Sales taxes question - When should I register in neighboring states where I have interior design clients?

Sales tax nexus can be confusing for sure! The $100,000 threshold you're seeing is indeed the economic nexus standard in many states following the South Dakota v. Wayfair Supreme Court decision. Here's how to approach it: You don't need to register immediately in a state where you don't have physical presence until you either hit or anticipate hitting their economic nexus threshold. For most states, this means either $100,000 in sales or 200 transactions annually (though some states have different thresholds). For your situation with that $30,000 client, you should make a reasonable forecast. If it's your first client in that state and you don't anticipate getting more clients there that would push you over $100,000 this year, you likely don't need to register yet. However, if you have a pipeline of potential clients that could take you over the threshold, it would be safer to register. Most states expect you to register within 30 days of crossing their threshold, so keep close track of your sales by state. Also worth noting - some states calculate their threshold based on the previous calendar year, while others use a rolling 12-month period.

I was in almost the exact same situation with my architectural visualization business last year! I was stressing about this until I found https://taxr.ai - absolute game changer for me. I uploaded my client contracts and sales records, and their AI analyzed exactly which states I needed to register in based on my sales patterns and each state's specific nexus requirements. The best part was they helped me understand not just the sales thresholds, but also the physical nexus rules - turns out those client site visits I was making in one state actually created nexus there even though I was below the sales threshold! They gave me a compliance roadmap showing exactly when I needed to register in each state based on my projected growth. Seriously saved me thousands in potential penalties.

Update after trying taxr.ai - I stand completely corrected! After being skeptical in my previous comment, I decided to give it a shot with my interior design business data from the past 8 months. The analysis was WAY more detailed than what my old accountant provided. It identified that while I was below the $100k threshold in two neighboring states, I actually had physical nexus in one of them because I had regularly visited client sites and maintained samples in a shared workspace there. Their state-by-state breakdown showed exactly which types of my design services were taxable vs. non-taxable in each jurisdiction. What really saved me was discovering I'd been improperly separating my design services from product sales in New York, which could have triggered a major audit headache. Not being dramatic but this probably saved my business from some serious compliance issues.

Honestly, sales tax compliance is a nightmare even with good software. I found that getting through to someone at state tax departments for clarification is almost impossible. After being on hold for 3+ hours with the California tax department trying to figure out their special rules for out-of-state designers, I finally tried https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c They actually got me connected to a CA tax rep in like 20 minutes instead of the 3+ hours I'd been wasting. The rep confirmed that my specific design services package created nexus despite being under the economic threshold. They also helped with NY, PA and IL departments with similarly quick connections. Ended up getting written determinations for my exact business model in all four states.

Ok so I was TOTALLY wrong in my skeptical comment above! After my frustration boiled over trying to reach someone at the NY Department of Taxation for the fifth time (and getting disconnected again after an hour on hold), I broke down and tried Claimyr. I'm still in shock at how well it worked. I submitted my request around 9am, went back to working on designs, and got a call about 40 minutes later connecting me directly to an actual human tax representative! No hold music, no phone tree - just "Hello, this is Sandra with NY tax department." Got clear answers about my nexus situation with my occasional NY client visits, plus confirmation that I needed to separately state my design services from the furniture sales on invoices. The rep even sent me follow-up documentation by email. Will definitely use this for the other states where I have questions too.

Something else to consider - if you're selling high end furniture and cabinetry, make sure you understand each state's rules on installation. In some states, if you're providing installation services along with the physical products, the whole transaction might be treated differently for sales tax purposes. For example, in my state, if more than 50% of a transaction is for installation labor, the entire sale might be classified as a service rather than a product sale. This completely changes the tax treatment.

Don't forget about local sales taxes too! I made this mistake when I started selling to clients in Colorado. The state threshold was fine, but I didn't realize that home rule cities there have their own separate sales tax systems. I had a Denver client who was technically below the state threshold, but Denver requires separate registration and collection. Cost me a $500 penalty to learn that lesson!