Starting up remotely? Keep these labor laws and tax guidelines in mind

Employees and employers face a lot of benefits and pitfalls when it comes to remote employment. The cultural pros and cons have been covered, but considerations from a setup and maintenance standpoint haven't been addressed. When it comes to a remote workforce, there are important legal and tax implications.

Over the last two years, employees have not been able to go into an office into a benefit by moving out of their employer's state. As remote-first businesses were created from scratch and talent was more important than location, it became common for startup to hire out-of-state employees.

Keep in mind the following when starting your startup.

Tax implications

There are tax implications for companies that have remote workforces. There is a state payroll withholding tax. This is required for the state where an employee works or provides services, regardless of the employer's location. It's possible that your startup needs to register and pay income taxes in several states.

These are complicated issues, and often, the best approach is to engage an expert early.

The questions we ask are listed here.

1. What are your sales and revenue by state?
2. Where are your employees located?
3. Where is your office located, as well as any other property?

Dollar amounts and property locations matter because each state has a different threshold when it comes to defining whether a nexus has been established or not.

This isn't something you can ignore. States pay attention. The state gets your tax ID number when you register with a government agency. If you have a presence in that state, your business will be monitored and pursued for tax debts.

One of our clients was stopped during an acquisition last year because they were out of compliance with their remote workforce. You need to register in each state where you have employees.

Considering the “nexus”