I Started a Company With XOLO and This is What Happened

I’ve been looking for ways to open my own business for a long time, but since the bureaucracy in my country is horrible and very limited, it wasn’t an option for me. When I started looking for options overseas, though, I found XOLO.

Ok, the story is a little more complicated than this, but it’s worth it. XOLO is an Estonian platform for digital nomads. It allows you to manage your own company as a sole trader (freelancer) or as an Estonian e-Resident.

The XOLO Go plan is free, and you can sell your freelance services to any other company in the world. You just need to pay 5% for every transaction and you’re done with the bureaucracy. Everything is invoiced through XOLO and you’re done.

However, if you want more freedom, you will need to apply for eResidency and set up a XOLO Leap account.

About eResidency

Not long ago, Estonia opened its fantastic system to the whole world. Becoming an eResident doesn’t give you the same rights as an Estonian citizen, but you can use their digital business environment using your personal ID card.

In order to become an eResident, you need to make an application through the Estonian eResidency portal, or through Xolo. You pay a fee of €100, and your card will arrive in 2-4 weeks along with the card reader.

Being an eResident alone doesn’t rise any obligations, but you can go ahead and set up your company.

When your card arrives at the pickup location, you’ll need to take a trip to the Estonian embassy in your chosen location. They will take your fingerprints, you’ll sign for the ID, and then wait 24 hours for it to activate before you can start setting up your company.

Starting a Company With XOLO

Since XOLO Go is limited to B2B customers, I couldn’t use it for a long time, so I went through the whole process and got myself a XOLO Leap account.

You can’t do anything until your eResidency card arrives, but you can prepare all the forms, ask all your questions and be ready for it. The most important things to keep in mind about XOLO Leap are:

  • If you’re the only one working for the company (if you don’t outsource) you won’t pay taxes on salary in Estonia.
  • You can deduce business costs such as portable gadgets (laptops, tablets, phones, cameras, lenses), learning resources (courses, books), business management tools (websites, apps), and business expenses.
  • You have a team of wonderful people to help you with anything! (this really won me. They message me every time something happens, and I message them with all the questions I have)
  • If you can’t justify an expense paid with the company card, you’ll pay taxes for it, and they’re not small, so make sure every transaction is justified.
  • You can’t take cash from the company, as they can’t be traced.
  • You can reimburse yourself for the things you bought for your company with your personal money.
  • You can only sell digital products through eResidency. Physical products are not allowed (not even dropshipping).
  • If you want to sell digital products on your website or any other platform, you’ll need to apply for VAT. Just ask a support agent to help you – they’re super sweet and helpful!

Setting up a Business Bank Account

You and your company are different entities, and you will need to open another banking account for your company. You can choose between TransferWise, PayPal, Stripe and LHV. The latter is actually Estonia’s national bank and you need to take a trip to Tallinn to meet with the official and sign the documentation.

I chose TransferWise, ad the pandemic didn’t allow me to travel – I’m sure you know the struggle. The setup was super easy. I got a link from XOLO to connect with TransferWise and it made everything by itself. In order to track all your transactions, XOLO gets read-only access to your bank account. Read-only means that it will only read the transactions, but won’t be able to control them – I only mentioned this for reassurance.

FAQs on Starting a Business With XOLO

Is XOLO legit?

Yes, XOLO is legit. It’s an Estonian entity helping you create and manage your online, borderless business.

What are the total costs?

In total, I paid €410 to set it up. I paid €100 to register as an eResident, €300 to set up the company including the XOLO Leap subscription, and another €10 to order my card from TransferWise.

Aside from that, you’ll still have to pay the monthly XOLO subscription depending on your plan, and if you outsource a lot of work, a tax on your board member salary.

Can you live in Estonia with eResidency?

No, you can’t. eResidency doesn’t give you the same rights as a citizen, but if you’re in the EU you can basically move anywhere you want. They’re very friendly, though, so if you want to visit, go ahead!

Now, to make things better, you can set up your company with my referral code and get a bonus of €100 from Xolo, which is neat!

What’s your opinion on eResidency? Do you have any more questions? Leave them in the comments! <3

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