Payroll Tax (PAYE) for Remote Teams: Paying Staff in Different States

Remote work made hiring easier.

Tax compliance did not.

You hire a developer in Enugu, a marketer in Abuja, and a designer in Ibadan. Salaries go out on time. Everyone is happy.

Then a letter arrives from a state tax authority you have never dealt with before.

That is when Payroll Tax (PAYE) becomes very real.

Many Nigerian businesses get penalized not because they underpay tax, but because they remit PAYE to the wrong state. This guide explains how PAYE works for remote teams across different states, and how to stay compliant without drowning in paperwork.

What Is Payroll Tax (PAYE)?

Payroll Tax (PAYE) stands for Pay-As-You-Earn.

It is the income tax deducted from employees’ salaries and remitted monthly to the relevant State Internal Revenue Service (SIRS).

As an employer, you are responsible for:

Calculating PAYE correctly
Deducting it from salaries
Remitting it monthly
Filing PAYE schedules

If anything goes wrong, the employer, not the employee, bears the risk.

Why PAYE Gets Complicated for Remote Teams

PAYE was designed for office-based work.

Remote teams changed everything.

The challenge is simple. Each Nigerian state controls its own PAYE system.

Once your employees live and work in different states, you must comply with multiple tax authorities at the same time.

Which State Should You Pay PAYE To?

This is the most important rule.

PAYE is paid to the state where the employee is resident, not where your company is registered.

Examples:

Company registered in Lagos
Employee lives in Ogun → PAYE goes to Ogun State
Employee lives in Rivers → PAYE goes to Rivers State

Getting this wrong is one of the fastest ways to trigger penalties.

Payroll tax PAYE for employees working remotely across different Nigerian states

Registering for PAYE in Multiple States

If you employ staff across states, you must:

Register with each relevant State Internal Revenue Service
Obtain PAYE employer IDs where required
File monthly PAYE schedules per state
Remit deductions by state-specific deadlines

There is no single national PAYE portal for all states.

This is where most remote-first companies struggle.

Common PAYE Mistakes for Remote Teams

Remote teams often fall into these traps:

Remitting all PAYE to one state
Assuming remote staff are independent contractors
Ignoring residency changes
Missing monthly filing deadlines
Poor payroll documentation

Each mistake increases audit risk and penalties.

HR manager reviewing payroll and PAYE deductions for remote employees

A Short Story: The ₦4.2 Million PAYE Shock

Tunde ran a remote fintech startup. His team was spread across Lagos, Oyo, and Kaduna.

For two years, he remitted all PAYE to Lagos State.

During a routine check, Oyo State demanded unpaid PAYE, penalties, and interest.

The total bill?
₦4,200,000.

The tax was already paid, just to the wrong state.

This is a common PAYE mistake, and it is entirely avoidable.

Best Practices for PAYE Compliance Across States

1. Confirm Employee Residency

Ask employees to declare their state of residence formally and update it when they relocate.

2. Maintain Separate PAYE Records by State

Track payroll, deductions, and remittances separately for each state.

3. File and Pay Monthly Without Delay

Late filings attract penalties, even when tax is eventually paid.

4. Use Reliable Payroll Systems

Manual payroll increases error risk as your team grows.

Automation reduces mistakes significantly.

How Zaccheus Simplifies PAYE for Remote Teams

Managing Payroll Tax (PAYE) across multiple states should not slow your business down.

Zaccheus acts as your AI CFO, helping you:

Track employee locations accurately
Calculate PAYE correctly per state
Maintain clean payroll records
Stay compliant as your remote team grows

Instead of juggling multiple spreadsheets and portals, Zaccheus keeps your payroll tax organized and audit-ready.

Frequently Asked Questions About PAYE

Can I pay PAYE to one state only?

No. PAYE must be paid to the employee’s state of residence.

What if an employee works remotely from different states?

PAYE is usually based on primary residence, not temporary travel.

Are remote workers considered contractors?

Not automatically. Classification depends on control, payment structure, and contract terms.

How often must PAYE be remitted?

Monthly, usually by the 10th day of the following month, depending on the state.

Can states audit remote payroll records?

Yes. States actively audit employers with distributed teams.

Final Thoughts and Next Steps

Remote teams are the future of work in Nigeria.

But Payroll Tax (PAYE) compliance must keep up.

When you understand where PAYE should be paid and maintain clean payroll records, multi-state teams stop being a tax risk and become a growth advantage.

Call to Action

Do not let payroll taxes slow down your remote team.

Visit usezaccheus.com and let Zaccheus handle PAYE calculations, payroll tracking, and compliance while you focus on growing your business.