Multi-State Tax Compliance for Businesses

Over the last quarter, 20+ businesses have come to us for guidance after receiving noticed for sales tax audits. This isn’t a coincidence. Sales tax audits are increasing, especially within e-commerce. States are increasing their efforts to find non-compliant businesses. It's been almost 7 years since the Wayfair decision, and states aren’t as lenient as before. Audit task forces are growing in high-population states like California, Texas, and Illinois. And since sales tax revenue funds budget items, states have a vested interest in closing the gap between the taxes owed and the taxes paid. Pre-audit questionnaires are also becoming more common. States are sending them to businesses, even if they haven't registered, requesting up to 3 years of sales data. And on top of all this, states are working together—sharing business information, making it easier to find non-compliant sellers. So if you’re non-compliant in one state, you may be caught by another. Staying compliant across every state you sell in is more important than ever. You might be subject to an audit if:  → You've failed to register and remit sales tax → You report high amounts of sales tax immediately after registering → You're connected to other vendors or customers being audited The penalties for non-compliance are high and getting stricter. In some states, penalties can be as high as 39% of taxes owed. My advice to ensure compliance: 1. Stay on top of it—once you’ve reached the nexus threshold in a state, register and file.  2. Partner with an expert or use sales tax software to help you keep track of changes. 3. If you’ve been non-compliant for some time, a Voluntary Disclosure Agreement could help reduce penalties and liability. States aren’t playing around, and they will come knocking. The cost of non-compliance far outweighs the effort of staying on top of your sales tax obligations. If you have any questions about staying compliant, shoot me a message—happy to help.

We just saved a SaaS company $850,000. They didn’t even know they owed it. They came to us realizing they had nexus in states where they’d been selling for years but never registered. The exposure was massive and penalties and interest were piling up. They were staring down a six-figure - potentially seven-figure - tax bill. We ran a Voluntary Disclosure Agreement (VDA) across the jurisdictions where they had exposure. A VDA lets companies come forward proactively, disclose back taxes, and negotiate penalty relief before the state finds you first. The result: $850,000 in penalties waived. They still paid the tax owed, but we eliminated nearly a million dollars in fines and interest. Most SaaS companies don’t realize that if you’re selling in multiple states, you probably have nexus somewhere you’re not registered. States are getting more aggressive, and the penalties compound. And if they come after you before you come to them, you lose all negotiating power. If you’re a SaaS company doing multi-state sales and you’re not 100% sure you’re compliant everywhere, run a free nexus study. It takes 3 minutes. Just sign up free and get your results! https://lnkd.in/eW76YWVz

Numeral is working with quite a few marketplaces these days. Turns out, sales tax gets pretty gnarly for marketplace businesses. And it’s super high risk from a compliance perspective. Let me explain. If you are operating a marketplace today, you're also running a multi-state / country tax operation, whether you meant to or not. Early Amazon built an empire on not charging sales tax. For years, the rule was simple: no physical presence in a state, no obligation to collect its sales tax. That let early ecommerce, for example, Amazon, undercut local shops by ~7–10% purely on the tax they didn’t have to charge. South Dakota v. Wayfair changed that. Now, states have moved to economic nexus (e.g. $100K in sales) and then layered on marketplace facilitator rules so that:  • You aggregate your sales + your sellers’ sales to determine nexus  • Once over the threshold, you are responsible for tax on all marketplace transactions  • You are the one who gets audited, not every micro-seller Now you’re juggling 46 states in the US alone, each with its own “marketplace” definition. Global sales tax, VAT, and GST rules in 170+ countries. Mixed 1P/3P, digital/physical, subscriptions, services, auctions, fees. That’s why we built Numeral, the AI-native sales tax solution for marketplaces that:  • Monitors state-by-state marketplace facilitator and MoR nexus rules  • Handles global sales tax, VAT, and GST  • Delivers accurate, real-time tax on every order, fee, and payout  • Keeps audit-ready records from transaction → calculation → filing So you can stop worrying about sales tax and focus on growing your marketplace.

Are you a remote distributed startup getting overwhelmed by state notices about overdue filings, wage reports, unpaid taxes, and garnishments? If so, this post is for you. First of all, I’ve been there. And so have thousands of other people. That’s why there are now solutions on the market to address this problem. You have a few options: Lowest lift: Continue handling everything yourself, which you can probably do for 3-5 states max before it gets intimidating. If you want to do this, I’d still pick a payroll that offers a PEO (e.g., Rippling) to maintain future optionality. Consider bringing on an hourly contractor to handle compliance at a lower billable rate or clearly divide responsibilities between salaried or outsourced HR/Finance/BizOps. Moderate lift: Bring on a vendor like CorpNet or Mosey to remind you to complete registrations, notify you of upcoming deadlines, and submit some filings on your behalf. Exact services vary by vendor, but this will let you expand to 5-15 states without feeling like compliance is someone’s part-time job. Biggest lift: Explore moving to a PEO (professional employment organization) that registers in each state directly and acts as a co-employer. Think of a PEO a bit like the international employer of record or EoR model within a single country. This let’s you easily scale to all 50 states, but becomes cost-prohibitive at higher headcounts (200+). Rippling, JustWorks, and Sequoia are common picks in the tech space.

