People
W-2 employee
A W-2 employee is a US worker whose employer withholds income and payroll taxes, pays employer-side taxes, and reports annual wages on Form W-2. Employing someone requires registering as an employer federally and in each state where employees work.
In plain terms: A proper employee, with tax withheld from every paycheque.
Why it matters
Registration is per state, so a remote employee in a new state creates a new registration and a new set of filings. This is the practical reason small companies use contractors or an employer of record for geographically scattered teams.
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