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Multi-state nexus: your clients are everywhere — is your tax bill?
The short answer
Since Wayfair, physical presence is not required — revenue alone can create nexus. Sales-tax thresholds (commonly ~$100,000 of in-state sales) and market-based sourcing of service income mean an agency with national clients can owe registrations, returns, or tax in states it has never visited. Remote hires create nexus almost automatically. The good news: pure advertising services are exempt from sales tax in most states — but the map is patchwork and moves yearly.
The annual nexus check
- Inventory the triggers: revenue by client state, people by state, property by state.
- Sales tax first: compare state thresholds, then check whether what you sell is taxable there at all.
- Income tax second: factor-presence and market-sourcing states can claim a slice of profit; apportionment decides how much.
- Register deliberately where exposure is real; voluntary disclosure beats discovered liability.
- Re-run it every year — growth changes the answer.
Frequently asked questions
Do I owe taxes in states where my clients are?
Possibly — economic nexus. For sales tax, most states assert nexus at thresholds like $100,000 of in-state sales; for income tax, several states use factor-presence or market-based sourcing that can tax service revenue where the customer benefits.
Are digital marketing services subject to sales tax?
It varies wildly: most states exempt pure advertising services, but some tax digital services, SaaS-like deliverables, or specific categories — and characterization of what you sell matters.
Does a remote employee create nexus?
Almost always — an employee in a state generally creates income tax (and often sales tax) nexus there, plus payroll registration. Hire location is a tax decision.
What should a growing agency actually do?
Inventory where revenue, people, and property sit; check thresholds annually; register where required before the notices arrive. Exposure compounds quietly — the cleanup programs are friendlier to volunteers.
National client list, one state registration?
We run the nexus inventory and tell you plainly where you owe, where you do not, and where to register before it costs more.
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