Many creative entrepreneurs are building businesses to gain financial and lifestyle freedom. Even more since the pandemic. The internet makes the possibility of creating a global business achievable. You can reach prospective clients and customers almost anywhere. A year into the pandemic, we’re seeing more interest in Digital Nomad entrepreneurship than ever. Wikipedia defines Digital Nomads as “individuals who leverage telecommunications technologies to perform their work duties, and more generally conduct their lifestyle in a nomadic manner. Such workers typically work remotely—from home, coffee shops, public libraries and even from recreational vehicles to accomplish tasks and goals that used to traditionally take place in a single stationary workplace.”
We’re not talking about doing business while on vacation. Nah. We mean doing business while globe trotting. You are in a different state or country every few months. You lack real permanency in your residence because your goal is to see as much of the world as possible. And because of this, you have clients from everywhere.
From a legal perspective, though, Digital Nomad entrepreneurship presents a few challenges.
Likewise, we’re dedicating our next #legalcoffeechat to answering your questions surrounding Digital Nomad entrepreneurship. You deserve to live the life you want without constantly worrying about whether you are working by the rules. You deserve clear answers. And we intend to give them to you. Leading up to the legal coffee chat, we’ll be introducing you to some legal concepts you really need to know before putting your apartment on Craigslist, selling your belongings, and packing your bag to become a full-time jet-setter. Because CGL is a U.S. based firm, this post is written from the perspective of a U.S. business owner, traveling or living abroad while working with a global customer base.
We kicked off the conversation earlier this month discussing domicile + later, the importance of selecting the proper business entity. This week, we’re wrapping up the conversation by focusing on how to minimize your risks as Digital Nomad entrepreneur. Let’s get into it!
With most adventures, there are risks involved. Embarking on the Digital Nomad entrepreneur journey is no different. We’ve discussed a few of them already. From establishing domicile to understanding what it means to have an online business to selecting the proper business entity, there are a range of potential risks in being a globe-trotting, jet-setting business owner. But that doesn’t mean you don’t do it. Because no risk, no reward. Just be sure to do all you can to minimize your risks. One of the biggest ways to do this is to avoid entering into agreements while you’re racking up those frequent flyer miles, unless you sign a contract.
What happens if I sign a contract with someone during my global adventures?
In short, you open yourself up to far more risks than you were anticipating when you decided to take the leap. Save yourself the trouble and the very likely unwanted travel, if something goes wrong, and avoid entering into oral agreements that are not accompanied by written contracts while, on your journey. This includes agreements with customers and business partners. As a Digital Nomad Entrepreneur, you could be exposed to even more liability because your contracts are initiated from all over the globe and at any given moment. Without a signed contract, there is no clear and defined statement establishing:
- What state’s law controls your contract (known as a choice of law clause), or
- In the event of a legal dispute, the state (and county) where a lawsuit may be filed (known as the jurisdiction clause)
Without a doubt, your home state will be one of the options. But when that is not written into your contract, you leave those important issues unresolved. Essentially, you leave it up to chance where you can land in court and what laws you will be bound by. If you include these clauses, the territory where you will have to face legal issues will be confined. Your final task is to remain conscientious. To recognize every scenario in which there should be a written contract and refusing to move forward until you have one. Let’s be honest. Deals happen fast. Some are written, even on bar napkins. But in today’s world, most are not. That’s why we’re providing you with a cheat sheet to help you recognize those situations where a written contract is necessary.
Join us this Friday, March 26th at 6:00PM CDT for our upcoming virtual legal coffee chat, Legal Lessons for the Aspiring Digital Nomad. You’ll not only receive the cheat sheet we mentioned, you will also walk away with an understanding of the potential risks associated with Digital Nomad entrepreneurship, as well as how minimize those risks. The event is free, but registration is required. Register at the link below. See you there!