Hello,

I am a full time employee for a company based in Florida and I am in the process of moving to Georgia. I will be maintaining my full-time status with this company (working out of my home) and am wondering what either I or my employer has to do in order to change my status from a Florida employee to a Georgia employee, considering that Georgia has a state income tax and Florida does not.

I want find out what the most cost-efficient and simple way is to get this accomplished without causing too much of a burden on my employer. We do not currently have any employers outside the state of Florida.

As a side note, they are considering changing my status to an independent contractor if this is an easier alternative, which I'm not sure I feel very comfortable about.

Any help would be much appreciated!

I have a fairly basic understanding of what needs to happen. I hope I can be a "jumping off" point.

What I believe has to happen is that your employer needs to register in the state of Georgia in order to collect GA state taxes. From there out I'm not sure. I used to work for a company that had employees all over the country and whenever we got a new state we would have to register our business there.

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Originally Posted by GlindaofOz

I have a fairly basic understanding of what needs to happen. I hope I can be a "jumping off" point.

What I believe has to happen is that your employer needs to register in the state of Georgia in order to collect GA state taxes. From there out I'm not sure. I used to work for a company that had employees all over the country and whenever we got a new state we would have to register our business there.

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So even though we won't be doing any "business" in GA, just me working from there, we still need to register? And if so, are there some sort of costs involved in doing this?

If you are living and working in GA, they will need to withhold taxes, and of course as a independent contractor you lose the 7.5 percent of the social security tax they pay for you, so you will be a lot worst off unless you have a lot of expenses to deduct and unless they are going to pay you a much higher rate of pay than you were as a employee.

You did not say if they are a coporation or not, if they are a corp, they will need to register with the state as a foreign company ( their name for it) since you are foreign to the state, and normally have a person and address for all legal service in that state. They will get a state tax ID number and withhold the proper state tax. Companies that have employees in multiple states just have to do that.

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Originally Posted by Fr_Chuck

If you are living and working in GA, they will need to withhold taxes, and of course as a independent contractor you lose the 7.5 percent of the social security tax they pay for you, so you will be alot worst off unless you have alot of expenses to deduct and unless they are going to pay you a much higher rate of pay than you were as a employee.

You did not say if they are a coporation or not, if they are a corp, they will need to register with the state as a foreign company ( their name for it) since you are foreign to the state, and normally have a person and address for all legal service in that state. They will get a state tax ID number and withhold the proper state tax. Companies that have employees in multiple states just have to do that.

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Thanks for responding. I'd like to gather as much information about this as possible and get any paperwork I might need to take to my employer. How would we go about getting a state tax ID number, and would you happen to know if this is a costly process? Oh, and yes, the company is a corporation.

The corporation will need ( and if they have been doing work in that state should have already) gotten a registered agent and registered with that state ( and every state they do business in) When our company moved to TN from GA they had to do that. You can contract the state tax divistion for a tax number and recording requirements, and if they have any exemptions you may meet.

Depends on what you mean by costly, there will be filing fees, costs of the resident agent * this is normally a company that does nothing but be agents for business. They basically will receive any legal notice ( getting served legal papers) and forward them to the corp

And there may be other requirements depending on the type of business

Ok, I think I'm getting a better understanding. Now, regarding becoming an independent contractor, if my employer agrees to adjust my salary to compensate for the Social Security taxes I'll have to pay, what specifically would I have to do in order to be OK with the state and with the IRS?

As an independent contractor you will be responsible at the end of the year to pay your state and federal taxes. From my understanding (I could be incorrect) - you file taxes as usual and by doing so you will come up with the amount owed to the government both federal and state.

If you're going to go independent don't forget that you may be losing out on other benefits that you have as an employee - i.e. paid vacation time, sick leave, health insurance, life insurance, and any retirement plans such as a 401(k) or profit sharing. You will also be responsible for supplying your own tools, such as phone, PC, etc.

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Originally Posted by ebaines

If you're going to go independent don't forget that you may be losing out on other benefits that you have as an employee - i.e., paid vacation time, sick leave, health insurance, life insurance, and any retirement plans such as a 401(k) or profit sharing. You will also be responsible for supplying your own tools, such as phone, PC, etc.

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Ok, I understand all the possible downsides to going that route. I heard something about independent contractors having to pay taxes every quarter, and having to show the IRS that I am truly an independent contractor (i.e. multiple clients, official letterhead, business name, etc). Any further info anyone can provide regarding both options (staying on as an employeee vs becoming independent) would be most helpful!

Thanks for all the great advice!

I worked for a company where we had both. The only downside I could see to it is that once you become an Independent Contractor technically your company does not have to give you as much work as they would if you were full time employee.

Since you have the option I think it might be easier for you to stay a full time employee and have your company register in GA. In some states the cost is nominal to register your business and in some states its free. In all honesty it's a way smaller headache for you. You wouldn't have to worry about putting aside tax monies or find your own insurance or any of those other things that come with full time employment. You also won't have to worry about proving your status or anything to that extent.

It sounds like you have a pretty good employer - its great they are fully exploring each option.

Have reviewed all posts and agree!

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Originally Posted by AtlantaTaxExpert

Have reviewed all posts and agree!

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Well it looks like my employer really wants me to go the "consulting" route with the company. Frankly, I don't think they want to deal themselves with all the hassle of getting set up in GA and the state tax issue. We are a small company, so they see it easier and less expensive for them to just 1099 me at the end of the year.

With that said, do I HAVE to set up my own company and pay taxes 4 times a year, etc.. Or can I just keep all my receipts, expenses, etc... and file at the end of the year and pay in then?

If the total tax owed (federal income and self-employment taxes) exceed $1,000 when you file, you will pay an under-withholding penalty (a set percentage of the tax). You can get the penalty waived the first year under one of the "safe harbor" rules, but, eventually, you will have to start paying quarterly estimated taxes due on 15 April, 15 Jun, 15 September and 15 January.