Hiring Remote Employees? You May Have Created State Tax Nexus

Hiring one remote employee in another state changes everything from a tax standpoint.

The same goes for selling products or services across state lines. Once your business creates a connection to another state, that state may expect you to register, file, collect taxes, or handle payroll compliance there.

In this episode, Mike sits down with Nellie Akalp, CEO and Co-Founder of CorpNet, to break down state tax nexus in plain English. They explain what creates nexus, why remote employees and multi-state sales can trigger tax obligations, and what business owners need to do to avoid penalties, back taxes, and compliance headaches.

🚀 Need help registering in another state, setting up payroll tax accounts, or staying compliant as your business grows? Visit CorpNet at https://www.corpnet.com/?PID=1071

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Chapters

00:58 What Is State Tax Nexus?

State tax nexus is the connection your business has to a state that creates a legal obligation to follow that state’s tax laws. Nellie explains the two main types of nexus business owners need to understand: employee nexus and sales nexus.

03:30 Hiring Remote Employees in Another State

Hiring one remote employee in another state can trigger payroll tax obligations, unemployment insurance registration, and state compliance requirements. Mike and Nellie explain why this should not stop you from hiring great talent, but it does need to be handled properly.

06:30 Why You Should Not Run Payroll by Hand

Payroll tax rules change often, and running payroll manually can create serious compliance issues. Nellie explains why business owners should use payroll software or a payroll provider once they start hiring employees.

09:00 Common Mistakes Business Owners Make With Employee Nexus

The biggest mistake is not knowing nexus exists. Nellie shares common issues like hiring remote employees without registering in the correct state, running payroll before accounts are set up, and forgetting ongoing filing requirements.

12:00 What Is Economic Nexus?

Economic nexus is based on how much you sell into a state, even if you do not have an office or employees there. Nellie explains how the South Dakota v. Wayfair case changed the rules for out-of-state sellers.

14:00 Sales Thresholds and Multi-State Tax Obligations

A common benchmark for economic nexus is $100,000 in sales or 200 transactions annually, but rules vary by state. Mike and Nellie explain why business owners should track sales by state and consider a nexus study as they grow.

16:30 Why E-Commerce Businesses Are More Exposed

Online businesses often assume they have nothing to worry about because they do not have a physical location in other states. Nellie explains why e-commerce sellers can be especially exposed when they sell across multiple states.

18:00 Foreign Qualification and State Registration

Some states may require your LLC or corporation to foreign qualify before registering for payroll tax accounts or sales tax accounts. Nellie explains what foreign qualification means and when it may apply.

20:30 Why Closing State Accounts Matters

If you stop doing business in a state, terminate an employee, or move operations, you may need to close your state accounts properly. Otherwise, your business may keep receiving notices or filing requirements even with no activity.

22:30 What Happens If You Ignore Sales Tax Nexus?

If your business has sales tax nexus and does nothing, states may assess back taxes, penalties, and interest. Mike and Nellie explain why sales tax exposure can be riskier because there may not be an automatic warning when you cross the line.

27:00 How to Fix Nexus Issues and Stay Compliant

Nellie explains the three key steps: identify where you have nexus, get properly registered, and put a system in place to stay compliant. The goal is to stay proactive before a state comes knocking.

Podcast Host:

Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings Podcast
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🎙 ABOUT THE PODCAST
The Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks down complex tax topics into clear, no-fluff insights so you can keep more of your hard-earned money.