The Sales Tax & Nexus Blind Spot by Liana Bertsch

After working with several SaaS companies, from early-stage all the way through successful exits, there’s one operational risk that consistently sneaks up on founders: SALES TAX 

It’s not exciting. It’s not a product decision. It doesn’t show up on your roadmap. But it becomes a very real issue when you’re scaling fast or heading into due diligence. And frankly, most SaaS teams don’t catch it early enough. This isn’t because they’re sloppy, but because the rules have shifted faster than anyone expected.

Here’s what I’ve been seeing:

SaaS companies are especially exposed because everything they sell is delivered remotely across multiple states and countries. At the same time, tax authorities keep expanding what counts as nexus. Over the last few years, the rules have shifted enough that software, digital services, and subscriptions are now taxable in places founders often overlook.

I frequently see SaaS teams make several common mistakes. Many assume that being a software company with intangible products automatically shields them from sales tax, which is no longer true in many states. Others track only billing addresses, ignoring user or employee locations.

A fast-growing company has many difficult decisions to make about how to spend its time and resources, but this isn’t one of them. Proactively managing sales tax costs very little and avoids the taxes, penalties, operational disruption, customer friction, and even valuation impacts during M&A or fundraising that can arise as a result of non-compliance.

Bottom line: It’s incredibly easy to build exposure without realizing it and incredibly hard to unwind it during diligence.

This is not an alarm bell — just a friendly nudge from someone who has seen this movie too many times.