Key figures
Federal receivables
2026, with sources
Revenue under US GAAP: ASC 606
ASC 606 is the FASB’s revenue standard, the same in every state. Revenue is recognized as you satisfy performance obligations, not when cash arrives. For an annual SaaS contract billed upfront, that means the cash lands on day one and the revenue arrives monthly — the balance in between is deferred revenue.
Accounts receivable is the other side: amounts invoiced and earned but not yet collected. Under ASC 326, the current expected credit loss model, companies estimate the allowance for receivables they don’t expect to collect, based on history and current conditions. For a small company with a handful of customers, that is usually a short, documented judgment, not a model.
Sales tax is a state matter
There is no federal sales tax. Since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, states may require out-of-state sellers to collect sales tax once they pass an economic threshold, without any physical presence. Every state with a sales tax now does.
That makes sales tax nexus a state-by-state question: what is taxable (some states tax SaaS, some don’t), the threshold, and how to register. It is the reason each state page carries a sales tax section and this page doesn’t.
Form 1099-K and processor reporting
Payment processors and platforms report what they settle for you on Form 1099-K. The 2025 law retroactively restored the pre-2021 threshold for third-party settlement organizations: a form is required when gross payments exceed $20,000 and transactions exceed 200. Card payments have no threshold at all, so most companies taking cards through Stripe or a similar processor will receive one.
A 1099-K is gross, not revenue. Reconciliation of processor payouts to the ledger — gross charges, fees, refunds, disputes — is what lets you explain the difference if anyone asks.
- Payment card transactions: reported with no minimum.
- Third-party networks (payment apps, marketplaces): over $20,000 and over 200 transactions.
- Amounts are gross — before fees, refunds and chargebacks.
- States can set lower thresholds of their own.
When a customer doesn’t pay
For tax, a business bad debt is deductible under the specific charge-off method in the year it becomes wholly or partly worthless, and only if the amount was previously included in income. Partly worthless debts are deductible only to the extent charged off on the books that year.
That ties the tax deduction to the accounting method: an accrual-basis company that recognized the invoice as income can deduct it; a cash-basis taxpayer that never reported it has nothing to deduct. The book allowance under ASC 326 is an estimate and is not itself deductible — the actual write-off is.
Receivables, state by state
Everything above applies everywhere. Each state then adds its own rules. Choose one to read its receivables page.
Point at a state, or shade the map by one question.
Common questions
Is there a federal sales tax on SaaS?
No. There is no federal sales tax. Whether you collect sales tax on software or services depends on each state you sell into, its rules for what is taxable, and whether you have nexus there — physical, or economic under Wayfair. The state pages carry those thresholds.
Can I deduct an invoice a customer never paid?
Only if the amount was already in your taxable income. An accrual-basis company that booked the invoice as revenue can deduct it under the specific charge-off method when it becomes wholly or partly worthless — charging it off on the books is part of the evidence. A cash-basis taxpayer never reported it, so there is nothing to deduct.
What does Stripe’s 1099-K mean for my revenue?
They report the gross amounts processed for you — before refunds, fees and chargebacks — when you cross the thresholds, or for any card payments. Your revenue is what your books say after reconciliation to payouts, and the difference is explained by fees and refunds.
Founder guides on this
- RevenueDeferred revenue for SaaS startups, explainedAn annual prepayment is cash today and revenue over a year. How deferred revenue works under ASC 606, why it’s a liability, and the schedule behind it.
- StripeHow to reconcile Stripe payouts to your booksA Stripe payout is charges less fees, refunds and disputes, batched across days. How to book it gross, tie it to the bank, and keep revenue right.
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
More of the federal guide
- AccountingFederal accounting for startupsCorporate tax, conformity to federal rules, apportionment and what it does to your books
- PayablesFederal payables for startupsPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollFederal payroll for startupsWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceFederal compliance for startupsRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryFederal advisory for startupsCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.