Keep These 5 Things in Mind When Paying Remote Employees

Thanks to COVID-19, remote work is gaining popularity across the globe. And if remote work is a whole new ballgame for your business, you may be wondering what you need to do differently to pay your workers who telecommute. Read on to learn what aspects you need to keep in mind when paying remote employees.

Paying remote employees: 5 things to think about

Whether you’re thinking about taking your team fully remote due to the coronavirus or are experimenting with hiring remote workers, consider a few things when it comes to paying remote employees. Check out our handy dandy list below to find out what you need to consider when paying remote workers.

1. Employee payroll forms

As an employer, it’s your responsibility to have certain documents in your records for each employee. Remote employees are no exception to this.

Keep the following forms on file for all of your employees (remote or not):

Form I-9: Confirms your employees are legally allowed to work in the U.S. Form W-4: Determines employees’ federal income tax withholding. State W-4 form, if applicable: Determines state income tax withholding for employees.

You may also require your employees to fill out company-specific forms, such as employee handbook acknowledgment or direct deposit forms.

If your team is just going temporarily or permanently remote, you should already have these employee documents. Double-check your records to ensure you have the applicable documents on file for each employee. Keep in mind that you must keep all payroll records for at least three years.

If you’re hiring remote workers, have newly hired employees fill out each applicable employee form during their onboarding process.

Consider utilizing an employee portal so remote employees can electronically (and securely) fill out their forms. If you don’t have a portal option, have the remote employee send you a copy of their forms in a password-protected document.

2. Withholding the proper payroll taxes

Every time you pay an employee, you need to withhold payroll taxes. Taxes you typically need to withhold from employee wages include:

Federal income tax Social Security tax Medicare tax

Depending on the state, you may also need to withhold state and local income taxes from employee wages.

If you hire an employee who lives and works from home in another state, do your research to find out what taxes you must withhold for that specific state. Additionally, you may need to register with the remote employee’s home state to withhold and deposit payroll taxes to the correct agencies (e.g., state, local, and unemployment agencies). If you have multiple remote workers in a number of states, register with the tax agency in every state.

The city or state your business is located in may also have a tax reciprocity agreement with the employee’s home city or state. If you hire an employee who lives in one state but works in another, check to see if there are any state reciprocity agreements.

If you plan on having your current employees temporarily or permanently work from home and they all live and work in the same state as your business, continue withholding the correct payroll taxes for your state.

3. Payment methods

When it comes to paying remote employees, you have a few options to consider. You can pay remote workers via:

Out of

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