Multi-State employees are a fact of life for many businesses. Employees may be moving from one location to another as part of their employment or they may be working remotely. Many businesses have offices in one or more locations outside of the home location and as businesses grow they may include multiple states. This is positive when it comes to growth but it can also result in a variety of questions when it comes to accounting, multi-state taxes and multi-state employee benefits.
Pros of Multi-State Employees
Growing your business is a good thing. This may require opening satellite offices in other states. When you end up expanding your customer base it is advisable to have an office or a place of business in a location that is accessible to these customers.
Larger Pool of Employees
Many businesses are having difficulty finding qualified employees. If you have only one location, your pool of potential employees is limited by geography. With employees being able to apply from other states, it vastly increases the ability to find employees to fill the positions that you have available.
Employee Flexibility and Retention
The ability for employees to work from distant locations and from home is very appealing to many people looking for employment today. Employees don't have to deal with traffic and parking and having a more flexible work time schedule makes it easier for employers to not only find good people but to retain them.
Cons of Multi-State Employees
Having employees in multi-states complicates accounting and particularly payroll. Having good accounting software can help to make sure your tax accountants are able to verify taxes are paid correctly and any credit your company has earned can be obtained.
Having employees in multiple states poses a variety of payroll challenges. Good accounting software can make this less challenging but it is not foolproof and needs to be monitored by accountants who understand the implications of multi-state taxing.
State tax rates vary from state to state and make it more complicated when dealing with multi-states. It gets even messier when an employee works split time from home and in an office in another state.
Each state determines its unemployment tax rate and the employer must remit the correct tax to the correct state. If an employee works in the office sometimes and at home other times and home is in another state, this is where things get complicated.
Multi-State Employee Benefits
Health benefits are the most complex benefits to administer. You can opt to carry a national policy which will cover every state but it may be more expensive and not as popular with your employees. States have specific requirements that are not uniform making it even more complicated to cover your employees. Some businesses opt for an HRA (Healthcare Reimbursement Arrangement) to allow employees to choose a policy best suited to their needs. There is no perfect option.
Background checks are an area where having employees in multiple states is a very sticky issue. Even when dealing with only one state it is complicated to stay in compliance with both state and federal mandates. With multiple states, it can reach nightmare proportions.
Work With Our Team
It's true, having multi-state employees does mean that your business accounting is more complicated. However, having a tax accountant with the experience to make sure that you are always in compliance and are not overpaying is important. At Chandler and Knowles CPAs, we have years of experience with our business clients making sure that they don't have to worry about their accounting, just growing their business. Contact us to set up an appointment.