Ignore 99% of Tax Rules—Just Use These 3 to Lower Your Multi-State Tax Bill

Am I supposed to be doing anything different with taxes?

"Mareaka, we’re bidding jobs in multiple counties and even crossing into neighboring states. Am I supposed to be doing anything different with taxes?"

Great question—and yes, if you're roofing or doing HVAC work across state or county lines, there are tax rules you absolutely need to follow.

But here's the good news: you can ignore most of the complicated IRS jargon.

Just focus on these 3 key areas to stay compliant and keep your tax bill as low as possible.

Let’s break it down.

Before we dive into it, let me introduce myself if we haven’t met yet.

I’m Mareaka from Bunch Accounting, and I specialize in helping roofing and HVAC business owners like you make confident, profitable decisions.

What Triggers State Tax Exposure (aka "Nexus")?

If you’re doing jobs in multiple locations, your business might have what’s called "nexus" in more than one state. That means:

Sending crews across state lines
Owning or leasing property in another state
Earning income from jobs based in another state

Any of these can create tax obligations like payroll reporting, income tax, or sales tax—even if you’re based somewhere else.

So if you’re based in North Carolina but picking up commercial or residential jobs across the border in South Carolina, you need to start thinking multi-state strategy.

Let’s say you’re running a roofing crew that spends three days a week working on a project in Rock Hill, SC while your business is headquartered in Charlotte, NC.

Even if the job is temporary, that creates tax obligations—like registering for South Carolina payroll, allocating a portion of your income there, and possibly even charging the correct sales tax.

And it's not just commercial jobs—HVAC companies doing residential service calls or installs just a few miles over the state line fall into the same bucket.

It doesn’t take a full-time crew in another state to trigger exposure—just consistent activity.

The 3 Tax Strategies You Actually Need

Here’s what to focus on to avoid headaches and stay lean:

1. Proper Payroll Setup Per State

If your employees are working in more than one state, your payroll has to reflect that.

Each state has different withholding requirements

You may need to register for a state payroll account

Failing to do this can lead to penalties, audits, or double-taxation

For example, if you pay an HVAC tech to work in Texas and Arkansas in the same month, and don’t report wages accurately per state, here’s what that might look like: say your tech earns $2,000 for work split between North Carolina and South Carolina.

If your payroll system records all $2,000 under NC wages but they actually worked 3 full days in SC, you're underreporting in SC and overreporting in NC.

That could result in letters from both states—SC wondering why it didn’t get its share, and NC flagging a mismatch in wages.

Even worse, it can lead to penalties, tax filings being rejected, or your employee getting hit with incorrect state withholding.

You could underreport in one and trigger a notice in the other.

Pro tip: Your payroll software won’t catch this automatically unless it’s set up to do so.

This needs to be handled manually or reviewed monthly.

2. Business Vehicle Tracking & Deduction Strategy

Crossing into other states means you're racking up a lot of miles. Don’t let those go to waste.

Track actual mileage per job or crew. One way to simplify this is by using a mileage tracking app like Hudlr, MileIQ, or TripLog. These apps can automatically detect when you're driving, log each trip, and let you categorize it as personal or business with a quick swipe. For crews using company vehicles, consider installing a GPS tracker or a dedicated mileage device in the truck that logs trips in real time and ties them to job sites. This way, you can pull reports each month that show exactly how many miles were driven for each project or state—no guesswork, no missed deductions.

Know when to use the standard mileage rate vs. actual expenses. The standard mileage rate is a flat amount you can deduct per mile driven for business (for example, 70 cents per mile in 2025). It’s simple, but may not reflect the true cost of running your vehicle.

If you own your service truck outright and it's fuel-efficient with low maintenance, the standard rate might work in your favor.

But if you lease your vehicle, pay high insurance, or spend a lot on repairs and fuel, you might be better off using the actual expense method.

That lets you deduct things like gas, maintenance, insurance, depreciation (if owned), or lease payments (if leased).

In general, if your vehicle is newer and expensive to operate—or you're driving primarily out-of-state—the actual expense method often gives you a larger deduction.

Just make sure you’re tracking all expenses and mileage accurately to support it.

Deduct maintenance, fuel, tolls, and depreciation properly

Example: If your service truck does 60% of its mileage on out-of-state commercial work, you could allocate more deductions against that taxable income, lowering your multi-state liability.

3. Per Diem vs. Actual Travel Expenses

For crews traveling overnight, you can deduct meals, lodging, and travel costs—but how you do it matters.

Per diem gives a flat-rate allowance per day, based on location. For example, if your crew is working in Columbia, SC, the IRS might allow a $69 per day per diem for meals and incidentals. That means you can deduct $69/day per tech without needing to collect every meal receipt. If they’re gone for five days, that’s $345 in clean deductions per person.

Actual expenses, on the other hand, require saving receipts for everything—hotel, meals, gas, even parking.

So if your team spends $120/night on a hotel, $50/day on meals, and $30 in miscellaneous expenses, you’d need to track and document those actual amounts. In this case, actual expenses total $200/day.

That’s more than the per diem rate, so using actuals might save you more on taxes—but it takes more recordkeeping.

Choosing between the two depends on how your crews travel and how much admin time you want to spend tracking.

Choosing the right one could save you thousands and reduce the paperwork headache.

A per diem is often easier, but sometimes actuals give you a bigger deduction—especially on higher-end commercial jobs where lodging and meals cost more.

Why Contractors Overpay (or Underreport) Without Realizing It

Multi-state jobs create complexity fast—and most bookkeepers or tax pros don’t specialize in it.

That means:

You could be paying taxes in a state where you don’t owe anything. A common mistake we see is when a contractor assumes they need to file taxes in a state just because a business partner lives there, or because a client is located there—even if no physical work was performed in that state. For example, if your roofing business is based in North Carolina and your business partner lives in Georgia, that alone doesn't mean you owe Georgia state taxes. Unless you're actively performing jobs, earning income, or sending crews into Georgia, there's usually no tax obligation there. Filing when you don't have to not only wastes time and money—it can trigger compliance checks and unnecessary headaches. That's why knowing exactly what triggers tax exposure (nexus) is so important.

Or worse, you could be underreporting and triggering an audit down the road

Either way, you’re wasting money or taking unnecessary risks.

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What Your Accountant Should Be Doing

If you’re doing work in more than one state or even across counties, your accountant should:

Review where your income is earned and allocate it properly

Help you track vehicle usage, per diem vs. actuals, and crew travel correctly

Make sure your W-2s, 1099s, W-9s, and state filings match up. That means collecting a signed W-9 from every subcontractor before they start work, issuing accurate 1099s based on actual payments, and ensuring those payments are properly allocated by state. A missing W-9 or misfiled 1099 can cause delays, trigger penalties, or throw off your tax filings—especially when you’re working across multiple jurisdictions.

If they’re not doing that? You might be overpaying—or worse, leaving yourself wide open.

Ready to Cut the Confusion?

You don’t need to become a tax expert to stay compliant and protect your profits.

Book a Profit and Tax Analysis Let’s review where your books stand today and map out what support would actually move the needle—without the cost of a full-time hire.

Let us know what you think in the comments!