Hiring remotely can unlock growth, but without the right systems, multi-state compliance mistakes can turn into costly penalties.
Remote hiring removes the ceiling that used to cap growth for so many young organizations. Now, you can recruit the best talent wherever they live. However, every new state you enter adds payroll registrations, HR rules, and agency notices to your compliance checklist.
Of course, most compliance mistakes and penalties don't stem from a founder’s bad intentions. Rather, they come from manual processes that fall behind as teams scale. Having the right systems in place for both compliance workflows and official business mail management can make the difference between catching issues early and reacting too late.
For that reason, we're looking at five of the most common compliance mistakes founders make with remote teams, and how solutions like Mosey and Stable can help you avoid them before the fines and penalties start piling up.
Key Takeaways
- Every new state creates compliance risk: Remote hiring triggers immediate payroll, tax, and HR obligations.
- Payroll tools don’t cover everything: Registrations, rule changes, and agency notices still need clear ownership.
- Missed notices cause most penalties: Unread or misrouted state mail often escalates small issues into fines or audits.
- Scalable systems prevent fire drills:Centralized compliance workflows and records keep teams audit-ready as they grow.
Mistake #1: Hiring in new states before setting up payroll tax accounts
Founders too often treat a new remote hire as a headcount decision when it’s actually just as much a compliance event. The moment someone joins your team in a new state, you've likely triggered withholding, unemployment insurance, and possibly paid family leave registration requirements.
Why it happens
Most early-stage teams don't have a system that flags state- and local-level obligations. And since it often feels more like an HR task and not a tax task, payroll is already running by the time anyone notices the gap
Why it's risky
States expect you to register before that first paycheck, not after. California and New York are especially aggressive, assessing penalties for late registration even if you withheld taxes correctly. Late or missing accounts can trigger backdated liabilities, interest, and follow-up notices that all snowball quickly. In some states, you could face penalties starting at 5% per month on unpaid taxes, capped at 25%.
How to avoid it
Treat a "new state" as a compliance event, not an HR formality. Build a system that detects when employees land in new locations and ensures you register payroll tax accounts before the first pay run. Compliance platforms like Mosey can automate this, flagging new hires, opening the right accounts, and keeping you ahead of agency deadlines without manual tracking.
Mistake #2: Assuming your payroll provider covers state compliance
Payroll software feels like the natural owner of tax compliance. After all, it calculates withholdings and sends the money. But processing pay and managing state compliance are two different jobs, with differences that spell trouble for too many growing companies.
Why it happens
Founders assume their payroll provider handles everything tax-related. However, the line between "running payroll" and "staying compliant" is blurry — until something falls through the crack, of course.
Why it's risky
Most payroll tools don't handle state registrations, agency correspondence, or rule changes. Instead, they calculate and remit, leaving obvious gaps that nobody realizes they own, including:
- Who registers accounts in new states?
- Who responds when an agency sends a notice?
- Who tracks when state rules change?
Without clear ownership, these tasks drift. Even when responsibilities are clearly defined, compliance can still break down if official state correspondence is scattered across inboxes or sent to outdated addresses. Eventually, missed filings and penalties pile up before anyone connects the dots, with U.S. businesses paying $26 billion annually in employment tax penalties. Once again, this usually isn't due to neglect but, instead, too many accounts with no one watching them.
How to avoid it
Define who owns registrations, filings, and agency responses. Don't assume your payroll provider covers it — ask. Better yet, use a platform built for employer compliance across states. A tool like Mosey centralizes tax account management so you're not left guessing who's responsible for what.
Mistake #3: Treating state and local HR rules as "later problems"
Employment rules vary wildly by state. Paid leave policies, harassment training mandates, salary transparency laws — each jurisdiction has its own requirements. And to throw salt in the wound, they’re all constantly changing.
Why it happens
Founders underestimate how quickly obligations can stack up. One remote hire feels manageable, and that becomes two. Soon, you have ten hires across five states, creating a web of rules that no one can manually track with any accuracy or timeliness. This challenge is amplified for remote-first teams without a central office, where policy notices and compliance updates may arrive by mail rather than email.
Why it's risky
Missing required policies or notices puts you out of compliance from day one, and inconsistent treatment across states only compounds the legal exposure. Reactive fixes (after a complaint or enforcement action) always cost more than proactive tracking would have.
