For fast growing software and SaaS companies, tax compliance has become a critical part of operational readiness. Since the 2018 Wayfair ruling, states can require remote software sellers to collect and remit taxes based solely on economic nexus, even without physical presence. This shift has created a major blind spot for SaaS founders, CFOs, and finance teams. It is also one of the most common issues uncovered during fundraising, due diligence, and mergers or acquisitions.
A Sales and Income Tax Nexus Study is now one of the most effective ways to identify exposure, stay compliant, and protect your company’s valuation.
What Sales and Income Tax Nexus Means for SaaS
Tax nexus refers to the connection between your business and a state that triggers tax obligations. For SaaS, cloud services, and digital products, the rules vary widely from state to state. Some states tax SaaS as a service. Others treat it like tangible software. Some tax cloud based tools while others do not. Economic thresholds also differ, which makes it easy for companies to fall out of compliance without realizing it.
Why SaaS Companies Need a Nexus Study
A Nexus Study gives you a clear, fifty state view of where you owe taxes and how much exposure you may have. It is especially important for companies preparing for fundraising, private equity investment, mergers or acquisitions, or IPO readiness.
A Nexus Study helps you avoid hidden sales tax liability by identifying uncollected or under remitted taxes before they become penalties or interest charges. It protects your valuation by preventing last minute surprises that lead to escrow holdbacks or renegotiations. It strengthens investor confidence by showing that your company has strong governance and operational maturity. It also prevents deal delays by ensuring your documentation is complete and defensible.
What a Software and SaaS Nexus Study Includes
A comprehensive Nexus Study typically provides a nationwide nexus map that outlines where you have triggered sales or income tax obligations. It includes an exposure assessment that quantifies potential liabilities. It also provides a compliance roadmap with clear next steps for registration, automation, remediation, and ongoing compliance.
This documentation becomes invaluable during audits, investor reviews, and due diligence.
Common Compliance Challenges for SaaS Companies
Many software companies face the same issues. CPAs often focus only on income tax filings, leaving sales tax exposure unaddressed. Sales tax rules for SaaS and cloud services vary dramatically across states. Economic nexus thresholds change frequently. Missing documentation slows down funding or acquisition. Ignoring nexus rules can lead to large, unexpected liabilities.
A Nexus Study helps eliminate these blind spots before they become costly.
Why Nexus Compliance Matters for Your Exit Strategy
If you are preparing for an acquisition or major funding round, tax compliance can make or break the deal. A Nexus Study helps you move through due diligence smoothly, avoid valuation cuts or escrow requirements, demonstrate transparency and strong governance, and close deals faster with fewer surprises.
For SaaS companies, compliance is not just a legal requirement. It is a strategic advantage.
Stay Compliant and Stay Investable
A Sales and Income Tax Nexus Study is one of the most effective ways to protect your valuation, reduce risk, and build investor trust. Whether you are scaling, fundraising, or preparing for an exit, now is the time to get ahead of compliance.
How Leyton Supports SaaS Tax Compliance
Leyton brings more than twenty five years of experience helping software and SaaS companies stay compliant and investor ready.
Our services include SALT Nexus Studies to identify thresholds and build a compliance plan, Voluntary Disclosure Agreements to settle past exposure with reduced penalties, R&D tax credit and grants integration to optimize your tax position, and audit defense with full documentation and end to end support.
With offices in Boston and San Francisco, we support clients nationwide across more than seventy industries.
