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On the flip side, if you work in Massachusetts but live in New Hampshire and work from home some days, you don't have to pay income tax on the days you worked from home (NH has no state income tax)
It's really not that big a deal. At Stack Exchange I think we have employees in eight different states now, all individuals working from home. It's a lot of paperwork but not disproportional to the amount of paperwork you have to do per-employee anyway. It does cost something to deal with but it's a rounding error compared to the cost of those people's salaries. It is by no means a reason not to hire people who work…
Do you need to pay corporate income taxes in these states as well?
It is possible avoid state income taxes and collecting sales taxes by hiring these employees as independent contractors (if you were willing to give them whatever autonomy was sufficient)?
Do you know if there similar tax consequences to hiring employees who are residing overseas?
(Of course the real answer to all of these is consult an attorney.)
I was wondering something similar but for countries. Say that I work for my own company developing iphone apps or something like that. Now I like to travel around so I go to the US and work from there, could it be problematic?
As far as I know there is no visa that allows foreigners to travel to the US and work remotely back home. It would be a breach of the Visa Waiver program (or any other visa) which can lead to deportation. I'd like to hear from people who did this, told the immigrations officer about their plans and were not turned back on the border.
Earlier quoted context omitted.
Good luck with that. The IRS has very specific rules for who can be considered an employee and who can be considered a contractor. Attempting to treat people who should be employees as contractors is one of their number one enforcement goals, because contractors don't have withholding and are therefore far less likely to pay their taxes.
Would that matter, as long as the contractors only work one of projects which are time limited?
Earlier quoted context omitted.
Good luck with that. The IRS has very specific rules for who can be considered an employee and who can be considered a contractor. Attempting to treat people who should be employees as contractors is one of their number one enforcement goals, because contractors don't have withholding and are therefore far less likely to pay their taxes.
Would that matter, as long as the contractors only work one of projects which are time limited?
It's really not that big a deal. At Stack Exchange I think we have employees in eight different states now, all individuals working from home. It's a lot of paperwork but not disproportional to the amount of paperwork you have to do per-employee anyway. It does cost something to deal with but it's a rounding error compared to the cost of those people's salaries. It is by no means a reason not to hire people who work…
Some questions for Joel/anyone else: Do you need to pay corporate income taxes in these states as well? It is possible avoid state income taxes and collecting sales taxes by hiring these employees as independent contractors (if you were willing to give them whatever autonomy was sufficient)? Do you know if there similar tax consequences to hiring employees who are residing overseas? (Of course the real answer to all…
"Doing business" (as far as our accountant is concerned) is having billable clients in those states--generating revenue. We've had employees in 3 states (MI, IL and FL) and the only concern is making sure you are meeting that states payroll tax and withholding policies.
On a related note: Some states have different workers comp laws. We we're not required to carry workers comp in Illinois, but did need it in Michigan (and we also had to insure our Illinois employee, because she was now working for a company that was based in Michigan).
It's a confusing mess sometimes--seek help from accounts and lawyers and don't be afraid to call the state and just ask.
On the flip side, if you work in Massachusetts but live in New Hampshire and work from home some days, you don't have to pay income tax on the days you worked from home (NH has no state income tax)
Of course, wouldn't that also mean that on days that you commute to work you're paying income tax in MA plus the above-average NH property tax?
And yes, if you work in MA and live in NH, you pay MA income tax. Also, if you live in MA and work in NH, you pay MA income tax.
That's one way to stop outsourcing...
This has nothing to do with outsourcing as outsourcing is usually done on a contract basis. This is a way to stop people from being employed by a company in a different state.
It starts with full-time employees and ends with anyone you pay...
Similar to how sales tax started with the location of your company and is now the location of your servers ( in several states ).
Earlier quoted context omitted.
Good luck with that. The IRS has very specific rules for who can be considered an employee and who can be considered a contractor. Attempting to treat people who should be employees as contractors is one of their number one enforcement goals, because contractors don't have withholding and are therefore far less likely to pay their taxes.
Would that matter, as long as the contractors only work one of projects which are time limited?
This is why most companies hire software contractors via companies who employ multiple contractors, and never directly.
I was wondering something similar but for countries. Say that I work for my own company developing iphone apps or something like that. Now I like to travel around so I go to the US and work from there, could it be problematic?
As far as I know there is no visa that allows foreigners to travel to the US and work remotely back home. It would be a breach of the Visa Waiver program (or any other visa) which can lead to deportation. I'd like to hear from people who did this, told the immigrations officer about their plans and were not turned back on the border.
So if I were going to US to work on my own business temporarily, I'd either go as a tourist or say, "Oh, I'm from Nandemo Ltd., and will go to a business meeting with SP_ Corp, here's their invitation letter". That's similar to what I did when I went to US for a job interview at the headquarters of X Corp. trying to get a job at their Tokyo office. If I had said I was coming to a job interview they wouldn't let me in; even though I had no intention to work in US.
One must be out one's mind to volunteer unnecessarily detailed information to the immigrations officer. Given that there are millions of illegal immigrants actually working for American employers and not getting deported, the odds that a web developer working at home would be deported seems pretty slim.