The competition for talent is getting stronger by the day.
Organizations are turning to remote work policies as a way to broaden their workforces. By expanding recruiting efforts beyond corporate headquarters, organizations increase the opportunities to capture the most skilled and talented employees — without demanding relocation.
While remote workforces come with myriad benefits, they also come with a host of issues that companies must address before jumping on the telecommuter bandwagon.
All Taxes Are Not Created Equal
Though it seems like common sense, many companies with remote employees run into trouble come tax season.
Income and some employee taxes differ by state, which can be difficult to manage without proper controls and documentation in place. Staying up to date on tax laws and requirements — by state — is essential to hiring remote workers.
State Business Licenses Exist … And Yes, You Need Them
If you’ve ever started your own company, you know you need a business license to operate.
What you may not know is that in order to hire a remote worker in another state, you need a business license for the state they work in as well.
Unfortunately, companies that aren’t aware of this prior to expanding (remotely) across state lines will find themselves on the receiving end of fines, penalties and in some cases, temporary closure for not following business laws.
Not only is this a major faux pas in the government’s eyes, this could cause temporary or permanent damage to your business’s reputation among customers, vendors and partners.
State Lines Can Change Everything
You might expect that all work laws, holidays and fees would be the same, but you know what they say about those who assume ....
When hiring remote workers in different states, you can run into numerous differences, including department of labor fees, differing minimum wages and certain employment laws like the amount of time employees can work without a break, leave of absences, maternity and paternity leave, disability acts, unemployment laws, commuter benefits and health insurance requirements.
Basically, almost anything can change when you cross state lines, which is something companies must be aware of before they consider hiring remote workers. These state differences aren’t necessarily a reason to avoid telecommuting altogether — they are just another thing to consider before making the jump.
Being aware of state laws, taxes and licenses are important aspects of hiring and managing remote workers, and will ultimately play a part in how successful your remote work policy is. Consult an expert about possible tax implications and to learn about the different state licenses you may need. As they say, it’s better to be safe than sorry.