Hiring someone who lives in another state creates obligations in that state, even if you have no office there. Here is what changes.

Register before the first paycheck

You will need a state withholding account and an unemployment insurance account in the employee’s state. Some states take weeks to issue numbers, so start early.

Withholding and local taxes

Withhold income tax for the state where the employee works. Some cities, like Philadelphia and New York City, add a local tax on top.

Ongoing filings

Expect quarterly wage reports and annual reconciliations in the new state. Your payroll provider files most of them, but someone needs to make sure the registrations are in place.