Payroll Tip: Watch Out for Multi-State Payroll Tax Issues

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by Alex Gray
November 2, 2016
Read Time: Less than 2 Mins
Last Modified: January 31, 2024

Watch Out for Multi-State Payroll Tax Issues

Let’s say your company is based in State A, but you win a job in State B. You send your crew over, and they send back their timecards. Which state do you need withholdings for, and how much of each state’s payroll tax do you have to pay? The short answer is — you could probably guess — it’s complicated.

Your business relationship (or “nexus”) to state tax jurisdictions and the amount owed to them (or “apportionment”) is determined by the overlapping state, federal, and other mandates. On the one hand, this can lead to contractors being out of compliance with payroll tax obligations — but just as often, it can mean that they’re paying more than required to additional tax authorities. For example, many construction companies end up paying unemployment insurance to additional states in which they work while, currently, they only need to pay their base state.

Taxation and legal counsel when it comes to these complex, cross-state tax issues are irreplaceable. Construction-specific CPAs are a must-have for contractors of any size. Along with their professional guidance, an expert construction-specific payroll service can execute tax-compliant processing without the headaches.

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