Employee Benefit Plan Audits

Navigating multi-state employment: Payroll tax compliance in the hybrid era

Benefits Pro (June 06, 2025)- It’s critical to take a step back and create a plan, assessing and managing the risks that come along with distributing employees across the country. The rise of remote and hybrid work is no longer...

Benefits Pro (June 06, 2025)- It’s critical to take a step back and create a plan, assessing and managing the risks that come along with distributing employees across the country.

The rise of remote and hybrid work is no longer a temporary response to disruption. Even as “work from home” becomes a less prevalent reality, businesses of all sizes embrace the opportunity to recruit top talent beyond state lines. This flexibility has created meaningful gains in scaling the workforce, access to varied skills, and employee satisfaction. But it’s also introduced a layer of complexity many organizations aren’t fully prepared for: multi-state payroll tax compliance.

Small to midsized businesses (as well as nonprofits) may have dived into multi-state employment with some false assumptions. A major misconception is the belief that payroll processing companies will not only take care of requirements such astax payments and quarterly or annual filings, but also provide tax advice and help businesses register in multiple states for these taxes. But that isn’t the case – and companies are often left on an island as they try to manage the situation.

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