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$1.1k mrr and customers in 14 us states — do i have to register for sales tax anywhere yet

Small tool, about eleven hundred a month, customers spread over fourteen states and a few outside the country. I am a one person LLC.

I have now read enough about economic nexus to be frightened and not enough to act. Some articles imply you owe registrations the moment you have a customer somewhere, others say there are thresholds you will never hit at this size. A third camp says register everywhere early to be safe, which sounds like a full time job.

What is the actual trigger, and is there anything I should be doing right now other than worrying about it.

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  • @quiet_promotion · 9mo ago · 2 replies

    The thresholds are the answer and you are nowhere near them, but here is the structure so you can check it yourself as you grow.

    States set an economic nexus threshold based on sales into that state. The most common figure is a hundred thousand dollars, with several of the largest states set considerably higher and a couple of others in between. Some states historically also counted a number of separate transactions, commonly two hundred, as an alternative trigger, and states have been steadily abandoning that test in favour of dollars only. Illinois dropped it at the start of this year and Kentucky is dropping it later in the year, and more will follow.

    At thirteen thousand a year total, across fourteen states, no single state is close on dollars. The transaction count test is the only theoretical route to a registration for someone your size, it is per state, and the list of states that still use it keeps shrinking.

    The other thing that matters more than any of this at your stage: whether software as a service is even taxable in a given state varies. Some tax it, some do not, some tax it differently depending on how it is delivered.

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    • @chainwax_chloe · 9mo ago

      Deal with your own state first. Physical presence, which for most solo founders means where you sit and work, creates nexus from the first dollar with no threshold involved. Everyone worries about the other forty nine and forgets the one they live in.

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  • @chainwax_chloe · 9mo ago

    The practical thing I set up when I had this same worry, which took an hour. My billing data exports with a country and state on every charge. A pivot table sums sales by state by year. I look at it once a quarter. If any state gets to about half of its threshold I have a note to go and read that state's rules properly. It has never triggered. But the anxiety went away completely, because I replaced not knowing with a number I can look at.

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  • @abd_avery · 9mo ago

    Do not register early to be safe. That is advice from people who sell registration services.

    A registration is not a one time act of tidiness, it is a permanent filing obligation. You will file returns in that state forever, including zero returns, sometimes monthly, and each one is a deadline you can miss and be penalised for. Registering in fourteen states at eleven hundred a month would be the single worst use of your evenings available to you.

    Track, do not register. Know your numbers by state. Act when a number gets close to a threshold.

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  • @layover_lucy · 9mo ago

    Record the state on every sale from today. That is the entire job until a number gets big, and the version of you in two years will be very glad the data exists.

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  • @arraysformula · 9mo ago

    Migrated the other direction last year and can confirm it is unpleasant. Existing subscriptions do not simply move, and every customer who has to re-enter a card is a customer given a moment to reconsider. I lost a handful who were not unhappy, just reminded.

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