Part 1: The Hidden Operational Risks Tech Startups Face When Expanding Into the U.S.

For international tech businesses , U.S. expansion represents a massive opportunity: a mature customer base, investor access, and credibility in one of the world’s most competitive markets. But it also introduces a thicket of operational complexity—especially around sales tax, employment, compliance timing, and entity footprint.

Here are the most critical operational risks that international tech startups must proactively address before and during their U.S. expansion (part 1).

1. Lack of Customer Location Data—and the Tax Fallout That Follows

One of the most overlooked compliance failures is simply not collecting enough data during customer onboarding. In the U.S., most states use market-based sourcing to assign tax obligations. That means your income and sales tax liabilities may be determined based on where your customer is located—not where your company operates.

If you aren’t capturing full addresses including U.S. zip codes for your customers at the time of sale, you're creating a blind spot that makes accurate tax filing nearly impossible. And once your revenue grows, these gaps can become significant liabilities. Many startups don’t discover this issue until a tax return is due—or worse, during due diligence for a financing or acquisition.

It’s not enough to “start tracking it later.” Clean, accurate location data must be part of your tech stack and sales workflow from the start.

2. Scattered U.S. Hiring and Its Hidden Consequences

Another common mistake: trying to strategically place one team member in each major U.S. region—New York, California, Texas, Florida, and so on. On paper, this gives you national coverage. In practice, it can create a compliance nightmare.

Each state has its own payroll requirements, income tax filings, sales tax rules, labor laws, and employee benefit regulations. Hiring across multiple states without a centralized HR and legal strategy multiplies the administrative burden and legal exposure.

Worse, having employees in multiple states immediately creates physical presence—or "nexus"—which removes the benefit of economic thresholds that normally give startups more time before triggering sales tax compliance obligations. Instead of scaling slowly and strategically, you inherit the full regulatory burden of a much larger organization.

3. Misunderstanding Economic Nexus vs. Physical Presence

Many businesses believe that if they stay under $100,000 in revenue per state, they don’t have to worry about sales tax. That’s only true if you don’t have any physical presence in those states. As soon as you hire someone—even one person or put inventory in a state—you lose that exemption.

Physical presence creates immediate nexus, which means your business must register, collect, and remit sales tax from dollar one in that state. For startups with lean compliance functions, this can result in missed filings, penalties, and future audit exposure.

To avoid triggering unnecessary compliance burdens, plan hiring locations strategically. Centralizing your U.S. team in one or two tax-friendly states can give your company the runway it needs to grow without tripping every regulatory wire along the way.

Final Thought

Considerations around the data you collect, where you hire, and your entity’s physical presence can be the difference between smooth filings and major penalties. These seemingly small decisions can have a big impact down the road. For your peace of mind, the health of your U.S. entity, and a smoother expansion process, consider consulting with us before your next move.

Part 2 of this series will explore additional considerations every tech company should know when entering the U.S. market.