Hacker News Reader

Comment by gamblor956 | Hacker News Reader

There is paperwork, but you don't need to establish a new entity in every state/country where you have an office or employee. You can simply register your existing company as a "foreign" business in all of the jurisdictions where it is not legally incorporated (and this is what most businesses do).

Generally, you only have a location-specific business created if there are location-specific benefits acquired, or benefits avoided, by doing so. (Like say, access to tax credits, or avoidance of certain compliance responsibilities).

View on HN

I don't have any personal experience but this is what Mitchell Hashimoto wrote a few years ago on the general topic of hiring remote:

https://news.ycombinator.com/item?id=17022563

It would be infinitely easy to do this with Bitcoin, you could have and all anonymous all remote workforce. Wait, that's already how open source works for the most part.

Unfortunately due to US laws around employment, that isn't remotely legal. You need to pay payroll taxes and withhold income taxes for your employees, and that requires SSN/ITIN.

If your employees reside in a US state, you usually have additional obligations there related to state income tax withholding or state unemployment insurance, as applicable.

This greatly oversimplifies how it actually works to be a foreign Corp in many states. You might be able to get away with this for a year or two but you will eventually be in a world of hurt. Once you have an employee in a state and you are making sales on that state, the tax and regulatory bodies will come after you. Your customers and partners will be reporting you, your payroll provider will make mistakes, and disgruntled employees will make claims in that state and it will be a significant drain on company resources.

??? This is literally how most multi-state businesses operate: 1 company, registered as a "foreign business" in other states, with a single multistate payroll provider like ADP handling the payroll function. (Yes, the company will be subject to tax and legal service in any state in which it has an employee, which is why generally when I was still at a firm I generally advised clients against remote employee arrangements.)

Note that a "foreign business" is a technical term in this context, simply meaning that a business operating in one state that is incorporated in another state. (See for example https://www.californiaregisteredagents.net/incorporation/for...) For example, almost every YC company is incorporated in Delaware, but is registered as a "foreign business" in CA where they are physically headquartered.

At the international level you usually form subsidiaries, due to the vast differences between laws at the national level, but some companies will simply register a "branch office" in other countries in which they have small operations. In fact, many countries, like the U.S., have tax forms specifically for these companies: the Form 1120F...

I read your basic point though that there are complications/expenses associated with having remote employees in other states ("I generally advised clients against remote employee arrangements"). I've worked for very small firms that did this so it couldn't have been too onerous. But it does serve to highlight that, especially small, companies aren't indifferent to where employees move to even if they're remote (and may prohibit certain moves).

Reply on news.ycombinator.com