Navigating Sales Tax for SaaS Businesses: Best Practices and Platforms
As Software as a Service (SaaS) businesses continue to grow and expand their customer base across different states, it’s crucial to understand the complexities of sales tax compliance. Each state has its rules and regulations regarding the taxation of SaaS products, making it challenging for businesses to stay compliant. This article will discuss best practices, do’s and don’ts, and platforms that offer state-by-state sales tax coordination for SaaS businesses.
- Determine your nexus: Nexus refers to the connection between your business and a state that triggers a sales tax obligation. Physical presence, economic thresholds, and affiliate relationships can establish nexus. Regularly review your business activities to determine where you have a nexus.