Unsure where you owe sales or use tax
Run Your Nexus Risk CheckA SaaS business creates California sales tax nexus when it exceeds the 500000 dollar economic nexus threshold or establishes physical presence in the state.
SaaS companies may create nexus in California by:
Once nexus exists, the SaaS company may be required to register and collect sales tax on taxable subscriptions.
Run Your Nexus Risk CheckCalifornia generally taxes transfers of tangible personal property. Pure SaaS may not always be taxed the same way as software delivered on physical media, but taxability depends on structure and service components.
Factors that may affect SaaS taxability include:
Taxability and nexus are separate issues. A SaaS business can create nexus even if some revenue is non taxable.
California economic nexus applies when total sales into the state exceed 500000 dollars in a calendar year.
For SaaS businesses, this includes:
Once the threshold is exceeded, registration may be required regardless of physical presence.
Before registering or filing, confirm whether your business has created sales tax nexus in California or Texas.
Run Your Nexus Risk CheckEven if revenue does not exceed 500000 dollars, nexus may arise from:
Remote workforce expansion has increased physical nexus exposure for SaaS companies.
If nexus existed but no seller permit was obtained, exposure may include:
SaaS companies often discover nexus years after exceeding thresholds.
California Back Sales Tax Liability | California Voluntary Disclosure Agreement
Proper nexus evaluation should precede registration.
If your SaaS revenue or workforce may have created California nexus, evaluate exposure before registering.
Run Your Nexus Risk CheckIdentify potential SaaS nexus exposure before penalties escalate.