If you’re a SaaS business selling your products and services across multiple US states, you’ll know how quickly sales tax compliance can turn into a tangle of confusing rules. Why? Because every state has its own perspective on how SaaS should be taxed. Some see it as software. Others as a service. And some, well, they’ve created entirely new categories just for fun. Let’s look at a few examples: 👉 New York considers SaaS to be taxable software so yes, sales tax applies. 👉 Florida doesn’t tax SaaS at all, it’s treated as a non-taxable service. 👉 Texas taxes only 80% of the SaaS subscription price, treating it as data processing. 👉 Illinois exempts SaaS at the state level, but Chicago throws in a special lease tax. 👉 California? No sales tax on SaaS. That’s just five states. Now imagine dealing with all 50. Phew! If you're expanding into new states this year, are you sure your sales tax strategy is keeping up?

Are you doing business in another state like California or New York, but live in Florida? Do you have a State tax compliance obligation? Let's dive into the world of "nexus" - a crucial concept for every business owner. What is Nexus? Nexus is the connection between a business and a state that allows the state to tax that business. It's the threshold you must meet to be subject to taxation in a state. The Evolution of Nexus: 1️⃣ Physical Presence Nexus (Pre-2018): Established by the Quill court case in 1992 You needed an employee, office, or warehouse in a state to be taxed there This was the gold standard for decades 2️⃣ The Online Revolution: E-commerce changed everything Example: A Texas company selling $10M to California customers could avoid CA tax without physical presence States got frustrated, losing out on significant tax revenue 3️⃣ Wayfair Case (2018) - Enter Economic Nexus: Overturned the physical presence standard Introduced "Economic Nexus" Now, even virtual or economic contact can trigger tax obligations Based on sales volume or transaction numbers, not physical presence 4️⃣ The New Nexus Reality: Some states set shockingly low thresholds - as little as $1 in sales Applies to both sales AND income tax Many businesses have multi-state nexus without realizing it 5️⃣ Types of Nexus to Be Aware Of: Physical Nexus: Traditional presence (office, employees, inventory) Economic Nexus: Based on sales or transaction volume Click-Through Nexus: From referrals by in-state residents Affiliate Nexus: Through related entities in the state Marketplace Nexus: For third-party sellers on platforms 6️⃣ The Wild West of Taxation: States are still adapting to this new landscape Some keep "doing business" standards intentionally vague Potential for complex multi-state compliance issues 🎯 Key Takeaway: If you're selling or targeting customers outside your state, you may have nexus (and tax obligations) in those states. Even if you've only filed in one state for years, it's time to reassess. ❓ Questions to Consider: In how many states might your business now have nexus? What's your real exposure if you trip economic nexus thresholds in multiple states? How will you manage potential multi-state compliance? This is a complex issue with far-reaching implications. As accountants and business owners, we're navigating uncharted waters. Let's discuss strategies and experiences in the comments! You can also DM me or book a call to discuss how to get compliant #TaxCompliance #WayfairEffect #BusinessTax #EconomicNexus #MultistateTaxation #NexusEducation

A lot of founders set up their company in Delaware and think they’re done…. Unfortunately, that’s not how it works. For income tax purposes, you have to file in the states where you’re actually doing business. So if you’re incorporated in Delaware but running everything out of Illinois, you’ve got to register and file in Illinois, too. I see this one all the time. Someone forms a C-Corp in Delaware, pays the franchise tax, and never files in the state where the team works, the customers are, or the bank account sits. Then it shows up later when the accountant starts asking why there’s no Illinois return. Delaware is a legal strategy. It’s about structure and protection. But where you operate determines where you pay. It’s basic state compliance stuff, but it gets missed constantly. Make sure you’re registered and filing where the work actually happens.

🎯 The scariest notification isn't from your ad account. It's the one that starts with "Department of Revenue." Most DTC operators are laser-focused on the metrics that matter: CAC, LTV, conversion rates, and monthly recurring revenue. But there's one metric they're completely blind to: tax exposure. Here's what I see happening constantly: → Brands are selling in states where they should be registered, but aren't → Most discover this through penalty notices, not proactive planning → Finance teams are burning hours monthly on reactive compliance → The "surprise" tax bills can be devastating The silent killer isn't your acquisition costs or inventory management. It's the tax liability building up in states you didn't even know you were obligated to track. Kintsugi fixes this before it becomes a crisis: → Pulls all your sales + payment + shipping data into one dashboard → Tracks nexus thresholds across all 50 states in real-time → Files automatically so you never miss a deadline → Reconciles everything so your team isn't scrambling at month-end This isn't just tax software built by accountants for accountants. It's compliance infrastructure built by operators who understand ecommerce velocity. While your competitors are getting blindsided by tax notices, you'll be scaling with clean compliance from day one. The difference between reactive and proactive compliance? Usually significant costs and a lot of sleepless nights. Get started with Kintsugi >> https://lnkd.in/g-VRHzbS