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As a small business owner who’s had remote employees across the US, there are two big problems. (These are specifically about remote employees, not remote contr

As a small business owner who’s had remote employees across the US, there are two big problems. (These are specifically about remote employees, not remote contractors.) First, to pay payroll taxes to employees who live in different states, you have to jump through a bunch of hoops with each state’s government. For example, when we had an employee living in Colorado, we had to set up a business relationship with the state of Colorado - using a fax machine. They literally wouldn’t accept paperwork any other way - it had to be via fax. Later, when that employee moved to another state, we had to tear down our relationship with Colorado (or else keep paying business fees to Colorado), plus set up tax paperwork with the employee’s new state. All of this cost us time & money. Second, health insurance was a lot more complex. We wanted to offer the best possible health insurance to all of our employees, but health insurance companies make that massively complicated, with various rules about where the majority of staff lived, where each person lived, which plans were available in which states, etc. If I could do it all over again, I probably would have just given each employee an allowance to use on their local state’s open health insurance market, but that’s a hot mess too.

ekhornung 7y ago
that sounds like a nightmare with CO. I have heard about the nightmare of fully remote outside of the US, but I didn’t realize it was so bad within in
rando444 7y ago
This was my take as well. I am doubtful the author is truly managing people carelessly across 14 time zones without jumping through significant legal hoops, or is rather hiring contractors instead that manage their own legal responsibilities.
mac01021 7y ago
These are definitely real problems. It's possible to have a remote company that only hires employees in one or a few states, though. As an employee, I would much rather work for one of those than one that required me to work from a specific office.
- bluetidepro 7y ago
  Yeah, that is a thing. At my last job, we had a mix of remote and in office workers. If you did end up going remote, there were some states that weren't allowed because of, from what I guess, OP is saying.
Tor3 7y ago
Fortunately none of those two issues are relevant where I live. That sounds very tricky indeed. I used to work a few months at a time from my home office in another country. It worked fantastically well. I like to be able to concentrate without interruptions, and, as the timezone was different from the office, I got a very nice overlap where co-workers would provide work for me as they left for the day, and I would have that sitting in my inbox when I started working. Then, when my day was over, they would have the work ready for them when they got in (for that kind of one-day jobs). Of course there was also video conferences and such. But, as our customers are everywhere anyway, it didn't make any difference if one or two of us from my company were in different locations when we had video conferences with them.
- hartator 7y ago
  Don't mean to burst your bubble but they are. If you don't have proper work visa, you can't work from the country you are in. Most companies ignore local immigration laws and allow you to work remotely from wherever. And this is fine by what I consider should be allowed. However it doesn't mean it's legal.
  - Tor3 7y ago
    Hold on, I didn't add all details to my post. Didn't think that would be necessary, it's not the point of the discussion after all. Of course I had the relevant regulations covered. There are detailed bilateral agreements between my home country and those countries I have worked in.
    - hartator 7y ago
      We were talking about regulations that make remote work difficult. I am not aware about bilateral agreements between countries that allow remote work. Can you share?
      - Tor3 7y ago
        Remote work simply falls into the category 'working for a company that does not have a local presence', which (depending on the bilateral agreements, which can vary a lot) can have different rules than when the company has a local presence. This is almost always about taxation (where to pay the tax). In other words, to work remotely you may need a working permit of some kind, which I've had in various countries.
itronitron 7y ago
Are remote contractors easier due to how things get billed out? I am assuming that puts the accounting burden on the contractor instead of the employer.
- BrentOzar 7y ago
  > Are remote contractors easier due to how things get billed out? Yep, exactly. In the US, contractors are responsible for their own health insurance, taxes, vacation balance, etc.
- chmars 7y ago
  That’s correct, however, it is a one-stop shop instead of becoming a local employer. It can be tricky though because contractors without their own legal entity can be qualified as employees in many countries, especially if they have only one client or only a few clients.
koboll 7y ago
Both of these sure sound like ripe b2b startup opportunities...
- rkuykendall-com 7y ago
  Check out mbesto's comment. This already exists but they don't want to pay for it...
rongenre 7y ago
Isn't this what Trinet or Gusto are for?
- jedberg 7y ago
  Gusto will make the correct payments, but you still have to set up your "business" in each state. I have the same problem too. I still get a bill from the State of Washington every month, despite the fact that my last employee there left over a year ago.
- mbesto 7y ago
