How Remote Employees Can Affect Your Sales Tax Nexus

Lisa Jones
Jun 3
3 min read

Updated: Jun 28

As the workplace continues to evolve, many businesses—regardless of industry—are embracing remote and hybrid work models. While this opens the door to greater flexibility and talent acquisition, it also introduces complex compliance issues—particularly around sales tax nexus.

If your business has remote employees working in other states, you may unknowingly establish a taxable presence in those states. Let’s break down what this means and how it can impact your business operations and obligations.

Understanding Sales Tax Nexus

Sales tax nexus is a legal term that defines the level of connection a business has with a particular state. If nexus is established, your business becomes legally obligated to register, collect, and remit sales tax for transactions in that state—even if you don’t operate a physical storefront there.

Traditionally, nexus was established by having a physical presence such as an office, warehouse, or inventory. However, the definition has expanded to include economic activity and remote operations.

How Remote Employees Trigger Sales Tax Nexus

Hiring talent outside your home state can impact your tax obligations more than you might expect. Here are a few scenarios where remote employees can create nexus:

1. Home Offices Count as Physical Presence

If a remote employee regularly works from their home in another state, their home office could be considered a satellite location of your business. Many states interpret this as a physical presence—thus establishing nexus.

2. Sales and Marketing Activities

Employees who solicit sales, meet with clients, or conduct product demos within a state—even virtually—can create nexus. This applies especially in states that consider sales activity a sufficient connection for tax purposes.

3. Product Development or Customer Service

Even if your employee doesn’t interact with clients directly, supporting your product or operations from another state—such as software development, tech support, or finance—may still qualify as significant business activity, thus triggering nexus.

4. Use of Company Property

If your business provides equipment (like laptops or phones) or reimburses home office expenses, it can further strengthen the argument that your business has a tangible presence in the employee’s state.

Why This Matters for Businesses

The implications of remote work on your sales tax compliance can be substantial:

You may need to register for sales tax in new states where you didn’t operate before.
Sales tax rates and rules vary widely by state, so accurate collection becomes more complicated.
Failing to comply may result in audits, interest, and penalties.
Retroactive liability is a risk—if you establish nexus but don’t collect sales tax, you may owe years of back taxes.

With states becoming more aggressive in enforcing nexus laws post-pandemic, it’s critical to take action before you’re flagged for noncompliance.

How Manage My Sales Tax Can Help

At Manage My Sales Tax, we understand how today’s workforce trends are reshaping business responsibilities. That’s why we offer expert solutions tailored to businesses with remote and distributed teams.

Nexus Risk Reviews – We analyze your employee footprint to identify which states may require registration.
Registration Support – If nexus exists, we handle the paperwork and ensure you’re properly registered in each relevant jurisdiction.
Accurate Tax Setup – We help you configure your invoicing, accounting software, and sales platforms to calculate the correct tax by location.
Ongoing Compliance – From timely filing to staying ahead of law changes, we provide proactive support every step of the way.