Owning a thriving business on an upward trajectory is exciting to be sure. However, growth and expansion don't come without their challenges. For example, many businesses as they grow, move from being located in one state alone to operating in several states, making multi-state liability and compliance a new challenge. After all, expanding state lines means you now have to pay close attention to the income tax withholding and payroll tax laws of more than one state.
Additionally, a significant increase in employees, like those involved in expansions, or having a workforce move from primarily in-person to at home or remote because of COVID-19 mandates come with their own challenges for employers. For example, sometimes, when employees begin working remotely, they are residing in a different state than the business operates, making state tax and payroll tax for a different state suddenly applicable. Suffice it to say, it can all get quite complicated and frustratingly confusing. The last thing you want is to be fined for non-compliance or to mess up your employee’s taxes. Therefore, you need to know how to navigate this expansion into more than one state properly.
What Makes Remote Workers and Multi-State Compliance Complicated?
COVID-19 and the subsequent shutdowns led to many businesses moving their workforce from in-office to at-home, remote work. When the employees remained in the same state as the business, this didn’t prove to be too challenging, though there were some other work-related issues to be solved. However, if workers lived in a different state than the business and were suddenly working from home, this presented all sorts of new challenges to businesses. They had to adhere not only to the state laws that they operated in but had to follow the regulations and mandates of the state in which their remote employees resided. This new challenge brought about a great deal of angst for employers who suddenly had no idea how to maintain compliance.
How to Navigate Employers’ Liability and Multi-State Payroll Tax
Instead of attempting to track payroll taxes manually, especially if you are spanning state lines via your remote employees, consider using payroll tax software through a third-party provider. This approach means you will automate compliance and maintain strict adherence to deadlines and regulations, all without having to know the law personally yourself.
Multi-State Tax Services
The following are some of the most notable multi-state tax services that would benefit you during an expansion spanning more than one state or help you ensure remote worker compliance:
Year-round state and local tax planning, looking at the local state and tax plan for each employee.
Review of prior year federal, state, and local tax returns for potential refunds. This would consider how much taxes an employee paid before and determine if they were paying the correct amount, too much or too little.
Multi-state taxation analysis. This would consider the taxation of employees in multi-states and if they are paying the correct amount or this needs adjustment adhering to different state laws.
Voluntary disclosures and tax amnesties. This would occur if the professionals find that you have been out of compliance, accidentally, and volunteer to disclose various factors about the matter to the proper authorities and lessen penalties and fees.
Representation for state tax audits. If the worst should happen, and you find yourself facing a tax audit this service would represent you and provide all the information you need to prove compliance.
Professionals Are Best at Knowing How to Navigate Multi-State Liability and Compliance
If you conduct business in multiple states and want to know if you are at compliance risk, please call TPC as we have expertise in many areas pertaining to this field. We understand all the nuances involved in expanding your business and are here to help you maintain compliance.