The COVID-19 pandemic has caused many Americans to find themselves working remotely. In response, states are reevaluating their remote work policies, which regulate how much tax revenue they receive and whether or not this is affecting an increasingly well-known work-from-home reality.
State rules for employees are a hot topic in the remote workforce. Complicated and ever-changing, these policy shifts can be challenging to keep up with as tax professionals try desperately to find out how they apply the growth of remote work in this new landscape.
The article takes an in-depth look at how state rules for employees apply to the remote workforce and some of its impacts on accounting professionals who are struggling with changing tax policy dialogues that affect business reporting.
Changes To Payroll Reporting
The future of work is remote. As new discussions continue to emerge about how to effectively tax a workforce scattered across the county and increasingly virtualized, it’s become more critical than ever for businesses – both large or small –to decide what kind of taxes they want their employees to face to accommodate this changing landscape.
Certain employees who work from different locations throughout the week need to be compensated accurately for their time on-site or offline. While we’re waiting for the perfect solution, these employees will need a payroll system to identify how much time they spend in each location weekly.
Suppose you’re taking advantage of the new remote work reality and operating across multiple states. In that case, the use of double-entry accounting solutions can help your employees stay compliant with tax obligations. These accounts will also make it easy for them (and any accountants reviewing bills) to calculate profits or losses from year-end tax obligations in each state they operate within – avoiding unwanted liabilities.
Cloud Based Solutions
As the pandemic continues to affect your employees, you’ll need a plan for them. One way of ensuring safety and protection during these times is by enforcing social distancing policies that mandate remote work hours to prioritize their well-being. Unfortunately, these policies may make it more difficult for accounting professionals to provide financial counsel and accurately report their clients’ expenses. It can also be challenging to keep track of income tax paperwork with everyone working remotely.
When a business needs to respond quickly and effectively, they can turn towards Software-as-a-Service (SaaS) solutions that can better integrate with their cloud-based environment.
The tax code’s complexity has been a significant obstacle for businesses, incredibly remote, trying to manage their finances. SaaS-based solutions help companies to overcome this challenge by making it easier and more efficient than ever before by automating their processes and allowing remote workers to access and store all of their data in one place.
With the advent of technology and the recent shift to SaaS, over 80% of organizations are expected to be entirely reliant on this system by 2022. With this cloud-based solution, you can rest assured that your accountants will have immediate and complete access to any documents they need.
Tax Structures For Businesses
Businesses should consider adopting tax structures that create high value in their net after-tax proceeds. They may not need to pay taxes on the business’s net income unless it exceeds a certain amount. These tax structures can be a massive relief for companies with remote employees in multiple states and are worried about potential exposure.
With the recent changes in tax laws, remote workers may find unexpected state taxes taking up a large share of their net income. These workers may be unaware of their state’s unique requirements. The good news for many business owners is that they may be able to reap the benefits of a beneficial tax structure and offset unexpected state obligations.
There are many ways for businesses and their owners alike to take advantage of the law when it comes to taxes. You can divide up your business’s tangible assets (real estate, equipment, and inventory) as well as its intangible ones to affect the capital gains or ordinary income taxes that it will need to pay on an annual basis.
Where To Go From Here
As the trend of virtualizing continues, companies must lessen how much they pay back toward state tax revenue. And though many states in America will cooperate with businesses and their employees so they can meet state-required tax obligations at year’s end, companies must adopt measures mitigating how much money goes back toward funding these services or programs.
We all know that states will need to continue relying on the revenue they derive from taxation, especially as COVID-19 offers no end in sight. To that end, it’s vital for businesses and their accounting professionals alike to be ready with measures taken to mitigate state-level taxes paid out (potentially) multiple times per year; make sure you are one of those who have planned!