  Yes and no. Trinet is a PEO[0] and Gusto is just for managing your payroll and benefits...two very different business models. In the former, your employees technically become TriNet employees and have agreements with virtually every state (so yes they would cover the). It's just not cheap. Gusto just facilitates the process to find/manage insurance/benefits and your employees are still your employees. [0] - https://en.wikipedia.org/wiki/Professional_employer_organization https://en.wikipedia.org/wiki/Professional_employer_organiza...
nmcfarl 7y ago
I’m in the same situation, with the exact same problems. We also found 401k's to be a problem that our payroll vendor that had helped us with all the state issues before we had a 401k, couldn’t handle (or didn’t want to handle). So we had to change everything to switch to Paychex. Basically everything is harder than it should be, because the states all have crazy rules and are set up to deal with local companies.
MichaelApproved 7y ago
> First, to pay payroll taxes to employees who live in different states, you have to jump through a bunch of hoops with each state’s government. While this is a pain and can be costly, isn't it still far cheaper to pay the fees to the states and your accountant than renting an office? > If I could do it all over again, I probably would have just given each employee an allowance to use on their local state’s open health insurance market Doing that would save you money by not having to manage the health insurance yourself. It's ridiculous that companies are even responsible for providing health insurance but that's another conversation. The savings you get from not managing healthcare would probably offset the extra cost of multi-state payroll.
- BrentOzar 7y ago
  > While this is a pain and can be costly, isn't it still far cheaper to pay the fees to the states and your accountant than renting an office? Depends on your location. At one point, we had 9 people scattered across multiple states. On one hand, it would have been cheaper to have a small office in an inexpensive location, and force folks to come into an office say, 2 days per week. We’d have been able to ensure that everyone lived in the same place, and avoid the multi-state tax & health care hassles. We chose to be fully remote because it enabled us to hire better people. The people you want aren’t necessarily in a specific geographic location (nor do they want to move there), and the people you want may have financial incentives to stay where they’re at. The people you want may also choose to live in more expensive areas for quality of life reasons, too. I found it amusing that, even though we were fully remote and our employees could live in cheap places to maximize their salaries...they didn’t. In fact, we all chose some of the most expensive places in the US to live: downtown Chicago, Manhattan, Miami, San Diego, etc.
- ChefboyOG 7y ago
  This is all true from a straight up numbers perspective, but in my experience, a fixed expense like a 3 year office lease is less stressful than managing fluid expenses like fees imposed by a dozen state governments. I'm still very pro remote work, but people tend to underestimate how logistically expensive it can be—especially when a team gets bigger—compared to simply leasing an office and saying "Everyone works here."
feld 7y ago
Compensate your employees well, have them be independent contractors. That's what my employer does.
- BrentOzar 7y ago
  > Compensate your employees well, have them be independent contractors. Absolutely, that’s a valid choice. We chose the employee approach because that’s what I would have wanted as an employee: I didn’t want to hassle with health insurance, taxes, vacation, hardware, etc. I wanted to just show up to work and have my employer take care of the rest, so that’s the company I built. (We definitely went overboard trying to make things easier for the employees.) Most of our competitors in this same space take the contractor approach, and I’d say that’s better for the company for sure. I understand why folks do it, and I don’t think there’s a wrong answer - both have pros and cons. My comment just wanted to lay out a couple of answers to the post’s question, “Why aren’t more companies remote-first?” Hopefully I achieved that.
  - PopeDotNinja 7y ago
    Within the USA, I like hiring people via the employee route. I'm paranoid that one or more contractors will do something like not pay their payroll, file for unemployment, or simply claim they should have been an employee all along. I'll consider contract arrangements for people that are clearly contractors with their own business, people outside the USA, and short term engagements where someone specifically asks in writing to be a contractor. Anyone who doesn't otherwise say so is going to be an employee. I consider the certain overhead of having employees to be insurance against the uncertain overhead of are-my-people-employees-or-contractors shenanigans.
- graton 7y ago
  That is likely not legal in the US. An independent contractor needs to be "independent" for the most part. If they work 40 hours a week, 50 weeks a year, for the same company they are considered an employee and can't be given a 1099. They should be a W-2 type employee. Now if the company wants to hire another company to be the legal employer of the employee they can do that. But still need to be a W-2 employee. Not to say that people/companies don't do it, but the companies that do are leaving themselves open to legal issues.
DVassallo 7y ago
Is it an option to let employees find their own health insurance through ACA (or privately) and just pay them more to make up for it?
- feld 7y ago
  Yes edit: in some scenarios, of course

