From a tax perspective it's mostly no different than if they had a small office in that state.
For big companies, in particular, it's not that big a deal as they're probably using a payroll service like ADP anyway. There may be some paperwork--and certainly more so if other countries are involved.
The other scenario involves visa workers. The I-140 is predicated on not being able to find local candidates that match a criteria. More broadly, the H1-B visa grant pertains to foreigners being able to work in the US at all in the first place. I'd imagine that if you had everything setup to be remote from the beginning it'd probably be fine to keep things humming along, but I imagine that switching surely must pose some sort of logistic challenge?
This is not always true.
I'm remote. I pay my state and CA taxes for my CA based company even though I have never set foot in CA for this job.
I've worked remotely for 5 years and have only ever paid state income tax in my home state, not wherever my employer is.
I confess I've never been in the position of being officially completely remote. I certainly don't pay taxes to the state where my company's HQ is but then I'm officially in an office in my state of residence. (And maybe the existence of that office would make a difference even if I weren't actually assigned there.)
You're required to withold taxes in the state that work is performed. If you're working from home, that's your work location.
You should get refunded for your CA taxes at the end of the year if they are being withheld.
And then tax issues aren't just the employees' income taxes but the company's tax regime.
https://news.ycombinator.com/item?id=17022563
It's definitely way more complicated than adding an employee in a new state.
Now imagine you ran one of the big billion+ USD revenue tech companies, and you're not talking about different states in the same country but a distributed workforce in many countries and the political pressures on taxation of e-commerce or similar business models involving intangible goods. One of the key arguments in many a tech company's tax/legal toolbox (usually for arguing they should pay taxes on one jurisdiction instead of another) is in which countries their engineering efforts reside and to what extent.
It's really no wonder that employment legal & finance wins out on totally flexible work arrangements in that situation, for better or worse. Politicians aren't taking any hostages in this context, see eg. France.
To provide an example from sufficient years back: I had to represent the stance of a past employer on compliance with Russian privacy laws to Roskomnadzor[1] in their HQ in Moscow. Through a carefully planted trick they tried to get us to commit to establish just the right kind of representation to be able to tax our revenue from Russian customers. In many countries, the narrative would've been "you have engineers here, you therefore build your products here, you should pay income tax here". Curiously, there isn't really obvious right or wrong in all this since the goods are intangible.
[1] https://www.google.com/search?q=roskomnadzor
(Disclaimer: experience entirely from prior to my current employment at Google, I don't speak for Google in any way and have no insight into these matters at Google.)
Your payroll provider generally tells you that you’re on your own for all that stuff.
For every additional state there is a ton of overhead.
I’ve had employees in California, Washington, and New York. It took two years to unwind Washington after the one employee there left, and it took a year and 20 hours of lawyer time to unwind New York, who was trying to charge us $5,000 as a penalty for missing paperwork we didn’t think we had to file (we ended up being right after paying the lawyer).
The only thing you are on your own for is tax filings and registration as a foreign entity. And that is only in some cases in some states. In most states, having a few remote employees is not enough to even trigger a filing requirement. In CA, which is probably one of the most draconian, we had to register as a foreign entity and then we have to file corporate taxes there and allocate taxes proportionally according to percentage of revenue that comes from CA, I believe.
And actually, they want your corporate income tax even if you don't have employees there, just because you sell to Californians. But they have had a hard time collecting for those that have no employees or other presence in the state.
I know for a fact this is wrong. Payroll companies don’t do worker’s compensation in Washington because the state runs the insurance program. You have to register with the state.
https://support.gusto.com/state-registration-compliance/comp...
All 50 states have a different process. Many require you to get a private policy but some have state run funds.
As an example, I have to deal with my insurance agent annually for my worker’s compensation in California and then deal with Washington separately for their scheme.