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8 Replies Latest reply: Mar 31, 2010 3:55 PM by jlsmove RSS

Remote Employees

newbie Newbie
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My company is headquartered in New York but my staff is located in other areas of the United States. When I applied for payroll it was explained that their salaries deductions would be based on their states. Do I need a business license? I'm not really certain on how to pose the question. However, I just want to know will I get hit with major taxes by employing staff in different states other than the main company?
  • Re: Remote Employees
    Lighthouse24 Master
    Currently Being Moderated

    If I understand your question, you're asking if the fact that you have employees who reside and work in other states obligates you to those states for anything other than their wage reporting and withholding requirements.

    Do you have physical locations where business is conducted in those states? If so, then you may be required to register with the state as a foreign company, and to comply with local licensing regulations (if any apply). If those employees deliver taxable products or services to customers in those states, you may also be responsible for collecting and reporting state sales tax.

    If you can be more specific about your business and what those employees do, a more definitive answer can probably be offered.

    • Re: Remote Employees
      newbie Newbie
      Currently Being Moderated

      Hi Lighthouse24,

       

      Thanks for the reply. I'm a magazine in New York. Now, one employee is in Delaware, does emarketing. The others are in Dallas, TX doing marketing and production. My COO is here in New York. They all work from home but have my equipment in their houses. Any suggestions? Let me know if you need more info.
  • Re: Remote Employees
    LUCKIEST Master
    Currently Being Moderated
    Remote Employees, Welcome to this web site.
    Every business should have an Accountant, A Lawyer and maybe an Insurance Agent.
    Do you have an Accountant?? Another suggestion might be an "Outside Payroll Service".
    They would take care of the payroll and also know about taxes on employees
    in different states.
    Good luck, LUCKIEST
    • Re: Remote Employees
      newbie Newbie
      Currently Being Moderated

      No Luckiest.

       

      I don't have an accountant, lawyer or insurance agent. If would like to recommend one I'd be greatly appreciative. Preferably one who knows how to work within the entertainment industry.

       

  • Re: Remote Employees
    Lighthouse24 Master
    Currently Being Moderated

    My first thought was that this is interstate commerce and that you do not need to register in Texas or Delaware.

    I can tell you for sure that a foreign entity transacting business in Texas must register with the Texas Secretary of State. The problem is, Texas statutes do not define "transacting business in Texas." (Case law and Attorney General Opinions are used to determine if registration is required and/or franchise taxes are due.)

    So . . . two options for Texas would be: (1) file a Texas Nexus Questionnaire and request a definitive ruling, or (2) do nothing for now, and if your employee wage reporting "triggers" something that causes the state to contact you, complete the form and get a ruling then. (Worst case with option 2, you'd pay the fee and tax you'd pay anyway. You could probably avoid any penalty by saying that interstate commerce does not constitute "transacting business in Texas," and you understood that your employee's activity qualified as interstate commerce. As I said, that was my first thought.)

    What is the possibility that the activities your employees are engaged in could result in someone filing a lawsuit in Texas or Delaware against your company? What is the possibility that your company would need to file a lawsuit in Texas or Delaware against one of those employees (or someone with whom they do business). If a reasonable possibility exists, I'd be more proactive (i.e., seek legal advice or contact those states directly to get a clear decision).

    I know that's not a very conclusive answer, but I hope it helped you a little. Best wishes.

  • Re: Remote Employees
    axualgroup Newbie
    Currently Being Moderated
    It sounds like you are doing (transacting) business in New York, but simply have employees working from home. You certainly need to deduct state income taxes for the state your employees work from (if that state has an income tax), but this is different than requiring a business license.

    Generally, a business license is required if you transact business in a state. Unless that state stipulates otherwise, a business license has nothing to do with payroll deduction requirements.
    • Re: Remote Employees
      newbie Newbie
      Currently Being Moderated
      Yes Axualgroup, My company is based in New York however my staff lives in other areas. When I was going to ADP for payroll (since finding BOA which is super free!) they gave me papers to file with each state so at the end they would file the taxes for me.

      But then I spoke to my business manager who said I may have to do a business license. I wasn't happy with that. I just wanted to pay these people and move on. How do I find out what that state requires so I don't get hit with an audit later down the road?

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