ekhornung 7y ago

that sounds like a nightmare with CO. I have heard about the nightmare of fully remote outside of the US, but I didn’t realize it was so bad within in

rando444 7y ago

This was my take as well. I am doubtful the author is truly managing people carelessly across 14 time zones without jumping through significant legal hoops, or is rather hiring contractors instead that manage their own legal responsibilities.

mac01021 7y ago

These are definitely real problems. It's possible to have a remote company that only hires employees in one or a few states, though. As an employee, I would much rather work for one of those than one that required me to work from a specific office.

bluetidepro 7y ago
Yeah, that is a thing. At my last job, we had a mix of remote and in office workers. If you did end up going remote, there were some states that weren't allowed because of, from what I guess, OP is saying.

Tor3 7y ago

Fortunately none of those two issues are relevant where I live. That sounds very tricky indeed. I used to work a few months at a time from my home office in another country. It worked fantastically well. I like to be able to concentrate without interruptions, and, as the timezone was different from the office, I got a very nice overlap where co-workers would provide work for me as they left for the day, and I would have that sitting in my inbox when I started working. Then, when my day was over, they would have the work ready for them when they got in (for that kind of one-day jobs). Of course there was also video conferences and such. But, as our customers are everywhere anyway, it didn't make any difference if one or two of us from my company were in different locations when we had video conferences with them.

hartator 7y ago
Don't mean to burst your bubble but they are. If you don't have proper work visa, you can't work from the country you are in. Most companies ignore local immigration laws and allow you to work remotely from wherever. And this is fine by what I consider should be allowed. However it doesn't mean it's legal.
- Tor3 7y ago
  Hold on, I didn't add all details to my post. Didn't think that would be necessary, it's not the point of the discussion after all. Of course I had the relevant regulations covered. There are detailed bilateral agreements between my home country and those countries I have worked in.
  - hartator 7y ago
    We were talking about regulations that make remote work difficult. I am not aware about bilateral agreements between countries that allow remote work. Can you share?
    - Tor3 7y ago
      Remote work simply falls into the category 'working for a company that does not have a local presence', which (depending on the bilateral agreements, which can vary a lot) can have different rules than when the company has a local presence. This is almost always about taxation (where to pay the tax). In other words, to work remotely you may need a working permit of some kind, which I've had in various countries.

itronitron 7y ago

Are remote contractors easier due to how things get billed out? I am assuming that puts the accounting burden on the contractor instead of the employer.

BrentOzar 7y ago
> Are remote contractors easier due to how things get billed out? Yep, exactly. In the US, contractors are responsible for their own health insurance, taxes, vacation balance, etc.
chmars 7y ago
That’s correct, however, it is a one-stop shop instead of becoming a local employer. It can be tricky though because contractors without their own legal entity can be qualified as employees in many countries, especially if they have only one client or only a few clients.

koboll 7y ago

Both of these sure sound like ripe b2b startup opportunities...

rkuykendall-com 7y ago
Check out mbesto's comment. This already exists but they don't want to pay for it...

rongenre 7y ago

Isn't this what Trinet or Gusto are for?

jedberg 7y ago
Gusto will make the correct payments, but you still have to set up your "business" in each state. I have the same problem too. I still get a bill from the State of Washington every month, despite the fact that my last employee there left over a year ago.
mbesto 7y ago
Yes and no. Trinet is a PEO[0] and Gusto is just for managing your payroll and benefits...two very different business models. In the former, your employees technically become TriNet employees and have agreements with virtually every state (so yes they would cover the). It's just not cheap. Gusto just facilitates the process to find/manage insurance/benefits and your employees are still your employees. [0] - https://en.wikipedia.org/wiki/Professional_employer_organization https://en.wikipedia.org/wiki/Professional_employer_organiza...

nmcfarl 7y ago

I’m in the same situation, with the exact same problems. We also found 401k's to be a problem that our payroll vendor that had helped us with all the state issues before we had a 401k, couldn’t handle (or didn’t want to handle). So we had to change everything to switch to Paychex. Basically everything is harder than it should be, because the states all have crazy rules and are set up to deal with local companies.

