At first glance, it’s an attractive idea to source employees from anywhere. And, when one of your team tells you they’re moving and assumes they get to keep the job…what would be the harm? Unfortunately, there’s a lot of painful and costly realities under the surface of these decisions. Don’t say yes until you’ve done your homework.
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Hey everybody, Drew McLellan here from Agency Management Institute, coming to you from Pacific Beach, California. You know, I love when we hold workshops and meetings here. I can walk on the beach for hours and I often think it would be awesome to live here. Honestly, that's what's happening in many of your agencies right now across the land. Your employees are thinking about how they work and where they work from in a very different way. And I've had a lot of agency owners have an employee walk into their office and say, "Hey, by the way, I'm moving to Wyoming, Hawaii, Alaska, Costa Rica. I'm moving to Wyoming, Hawaii, Alaska, Costa Rica. But don't worry, I'll still be able to work for you." One of the things that many agency owners are not thinking about either when they're hiring someone off the bat who lives in a different part of the world or when they are allowing an employee to dictate where they live and that they're going to keep working for you is, especially here in the States, there are some very specific rules and taxes that you have to be thinking about before that's going to work. So the minute you have an employee, you hire someone who lives in a different state, or you have an employee move to a different state, you have to register your business with several different departments of that state. And what that's going to say is, "We are doing business in your state, we are establishing a domicile or an office in your state, and we know we are subject to the taxes of your state." and we know we are subject to the taxes of your state." There is a litany of things that you need to do to stay in legal compliance if you're going to hire someone from another state or you're going to have an employee that you already have on your roster move to a different state and keep working for you. So you've got to do your homework to understand what you need to do and what your obligations are. There are several states that are very, let's call it "not business-friendly" when it comes to taxation around employees living in their state even if you have no clients or no business in that state. So you're going to want to do a lot of homework before you blindly say yes to an employee who says they want to move to a different state and before you hire someone from a different state. For many employers, when they do the math, no matter how amazing that employee may be or is, the numbers just don't add up. So what you want to do is you really do need to do your homework before you hire someone from a different state or before you allow an employee to maintain their employment after they have moved to a different state. Because in some cases, and I've seen this with several agencies we work with, no matter how great the employee is, the numbers just don't work and you need to part ways with that person or you need to try and find someone who either works closer to you in your state or perhaps in a state that is more business-friendly when it comes to taxation. All right? So I'm not saying don't do it, but I am saying do it with an informed point of view. Do your homework. I'll be back next week! Thanks.