When it comes for remote employment employees and employers face many benefits and pitfalls. While the cultural pros and cons were highlighted, considerations in terms of setup and maintenance were largely not considered. There are important legal and tax implications to keep in mind when it comes to remote labor.

Virtual teams existed long before COVID-19, but over the past two years, employees have turned the inability to enter the office to their advantage by leaving their employer’s state. For startups, hiring staff from outside the state has become commonplace, as remote businesses have been created from scratch, and talent has been far more important than location.

If your startup is running or being removed, keep the following in mind.

Tax implications

Remote labor has tax implications for their companies. In particular, there is a state payroll tax. This is usually required for the state where the employee works or provides services, regardless of the location of the employer. This means that your startup may need to register and withhold income tax in several states.

Here are the questions we ask customers:

1. What are your sales and revenues across states?
2. Where are your employees?
3. Where is your office as well as any other real estate?

The amounts in dollars and the location of the property matter because each state has a different threshold when it comes to determining whether a connection has been established (read more) or not.

This is not something you can ignore. States are paying attention. When you register with a government agency, the government receives your tax number and other identification information. This means that you are present in this state and your business will be monitored and prosecuted for any tax liabilities.

For example, one of our customers was terminated during an acquisition last year because it was found that they did not match their remote workforce. Therefore, it is very important to register in each state where you have employees.

Given the “nexus”