Aside from all the conversation about work culture, state taxes are a big barrier to fully remote work. States hate losing tax revenue. Notoriously, it is easier to register to do business in a state than to unregister. This is even harder internationally.
For large organizations, remote can be the difference between one state's paperwork + regs + taxation, and every state and country under the sun's paperwork + regs + taxation. That is a real burden. Not just the paperwork + administrative overhead, but being subject to differing employment + everything else laws from *everywhere* will really muck up ability to run a consistent business.
While fully remote startups can now access services to help with this, like PEO providers like Justworks/Deel, the reality is that most of the world is not setup to accept this at scale. I run a fully remote startup and still run into issues with vendor diligence departments and accounts etc. expecting us to have a physical office, and being totally bewildered when we don't. The people involved now understand remote work, but the systems --forms, insurances, tax nexus decisions, etc -- still very much aren't setup to handle it.
Notably: if you are a bigger company, you can't put the toothpaste back in the tube with all these local governments, and you bet that every locality will be trying to extract tax dollars from the big firms with deeper pockets.
We see this all the time working at the intersection of the insurance / fintech space. I've had several big, legacy vendors make requests for multiple physical signatures on a piece of paper (printed and mailed or faxed, can't just annotate a PDF) from people who haven't even met eachother in person let alone ever worked at the same address.
The kicker? These papers are access authorization forms to APIs.
Your average tech company is probably reasonably well prepared to go truly distributed, but I bet many of their vendors aren't. Whole workflows in certain industries don't even conceptualize companies with employees distributed across offices, let alone companies with no office at all.
(I've fought similar battles over not being able to provide a direct phone extension because I don't have a phone on my office desk and even if I did I'm not at the office anything close to full time, and I don't provide my personal cell phone number to vendors... but thats a whole different topic. Employees exist without phone numbers! Entire offices exist without phones!)
This is what we've eventually given up and done. At a certain point, the vaguely-principled stand gets in the way of business. We're playing in an old-school corner of the world and need to meet it in the middle.
is this your startup? I'd love to chat about what you've found work. we're in the intersection of fintech / wealth (which overlaps with insurance).
I've gotten by just fine for the past few years but we are starting to see more questions about this that require us to change our legal address away from a residence. I think we got away without much trouble solely because of the pandemic, and now it's over we're going to see a lot more questions about this.
It's not worth the future of the whole business to fight big vendors/customers over addresses.
Basically, for those who aren't living this, the physical address is mostly a liability thing. Insurance expect to be able to (imagine worst case scenario) walk into an office and blame / seize assets / arrest people if things go south. Sometimes you can just provide a residential address of a founder / board member, but all the diligence forms etc expect a physical office building where you can find all the employees 5 days a week if you just walk in.
> For large organizations, remote can be the difference between one state's paperwork + regs + taxation, and every state and country under the sun's paperwork + regs + taxation. That is a real burden. Not just the paperwork + administrative overhead, but being subject to differing employment + everything else laws from everywhere will really muck up ability to run a consistent business.
This is a real burden for small businesses. The nature of Amazon's business as an online retailer with a massive distribution network means that for any significant market they do business in, they will have employees. Practically speaking, this is a solved problem for any state in which Amazon has a warehouse (which I think is probably all of them for the US?).
All major payroll companies and employment law firms have long since figured out paperwork, taxes, and labor regulations in all 50 states. Unless you're so small that you don't even have an external payroll provider or legal counsel, "differences between States" shouldn't be a valid excuse.
While Amazon may have the administrative capacity for handling the filings, that doesn't address the tax revenue politics + considerations (which i didn't write much about in my earlier comment).
The issue of state tax breaks was such a big deal during their "HQ2" contest a few years ago that it actually became one of the top issues in the NYC elections that year. (to a large extent local candidate races became a referendum on how they felt about giving tax breaks to amazon in exchange for Amazon's commitments to employ a certain # of highly paid software + product people who would potentially contribute to the overall tax base. NYC people ended up electing politicians to stop the previously-negotiated pending deal with amazon, and amazon got enough blowback to say 'we give up' publicly.
> state taxes are a big barrier to fully remote work
What percentage of remote-workers are in a different tax-jurisdiction? Especially post-COVID I expected that the majority of remote-work involved people already in the same US state, merely with a nontrivial commute.
sortof yes, sortof no.
Aside from all the conversation about work culture, state taxes are a big barrier to fully remote work. States hate losing tax revenue. Notoriously, it is easier to register to do business in a state than to unregister. This is even harder internationally.
For large organizations, remote can be the difference between one state's paperwork + regs + taxation, and every state and country under the sun's paperwork + regs + taxation. That is a real burden. Not just the paperwork + administrative overhead, but being subject to differing employment + everything else laws from *everywhere* will really muck up ability to run a consistent business.
While fully remote startups can now access services to help with this, like PEO providers like Justworks/Deel, the reality is that most of the world is not setup to accept this at scale. I run a fully remote startup and still run into issues with vendor diligence departments and accounts etc. expecting us to have a physical office, and being totally bewildered when we don't. The people involved now understand remote work, but the systems --forms, insurances, tax nexus decisions, etc -- still very much aren't setup to handle it.
Notably: if you are a bigger company, you can't put the toothpaste back in the tube with all these local governments, and you bet that every locality will be trying to extract tax dollars from the big firms with deeper pockets.