MichaelApproved 7y ago

> First, to pay payroll taxes to employees who live in different states, you have to jump through a bunch of hoops with each state’s government. While this is a pain and can be costly, isn't it still far cheaper to pay the fees to the states and your accountant than renting an office? > If I could do it all over again, I probably would have just given each employee an allowance to use on their local state’s open health insurance market Doing that would save you money by not having to manage the health insurance yourself. It's ridiculous that companies are even responsible for providing health insurance but that's another conversation. The savings you get from not managing healthcare would probably offset the extra cost of multi-state payroll.

BrentOzar 7y ago
> While this is a pain and can be costly, isn't it still far cheaper to pay the fees to the states and your accountant than renting an office? Depends on your location. At one point, we had 9 people scattered across multiple states. On one hand, it would have been cheaper to have a small office in an inexpensive location, and force folks to come into an office say, 2 days per week. We’d have been able to ensure that everyone lived in the same place, and avoid the multi-state tax & health care hassles. We chose to be fully remote because it enabled us to hire better people. The people you want aren’t necessarily in a specific geographic location (nor do they want to move there), and the people you want may have financial incentives to stay where they’re at. The people you want may also choose to live in more expensive areas for quality of life reasons, too. I found it amusing that, even though we were fully remote and our employees could live in cheap places to maximize their salaries...they didn’t. In fact, we all chose some of the most expensive places in the US to live: downtown Chicago, Manhattan, Miami, San Diego, etc.
ChefboyOG 7y ago
This is all true from a straight up numbers perspective, but in my experience, a fixed expense like a 3 year office lease is less stressful than managing fluid expenses like fees imposed by a dozen state governments. I'm still very pro remote work, but people tend to underestimate how logistically expensive it can be—especially when a team gets bigger—compared to simply leasing an office and saying "Everyone works here."

feld 7y ago

Compensate your employees well, have them be independent contractors. That's what my employer does.

BrentOzar 7y ago
> Compensate your employees well, have them be independent contractors. Absolutely, that’s a valid choice. We chose the employee approach because that’s what I would have wanted as an employee: I didn’t want to hassle with health insurance, taxes, vacation, hardware, etc. I wanted to just show up to work and have my employer take care of the rest, so that’s the company I built. (We definitely went overboard trying to make things easier for the employees.) Most of our competitors in this same space take the contractor approach, and I’d say that’s better for the company for sure. I understand why folks do it, and I don’t think there’s a wrong answer - both have pros and cons. My comment just wanted to lay out a couple of answers to the post’s question, “Why aren’t more companies remote-first?” Hopefully I achieved that.
- PopeDotNinja 7y ago
  Within the USA, I like hiring people via the employee route. I'm paranoid that one or more contractors will do something like not pay their payroll, file for unemployment, or simply claim they should have been an employee all along. I'll consider contract arrangements for people that are clearly contractors with their own business, people outside the USA, and short term engagements where someone specifically asks in writing to be a contractor. Anyone who doesn't otherwise say so is going to be an employee. I consider the certain overhead of having employees to be insurance against the uncertain overhead of are-my-people-employees-or-contractors shenanigans.
graton 7y ago
That is likely not legal in the US. An independent contractor needs to be "independent" for the most part. If they work 40 hours a week, 50 weeks a year, for the same company they are considered an employee and can't be given a 1099. They should be a W-2 type employee. Now if the company wants to hire another company to be the legal employer of the employee they can do that. But still need to be a W-2 employee. Not to say that people/companies don't do it, but the companies that do are leaving themselves open to legal issues.

DVassallo 7y ago

Is it an option to let employees find their own health insurance through ACA (or privately) and just pay them more to make up for it?

feld 7y ago
Yes edit: in some scenarios, of course