Crossing State Lines Here's What You Need to Know About Sales Use Taxes

Expanding your business into new states is exciting — but it also brings a new level of tax complexity. Each state has its own rules for sales and use taxes, and failing to comply can lead to costly penalties or audits.

Sales tax applies when you sell goods or services and collect tax from customers at the point of sale. Use tax, on the other hand, applies when you buy taxable goods or services from out-of-state vendors who don’t charge sales tax - meaning you owe it directly to your state.

The biggest factor to watch is nexus — your business’s connection to a state. You can trigger nexus either by having a physical presence (like offices or employees) or by meeting economic thresholds for sales volume. Once nexus is established, you’re responsible for collecting and remitting taxes according to that state’s rules.

Because every state’s laws, rates, and exemptions differ, staying compliant can be overwhelming. That’s why many growing businesses partner with outsourced accounting experts like ProcStat to simplify multi-state tax compliance and reduce audit risk.