in other countries.
If you are willing to put in the leg work, incorporating a FZ LLC Dubai is really worth it.
The pros
Easy to open an LLC, no corporate tax for FZ, high VAT threshold, no need to file reports until you reach the VAT threshold (saves money on accounting & mental energy), most of the government services are digital,...
The cons
Opening a bank account is a painful process (+ you will need to show your face), digital banking isn't very advanced (Transferwise business banking pulled out 1.5 years ago), ...
Pm me if you'd like more details. Happy to share my set up, how we did it and what I would recommend if you consider this as an option.
tricky - every country is different. My own country doesn't care where your business is incorporated for taxes. If your company is managed from here, then you'll be taxed on local taxes - gets super complicated, so DYOR
An important problem. Not a clue how to solve it; the double taxation can be ugly. Perhaps digital nomads already cracked the code.
Yeah, thankfully tax treaties solve that problem and they're pretty common - even Estonia has them with over 60 countries.
Hi! Nothing related to the subject, just wanted to bring you an information on the name of your solution. Konbini is a very popular media in France: https://www.konbini.com/fr/
Maybe worth checking out?
Hi, thanks for the heads up. I've run into that site before, but konbini is a generic term (it means convenience store in Japanese) and I'm targeting a completely different audience with my product, so I don't think it'll be a problem.