As a business owner, what should I know about using remote employees?

Interest in the use of remote employees has greatly increased along with growth in the number of service jobs and developments in technology that enable some  workers to work almost anywhere. A remote employee is someone who works away from the office, often at home, part or all of the time. You might be able to use a remote employee in your business if the employee does not need to be at a specific location in order to do the work required.

You may be able to increase the talent pool available to your business by hiring an employee who is not local and permitting the employee to stay where he or she is and work remotely. Even local employees may see an advantage to working remotely at least part of the time.

Remote employment can be incorporated as part of flexible scheduling. An employee might come into the office one or two days a week, and work remotely the remainder of the week. Remote employment can be especially advantageous where the employee would otherwise face a long commute to work, or the employee has to balance work with the occasional care or transport of young children or elderly parents.

If you hire an employee who works remotely in another state, remember that there are tax consequences. If the employee works almost entirely in the other state, the employee will usually pay income tax in the other state. If the employee splits time between the two states (for example, works one day a week in state A, and the other four days in state B), the employee may pay income taxes in both states.

As the employer, you will usually need to create an account with the state, and possibly local, taxing authorities in the other state, and withhold income taxes from the remote employee’s wages and pay them to such tax agencies. As the employer, you may also need to pay unemployment insurance to the other state. A payroll service, accountant, or attorney can help you determine what your obligations are and how to meet them.

 

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012