All of my employees are remote W2 employees with health benefits, etc. Over time, employees have moved to different states and now I am paying having to pay unemployment and payroll taxes in multiple states. I use Quickbooks for payroll which automatically calculates and pays the taxes so that part is not difficult but it increases our accounting expenses having to deal with multiple states and I am wondering if there is a better way to pay people?
I do not want to pay them as contractors so that is not an option. I’ve looked at PEO’s in the past but they seem to be more expensive than just doing it the way we are already doing it.
Is there anything else out there I should be looking at to make payroll and taxes more efficient?
I think processing your own payroll in-house is a really bad idea for most small businesses. Pay a payroll company to handle it for you, and I guarantee you’ll never look back. Even then, if you are paying remote employees in multiple states, you have to set up and manage employment tax accounts in each state, which is a pain. I tried it last year and couldn’t manage it. I was always getting notices from one of the states that we owed another tax or fee or that the rate the payroll company was using was wrong. I ended up terminating 2 of my remote employees for performance issues and switched the last one to 1099 (her job really fits the qualifications for contractor status). I will never hire employees in another state again.