As the trend toward remote and hybrid work continues, more startups are building teams spread across cities, states, and even countries. While this distributed workforce unlocks greater access to talent, it also introduces new accounting complexities – from payroll and taxes to expense management and regulatory filings. Kruze Consulting specializes in helping venture-funded startups navigate these challenges.
1. Set Up a Robust Expense Tracking System
For remote teams, implementing a modern expense management platform is essential. Solutions such as Brex and Ramp now offer virtual cards and customizable spending limits for employees worldwide. These systems simplify expense approvals, centralize documentation, and seamlessly integrate data into your accounting platform – a must for auditors and investors alike.
2. Use a Global Employer of Record (EOR) Services to Simplify Payroll
Hiring internationally or across state lines? Consider platforms like Remote or Deel. These services allow you to legally hire, pay, and manage benefits for global employees – without needing to establish a legal entity in each country. This provides payroll, tax, and statutory benefits compliance, and supports a more inclusive global team.
3. Adopt a Scalable Accounting System
Your accounting platform should grow with your business. For startups up to around 100 employees, QuickBooks Online remains a versatile and affordable choice. As you encounter more complex needs – such as consolidating foreign subsidiaries – consider upgrading to solutions like NetSuite for advanced capabilities and compliance.
4. Monitor State and Local Tax Nexus
Having employees distributed across multiple states creates new state tax obligations. If you employ team members in another state, you’ll almost certainly trigger tax nexus – requiring you to register with the state, remit payroll taxes, and possibly file sales or income tax even if you have no office there. Each state’s thresholds differ (check our map of state thresholds), so consult your startup accountant to assess your exposure and register where needed.
5. Modernize Payroll and Benefits Administration
Cloud-based payroll providers (like Rippling or Gusto) now make it easier than ever to onboard employees nationwide (or globally), stay up to date with varying tax rates, and offer competitive benefits. Evaluate solutions tailored for distributed teams to ensure accuracy, compliance, and employee satisfaction.
6. Address Foreign Subsidiaries and Ownership Properly
If your startup includes foreign owners (over 25%) or operates international subsidiaries, your US entity is required to file key forms like Form 5471 (for 10%+ ownership in a foreign business) and Form 5472 (for US corporations with 25%+ foreign owners). Missing these forms can result in significant fines – make sure your startup accountant has deep experience with international structures.
7. Budget Rigorously and Compare Performance to Plan
Remote work can cause financial silos and communication delays across time zones. Set a clear monthly process for budget vs. actuals reviews. This helps prevent both overspending and underspending – missing critical hires or skimping on essential systems can set the business back just as much as going over budget.
Embracing the Benefits While Navigating the Challenges
A distributed workforce opens doors to new talent and flexibility, but also requires a proactive, tech-forward accounting approach. With the right systems and partners in place, your startup can navigate complexity, stay compliant, and focus on growth. Contact Kruze Consulting for help managing accounting, payroll, and tax strategy for your distributed team.
