What to check, what to register for, and when it makes sense to let an Employer of Record handle it for you.
When your first employee works in a state where your company has no presence, that state's rules usually apply to them. In practice, the employer registers for state payroll withholding and unemployment insurance, arranges workers' compensation coverage, and follows the state's wage, leave, and final-pay rules. Your company may also need to register to do business there. It rarely needs a new legal entity. You can handle this yourself, or use an Employer of Record (EOR) that employs the person for you through its existing registrations.
Answer these first. They decide which registrations and rules apply.
The state where the work is performed usually decides which payroll taxes, unemployment insurance, and employment laws apply. For a remote employee, that is where they live and work, not where your office is.
Check whether you already have a state withholding account, an unemployment insurance account, workers' compensation coverage that extends to the state, and authority to do business there.
Some states add city, county, or school-district income taxes with their own withholding and filings. Ohio, Pennsylvania, Indiana, and Maryland are common examples.
Minimum wage, overtime, paid sick leave, pay transparency, non-compete limits, and final-pay deadlines all vary by state. Check them before you send an offer letter.
Some accounts need to be in place before the first payroll. A fixed start date, or a role whose length is uncertain, changes whether it is worth setting everything up yourself.
"Setting up in a new state" can mean three very different things. Most first hires involve the first two, not the third.
Foreign qualification
A corporation or LLC formed in one state files for a certificate of authority in other states where it conducts business. The SBA lists having employees working in a state as one sign that you may need to. What counts as doing business varies by state.
Applies to your company
Withholding and unemployment insurance
To run payroll for someone working in the state, the employer registers for state income tax withholding (where the state taxes wages), a state unemployment insurance account, and any local tax accounts.
Applies to whoever is the employer
A subsidiary in the state
A separate company formed in the new state. This is usually not needed just to employ someone in another US state. Companies typically form one for business, liability, or tax reasons, not because of a single hire.
Usually not required for a first hire
These obligations sit with whoever is the legal employer. Details differ by state, so treat this as a checklist, not legal advice.
Most states tax wages, and the employer withholds and files with the state revenue department. A handful of states, including Texas and Florida, have no state income tax on wages. Some neighboring states have reciprocity agreements that change where tax is withheld.
Each state runs its own unemployment insurance program. The employer registers with the state workforce agency and pays state unemployment tax on each employee's wages up to a taxable wage base. New employers are usually assigned a starting rate.
Almost every state requires coverage. Texas is the exception, where coverage is optional but employers who opt out must file notices. A few states, such as Ohio and Washington, require coverage through a state fund instead of a private insurer.
Employers report each new hire to the state, generally within 20 days of the hire date. Some states set a shorter deadline.
Form I-9 is a federal requirement for every new hire: the employee completes Section 1 by their first day, and the employer completes Section 2 within three business days. Some states, such as Florida, also require certain private employers to use E-Verify.
States require their own workplace posters and, in many cases, written notices at hire covering pay rate, payday, and leave rights. Remote employees still need to receive them.
Minimum wage, overtime, paid leave, pay transparency, non-competes, and final-pay timing follow the state where the employee works, and some cities add their own rules on top.
Some states have local income taxes with separate withholding: municipal taxes in Ohio, local earned income taxes in Pennsylvania, and county taxes in Indiana and Maryland.
We have a guide for every state. Start from the Employer of Record overview to find yours.
WorkGenius already has these accounts, policies, and registrations in place in all 50 states. Tell us where you want to hire, and your new hire can typically start within days.
There is no single right answer. It depends on how many people you will hire in the state and how much you want to manage yourself.
Register your business in the state if required, open withholding and unemployment accounts, extend or buy workers' comp coverage, and add the state to your payroll.
Makes sense when
A Professional Employer Organization co-employs your staff and runs payroll and benefits. Your company stays an employer, so depending on the state you may still need your own registrations.
Makes sense when
An EOR becomes the legal employer of your new hire and uses its own registrations, accounts, and insurance in that state. You direct the day-to-day work.
Makes sense when
As your Employer of Record, WorkGenius is the legal employer in all 50 states and takes on the employment obligations above.
Check with your advisor: using an EOR means your company is not the employer, but it does not automatically settle whether your business itself needs to register or file business taxes in that state.
Pricing is one all-in markup on the employee's pay, billed on one weekly invoice. Benefits are billed separately.
Tell us which state you want to hire inThis guide is general information, not legal or tax advice. Rules change and vary by state.
We'll walk you through what that state requires and how quickly your new hire can start with WorkGenius as the employer.
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