INSIGHT

Multi-State Licensing and Nexus Considerations for Architecture and Engineering Firms

Sue P. Leighton • June 15, 2026

Services: State and Local Taxes Industries: Architecture & Engineering, Professional Services

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Architecture and engineering firms are no strangers to working across state lines. A structural engineer licensed in Texas might get pulled into a project in Colorado. A mid-sized architecture firm headquartered in Illinois might find itself winning work in five states within a single fiscal year. Growth is good, but every new state brings a new set of rules. Understanding your licensing obligations and tax nexus exposure before you start work, not after, can save your firm from costly surprises.

This article covers what A&E firms need to know about multi-state licensing requirements, how nexus is triggered, and where firms most commonly run into trouble.

What Nexus Means for A&E Firms

Nexus is the connection between your firm and a state that requires you to comply with that state’s tax laws. For product-based businesses, nexus is often straightforward. You have a warehouse there; you pay taxes there. For professional services firms, it gets more nuanced.

For A&E firms, state tax nexus is typically triggered by:

• Employees or contractors working in a state, even temporarily
• Project sites located in another state, particularly for longer engagements
• Leased office space or equipment in another state
• Revenue thresholds in states that have adopted economic nexus rules for services

Some states are more aggressive than others about asserting nexus. California, New York, and Massachusetts have well-documented reputations for pursuing out-of-state service providers. If your firm has been sending project teams across state lines for years without reviewing your tax exposure, there’s a real chance you’re already carrying obligations you haven’t addressed.

Where A&E Firms Most Commonly Get Caught Off Guard

Most compliance problems don’t start with bad intentions. They start with fast growth, a new contract, or a client who needs boots on the ground in a hurry. Here are the situations that come up most often.

• Remote employees working from new states. Many firms now have employees working remotely from states where the firm has never had a presence. Each of those employees may be creating payroll tax, income tax, and sales tax compliance for the firm in their home state.
• Project-based nexus. A long-term infrastructure or commercial design project in another state can establish nexus for income tax purposes, especially when staff are physically present for extended periods. The threshold varies by state, but some states look at as few as a handful of workdays.
• Apportionment errors. When a firm has nexus in multiple states, it must apportion income across those states based on each state’s formula, which may weigh payroll, property, and sales differently. Getting this wrong leads to overpaying or underpaying, and neither outcome is a good one.
• Letting individual licenses drive the firm-level review. Firms often track their licensed professionals carefully while overlooking the firm’s own Certificate of Authorization requirements. Both matter and need to be managed separately.

Staying Ahead of Multi-State Obligations

Architecture and engineering firms that work across state lines should treat multi-state licensing and nexus reviews as an ongoing part of operations, not a one-time task. That means revisiting your footprint when you hire in a new state, pursue work in a new market, or see a significant shift in your project portfolio.

A few practical steps worth building into your process:

• Map your current state activity, including where your projects are, where your employees work, and where your revenue is being generated
• Confirm your Certificate of Authorization status in every state where you’re actively working or pursuing work
• Review your apportionment methodology with a tax professional who understands how professional services firms are treated in each relevant state
• Track license renewals and qualifier changes, because if a licensed principal leaves the firm, some states require you to appoint a replacement within a specific window or risk losing your firm license

Working With BPM

Multi-state licensing and nexus compliance is a moving target, and most A&E firms don’t have the internal bandwidth to stay on top of it across every state where they work. At BPM, we provide state and local tax (SALT) services for architecture and engineering firms to assess current state exposure, identify gaps, and build a clear path toward compliance.

If your firm is expanding into new markets, onboarding remote employees in new states, or simply hasn’t done a thorough review in a few years, we’re ready to help. To schedule a conversation with our team, contact us.