When a company has a remote employee with out-of-state payroll, that typically creates nexus in that state for the company, unless a specific exception is met. When nexus is established, also known as physical presence, a company can create additional filing requirements for themselves, in addition to having to withhold income taxes on the employee’s wages.
A company is typically recognized as doing business in a state when any remote employee located there works for the company. This employee could establish nexus, possibly creating new income, franchise, and sales and use tax obligations.