What does this look like in practical terms? California requires specific meal and rest break policies, while New York mandates sexual harassment training and Colorado enforces pay transparency rules. In other words, each state adds another layer to manage, and missing just one requirement in one location is enough to leave you vulnerable.
How to avoid it
Track state and local HR rules before they become problems. The key is surfacing changes early so you can update policies before issues arise, not after. Compliance platforms can help here by monitoring requirements across states and alerting you when action is needed. Mosey, for example, keeps your handbook and policies current as laws evolve, without your team needing to manually track every update.
Mistake #4: Letting state notices sit without a clear owner
State agencies are constantly sending notices, from tax rate changes and audit requests to registration confirmations, penalty warnings, and more. For remote teams without a central office, these notices can easily end up in the wrong inbox… or no inbox at all.
Why it happens
Distributed teams lack a single place for handling official mail, especially when they rely on home addresses, coworking spaces, or ad hoc forwarding instead of a permanent business address. Notices get forwarded between people, deprioritized in crowded inboxes, or assumed to be someone else's problem.
Why it's risky
Many notices are time-sensitive. A wage audit request might give you 30 days to respond. Miss it, and a minor inquiry escalates into penalties or a formal investigation. Even routine notices like unemployment insurance rate updates can cause payroll errors if you don’t process them quickly.
The pattern is too common and predictable amongst growing companies: a notice arrives, sits unread, and becomes a full-blown crisis for a founder two months later.
How to avoid it
Centralize agency correspondence and assign ownership immediately. Also, track what you receive, what action it requires, and when you resolved it.
A centralized mail solution with built in mail scanning like Stable, or a compliance platform with integrated notice tracking like Mosey’s mailroom feature, can digitize notices, send alerts when something arrives, and help you resolve issues before they escalate. This kind of mailroom automation removes the risk of notices sitting unread or being routed incorrectly.
Mistake #5: Poor recordkeeping that turns audits into fire drills
When an audit hits, agencies want documentation. Proof of registration. Evidence of notice responses. Timestamps showing when you received and acted on correspondence. Without organized records, your team is scrambling to reconstruct a timeline under pressure.
Why it happens
Compliance documents live everywhere, including physical mail boxes, inboxes, shared drives, payroll portals, accounting systems, and more. Likewise, physical mail gets lost between offices or sits unopened at old addresses. The problem: there's no single, reliable record of what was received or when.
Why it's risky
Audits require proof. If you can't show when you received a notice and how you responded, agencies assume the worst. Inconsistent documentation raises red flags, inviting deeper scrutiny and prolonged compliance issues. As a result, teams lose days reconstructing timelines instead of running the business.
Unfortunately, the problem is significantly worse for remote-first companies. Without a physical headquarters, critical mail can bounce between forwarding addresses or disappear entirely.
How to avoid it
Create a centralized, digital record of official business correspondence, especially physical mail. Use a consistent business address and digital mailbox to ensure documents are captured, searchable, and accessible even as your team changes.
This is where Stable comes in. Stable provides a permanent business address and virtual mailbox that scans incoming mail and uploads it to a searchable online dashboard. Every piece of correspondence is timestamped, categorized, and accessible to your team, no matter where they're located. So, when audit time arrives, you're not hunting through old inboxes. Instead, you're pulling clean records in minutes.
Ultimately, when you pair clean recordkeeping with clear internal processes, audits become procedural instead of reactive.
Build systems that scale with Mosey and Stable
Most founders don’t set out to cut corners on compliance. The problems usually show up much later. What starts as a few registrations in a few states becomes dozens of accounts, hundreds of notices, and thousands of rules, all changing constantly.
The fix isn't hiring an army of compliance specialists. It's building systems that scale with your team, beginning by tightening your registrations before new hires start. Then clarify who owns filings and agency responses, proactively track HR rules, and centralize your notices. All the while, you’ll need to keep records audit-ready from day one.
Platforms like Mosey automate the hard parts of multi-state compliance, like payroll tax registration, HR monitoring, and notice management, while Stable ensures every official notice and document received in the mail actually reaches your team, gets tracked, and is audit-ready. No more lost correspondence. No more audit scrambles.
