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    3 Replies Latest reply on Sep 3, 2009 5:26 PM by FanfareEvents

    Multi-State Business and Payroll

    mnasim034 Newbie
      Hello All!

      I have a IT staffing and consulting firm that is based out of NJ. I have a client in CA who is willing to hire one of my consultants. Now if my consultant moves to CA to work for my client do I need to pay NJ AND CA payroll taxes or just one state when I pay my consultant? Also, if I need to pay CA taxes do I have to be incorporated in CA? The way it works is my client pays my company as a 1099 and I pay my consultant an hourly wage, so the consultant is on my payroll, not the clients. The job is temporary, at most one year.

      If you need more information to answer my question than I will provide.

        • Re: Multi-State Business and Payroll
          LUCKIEST Guide
          Multi-State Business and Payroll

          You just started an IT staffing and consulting company a few months ago.

          Do you have an Accountant?? How can I get in touch with you in N J?? Email?? Phone??

          • Re: Multi-State Business and Payroll
            FanfareEvents Newbie
            I have the same issues with hiring staff in different states. They are on my payroll in Washington State but they live in a different state, and sometimes work in a different state all together. Which state do I need to pay taxes to; my state, the state where the employee lives, or the state that they are working in? It's all very confusing! Let me know if you find the answer!
            • Re: Multi-State Business and Payroll
              TaxDiva Newbie

              If you own a company with employees located in various states, you usually have to pay the withholding to the states they are using as their State of Residence. To determine this, the ruling is that if you send an employee from New Jersey to California to work for a period of time less than one year, your employee's State of Residence is New Jersey for that placement, and they would be liable to pay the state withholdings to NJ. If that same employee will be there over a year, their State of Residence would be then be California, and you would have to file California State Taxes on them.

              It is also important to know that if you send them from NJ to CA, and the original plan was for them to only stay for 8 months, and they end up having to stay 14 months, their State of Residence will still be NJ. If you or the employee determines that they will be staying on indefinitely, you need to switch the State of Residence to CA at that point, and you and your employee would have to file a tax return from both states that tax year, that would seperate the income between states. I would have a signed document that proves the original term was for less than one year, to prove that you were responsibly collecting the correct state withholdings.

              Hope this helps.