How to Hire a Remote Employee in a Different State

You start your payroll using Gusto because it’s solid software that’s easy to use.

And it works great, until you try to hire your first remote employee who works in a different state.

You click on the state setup and then run into something like this (depending on your state):

“Oh no big deal, it’s only 2 fields!” you cheer prematurely.

Because getting that TWC account number in Texas is going to be a pain in the ass, starting with all of these forms:

And because you’re not an expert on unemployment tax registration in Texas, you’ll run into problems and have questions along the way:

  • “I’m doing this so I can get my employee hired but Texas is telling me they’re hire date and first pay date has to be in the past?
  • “What years am I “liable for Federal Unemployment Tax” ?
  • “We’re registered in Delaware, do we need an entity in Texas?” (Actually what you need is a foreign entity registration.)
  • “I’m only hiring an employee who works from home. Do I need to list their home as a “place of business” ?

Then once you’ve figured all that out you’ll also have to register as as foreign entity in the state (see below). And that means filing annual reports with the state and getting another registered agent (that you have to keep track of annually).

And all of this is different for each state.

So every time you hire an employee in a new state, you have to figure this all out from scratch again. (And for what it’s worth, Texas’ process is relatively straightforward compared to other states. Ask people who’ve hired remote employees in Washington state, or New York 😬)

Setting up Foreign Qualification (“register as a foreign entity”)

This is also required once you hire someone in a new state.

I’ll spare you most of the details here but to get a taste, here’s the 1st of 4 forms required to register a user account in Texas:

(Don’t worry, I have screenshots of the other 17 forms required to start and finish the foreign entity registration.)

Compliance as a Service

If you’re hiring a remote employee in a new state & want all of this to just go away so you can pay your employee and be done with it, email me:

We charge reasonable rates and will make sure you never have to worry about this again.

We can also do this in all 50 states.