Working From Home

Q. I am looking to expand my business into other states.   I don’t want to rent full offices in case it doesn’t work out so my sales reps will work from home doing phone sales. What issues am I going to have to pay these guys?

A. Congratulations on your business growth!  There is one important detail to remember when you start operating from other states.  Because these are employees, you have established a business presense or “nexus” in that state.  That means, in order to properly compute your payroll, you will need to open a withholding and unemployment account in each of those states.  Depending on how the business is set up, this may also open you up to property, sales and income tax liability in those states.  Hopefully, you have retained the services of a CPA and/or hired a competent payroll person to process and handle this situation.

Small companies are especially prone to making decisions that increase their tax and payroll complexity beyond the original intention.  The moral of the story here is to research the issues prior to making the decision.  From a sales perspective, maybe this makes sense.  However, because of the increased record keeping and filing requirements, perhaps it is not the best decision.  Utilizing technologies such as VOIP, VPN and Web Conferencing, your sales reps can make calls directly from your main location.  In my opinion, hiring local talent is another way to have better control over the activities of your employees.  As your company expands and other requirements such as distribution or call centers become needed, then the establishment of nexus in other states would make better economic sense.