If you allow employees to telecommute, be sure to consider the potential tax implications. Hiring someone in another state, for example, might create sufficient nexus to expose your company to the following in that state:
- Income tax
- Sales and Use tax
- Franchise tax
- Withholding tax
- Unemployment tax
- Workers Compensation Insurance
- Personal Property tax
- Unclaimed Property
You’ll also need to be registered with the Secretary of State for each state in which you do business.
The rules vary by state and also by type of tax — and become even more complicated for international telecommuters. So it’s a good idea to review the rules before you approve a cross-border telecommuting arrangement. If you’re considering hiring employees to telecommute from outside your state, contact us and we can help you assess the potential tax impact.