Managing Payroll Taxes Effectively With Remote Workers
by Ankita Tripathy Finance 30 December 2023
Payroll services prior to 2020 were fairly straightforward. Payroll was tracked by timesheets at the office branch where people worked, and their pay, benefits, and tax withholding were processed at the same location. Because there was very little variation, the processes and factors for calculation could be set and left alone for months and years at a time.
However, with the massive movement to remote work, and a significant number of employees not only working in different towns but different states, a cornucopia of payroll tax withholding issues has come up.
Tax Withholding and Location
Employers are generally responsible for managing tax withholding on the payroll of employees. This accounting process matches the employer and employee share of benefit costs and taxes as well as processing pay distribution to workers on a set schedule. Taxes are generally applied both in terms of federal requirements and state and local payroll tax obligations.
Again, this role was simple prior to the explosion of remote work. Now, with many remote workers in different locations still applicable, it’s become far more complex to keep track of and stay compliant. Then it gets even odder when the employee turns out to be working in another country. After all, the Internet makes it possible to work just about anywhere.
Dealing with Complexity in Payroll
Many businesses were not prepared for the convoluted effect of many tax impacts on their payroll, and it created a lot of confusion for accounting staff on board. However, what many have also realized is that outsourcing their payroll is also an effective solution to the problem. By bringing in an expert payroll service partner, these businesses stayed ahead of the curve, managed their payroll with all of its remote worker nuances, and still kept tax withholding and various related compliance on track.
Doing so has allowed businesses to stay focused on what they do best instead of losing time and energy trying to build a whole new bureaucracy around remote work payroll requirements. With a remote expert on board, the transaction and payroll processing is handled smoothly, workers receive their compensation and benefits timely, tax withholding processes are on schedule, and the business only has to worry about making sure funding is in place timely for the payroll transaction pull. It’s a far easier approach to a modern challenge than trying to scale up internally without the expert knowledge involved.
Using Delegation to Full Effect
Taxes aren’t going to go away anytime soon, and nor will the payroll requirements, but the nuances and changes can be made a lot easier to live with by letting a payroll expert handle the technicalities.