The two-switch model
For every state, separately, ask: (1) Do I have nexus here?, a connection strong enough that the state can make me collect. (2) Is my product taxable here? Only when both answers are yes do you register, collect from customers in that state, and remit. Sales tax is also the customer's money passing through you, priced correctly, it's an administrative burden, not a cost.
Switch one: nexus
- Physical nexus, an office, employee, or inventory in the state. The one that surprises non-US founders: Amazon FBA stock sitting in a state's warehouse is physical nexus there, and Amazon moves your stock between states without asking.
- Economic nexus, since the 2018 Wayfair decision, enough sales volume alone: the common threshold is $100,000 of sales into the state in a year (some states also use 200 transactions; a few set higher dollar bars like California's and Texas's $500,000).
Read that again from a bootstrapper's view: selling $300k/yr spread across all fifty states typically crosses no single state's economic threshold. Nexus arrives state-by-state as revenue concentrates, your job from day one is merely to track sales by state so you notice when it does.
Switch two: is what you sell taxable?
| What you sell | Typical treatment |
|---|---|
| Physical goods | Taxable nearly everywhere sales tax exists |
| Custom services / consulting / dev work | Mostly not taxable, with state exceptions | | Digital downloads, templates, courses | Mixed, trending toward taxable |
The marketplace facilitator rescue
Every sales-tax state now makes marketplaces collect and remit for their sellers. If you sell through Amazon, Etsy, eBay or Walmart, the platform handles the tax on those sales, the single biggest simplification for non-US FBA sellers. Two cautions: FBA inventory can still create registration obligations in some states even when Amazon remits the tax, and anything you sell on your own Shopify/website is entirely on you, the marketplace rules don't follow you home.
The founder playbook by business type
- Services/agency from outside the US: almost certainly nothing to do, services largely untaxed, and you'd need $100k+ into a single taxing state. Revisit annually.
- SaaS: turn on Stripe Tax (or Paddle as merchant of record) from the first dollar, not to pay tax now, but to have per-state numbers when a threshold trips. Register only where tripped + taxable.
- FBA: marketplace facilitator covers the remittance; get state-registration questions answered once by a professional for the states holding your inventory.
- Own-site e-commerce: the hardest case, physical goods are taxable everywhere, so watch the per-state $100k line and register as you cross. Shopify Tax / TaxJar / Avalara automate the arithmetic.
⚠️The one real mistake
Ignoring it for three years after crossing thresholds. Uncollected tax stops being your customers' money and becomes yours, plus penalties. The fix is an hour a quarter of looking at a dashboard, cheap insurance against a five-figure cleanup.
Registration and filing mechanics
Per triggered state: register for a sales-tax permit (online, typically free-$100), start collecting at the customer's local rate (your billing stack computes this), and file returns at the state's assigned frequency, often quarterly, and yes, usually still filing $0 returns in quiet periods once registered. This is exactly the sort of recurring obligation that goes on your compliance calendar; ongoing filing support is one of the separate services we quote when your footprint justifies it.
