Remote employment is becoming more and more commonplace for many companies, with many employers choosing to allow employees to work remotely in some capacity. This can be a great benefit for employees who can take advantage of more flexible working arrangements and no longer need to deal with long commutes. Businesses can benefit from reduced overhead costs and happier (as well as more productive, in many cases) employees.
How can businesses benefit from remote employment?
Another benefit for employers that allow for remote work is the talent pool is no longer restricted to a specific geographic area(s) due to employees being required to physically be in an office. In many situations, the only real requirement is reliable equipment and a stable internet connection, meaning the employee has the freedom to work from virtually anywhere. This can be a game-changer for companies that may have historically experienced staffing challenges due to a lack of access to qualified talent, allowing them to hire employees across state lines, or in some cases, even from out of the country. Employee retention may also improve, as workers might not have to make the choice between keeping their jobs and moving to a different city, state, or country.
Special considerations for remote workers
However, making the choice to allow employees to work from a different state (or country) comes with its own set of challenges. Unless the business already has a presence in the state, in most cases the company will need to register and set up additional tax accounts. This can include income tax, unemployment, and other regulations regarding tax withholding and reporting, depending on where the employee is located. Employers will also need to be mindful of any local requirements as well, as there may be additional tax and reporting requirements.
The process of registering as a business for the various tax withholding accounts can vary from state to state, and some can take up to several weeks to issue an account number. The timing can present a challenge when employees give notice at the last minute that they’re moving. Or, they might have already moved to the new state without letting the company know. Timing can be critical for employers looking to extend offers to candidates too. Making an offer to a candidate and then requiring them to wait for several weeks before starting while the business figures out how to get set up in the employee’s state can be a lot to ask.
How can we help?
There are a few states that have reciprocal agreements which could make the process easier for some employers, but in most other cases, there really isn’t a way to avoid the registration and setup process when dealing with a relocating employee or new hire. Fortunately, there are service providers who have the knowledge and experience to help keep employers in compliance. A partner like Valor Payroll Solutions can work with the business to set up tax accounts and determine their liabilities to make sure they remain compliant in all applicable states. Contact us today and let us take care of your multi-state payroll needs!
