- 1). Pay your out-of-state workers as independent contractors or subcontractors. This means that the employee will be responsible for any taxes that need to come out of her paycheck.
- 2). Hire a human resources (HR) company to hire employees in the state in which you need the work done. The company can help you comply with any state laws or tax requirements that need to be handled, and the employee will technically be an employee of the HR company, not yours.
- 3). Find out if your state has a reciprocal agreement with another state by calling your state department of labor. For example, Wisconsin has a reciprocal agreement with Illinois, so if a person lives in Wisconsin but works in Illinois, the employee files his income taxes in Wisconsin and the employer pays the employee just as she would someone who works in Wisconsin. So, if you have a Wisconsin business, but a client in Illinois, you and your employee will not be penalized for it.
- 4). Call the department of labor in the state where your employee will be working and find out if there are ay reciprocal agreements or other laws you must follow in your business. States often have different laws for employees who are minors, as well as different payroll tax rates.
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