Out of State Employee

Small corporation set up in State 1 wants to hire an employee in State 2. Does the corporation have to do state payroll tax withholding for both states, or just State 2?
I'd think that withholding would only be necessary for State 2, though I want to be sure I'm not missing something.
Thanks.
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When my small company did it, the payroll service just did it for state 2. Both states seemed to be OK. The hardest part was later persuading state 2 (which happened to be California) that we had shut down and we hadn't made state unemployment payments because we were no longer a business and he was no longer an employee.
R's, John
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Thanks, John.
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Stu
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On Tuesday, April 24, 2018 at 12:03:21 AM UTC-4, Stuart O. Bronstein wrote:

It depends on the states involved. For instance, if the employer is in NY, it must withhold NY income tax unless the employee works outside of NY because the employer requires it. In other words, if the job could have been done by an employee working within NY, the wages are subject to NY withholding.
Ira Smilovitz, EA
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