Virtual Companies and Nexus: What Small Businesses Need to Know Leave a comment

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The coronavirus continues to impact small businesses. Many businesses have chosen to go virtual, either temporarily or on a permanent basis. But that decision can impact the business’s nexus status.

Companies with remote employees in other states may also need to register for foreign qualification, register for payroll taxes in those states, or they may need to start collecting sales tax from places they never have before.

Business Compliance Consequences for Pivoting to a Virtual Company

Many businesses have pivoted to a remote working model to keep employees safe and many may continue to do so for the foreseeable future. The primary concern for these employers is keeping their business going; they aren’t concerned about where their employees live. Therefore, some employees may have chosen to work temporarily or permanently from another state than the business’s home state.

And then there are the businesses that have experienced increased sales and a need to ramp up production during the pandemic. Trades such as the video gaming industry, and those pivoting to essential needs businesses, are still thriving and may need to hire help from another state.

Businesses with employees in another state have now established nexus (a connection) in that state and are required to register for foreign qualification in the state the employee is working.

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