When small business owners ask about sales tax compliance, they are often met with advice that sounds reassuringly simple.
Register everywhere you have nexus.
Be conservative.
Err on the side of caution.
I understand why this guidance shows up. It feels responsible. It removes ambiguity. It gives a clear next step in a system that rarely offers one.
And to be clear, registration is often the right decision, especially once a business has meaningful taxable activity or clear exposure in a state.
The problem is not registration itself. The problem is treating registration as automatic rather than intentional.
Sales tax compliance is not simple. Advice that skips context can quietly create more work and more risk than it resolves.
Registration is not a harmless box to check. Once a business registers in a state, it creates an ongoing relationship with that tax authority. There are filing obligations. There are notices. There is recordkeeping. There is audit exposure. Even when no tax is due, returns still have to be filed.
For some businesses, especially those with minimal taxable sales in a state, registration can increase complexity without meaningfully reducing risk, at least in the short term.
This comes up often with B2B sellers, exempt customers, and marketplace-heavy businesses. On paper, economic nexus may exist. In practice, actual tax liability may be close to zero. The ongoing administrative burden, however, is very real.
A more helpful approach asks better questions.
Are the sales actually taxable?
Are customers exempt, and are exemption certificates realistic to manage?
Are marketplaces already collecting and remitting?
What obligations begin after registration, not just at registration?
What does it realistically cost to stay compliant in this state over time?
This is where judgment matters.
Sales tax compliance is not a moral purity test. It is a risk management exercise. Businesses are allowed to think about materiality, proportionality, timing, and tradeoffs.
Small businesses do not need advice designed for companies with internal tax departments. They need guidance that acknowledges how limited time, focus, and resources actually are.
Registering is often the right answer. The mistake is assuming it is always the first answer.
