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We are a California small business with an employee who moved

Customer Question
to Seattle WA. We do not...
We are a California small business with an employee who moved to Seattle WA.
We do not have an office in WA and he works out of his home.
Do we have to pay unemployment insurance Workmen Comp in WA?
Do we withhold taxes in Cclifornia?
Submitted: 7 years ago.Category: Tax
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Answered in 1 hour by:
5/4/2010
Tax Professional: BK-CPA, Certified Public Accountant (CPA) replied 7 years ago
BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience: Owner of a CPA firm
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It sounds like your employee may be working for you under more of a contract labor scenario, in which case you don't have to deal with payroll taxes etc., just issue a 1099 at year end. I would make the switch to contract labor upon the employee moving. Because the employee is both living in and working out of WA, you would withhold according to WA tax law and schedules, which is good, because WA has no personal or corporate income tax:

 

http://dor.wa.gov/content/findtaxesandrates/incometax/

 

 

Here is a link to WA workers' comp requirements:

 

http://apps.leg.wa.gov/wac/default.aspx?cite=296-17-31004

 

 

Here are the employments that are excluded from WA workers' comp:

 

http://apps.leg.wa.gov/RCW/default.aspx?cite=51.12.020

 

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Customer reply replied 7 years ago
Are there any other options for continuing having him work as a regular CA employee and pay Workmens comp in WA without having a corporation registered in WA?
Tax Professional: BK-CPA, Certified Public Accountant (CPA) replied 7 years ago

This stuff is black and white:

 

Even though your corporation was created in CA, you can end up owing income/payroll/property and other taxes where you establish nexus with different taxing authorities.

 

To be blunt, if you're going to have an employee working out of WA, you're going to have to adhere to WA laws. I did tell you that WA has no income tax, so that is good for you.

 

I'm sorry there isn't a correct answer that is going to tell you what you want to hear, but that is the answer. Thank you again for your question.

BK-CPA
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