Pay other State's Income Taxes on STR that I manage, not own?`

[Jackson Mayer]

Good morning! We own a small business in Florida where we manage 25 doors for STR. We are looking to expand into some other states that have state income tax, but not exactly sure what that looks like for state taxes. Florida has no state income tax.

We would still be managing from Florida, and would mostly only be doing listing setup, messaging, and pricing. We would have no employees in the other states; homeowners would be required to provide us with a contact who can help, and that contact would be paid directly by the owner.

Any insight would be appreciated.

TLDR: Do we have to pay state income tax on properties that we manage but don't own in other states.

[Ashish Acharya]

This will get more complicated than you think. 

State taxing authorities use different methodologies to determine how a company must apportion service revenues to their state. The most commonly used methodologies are:

• Cost of Performance Method
• Market-Based Method
• Other reasonable methods, such as:
  • Sourcing revenues where the services are performed or,
  • Sourcing revenues based on a customer’s location

Each state has its own adaptations of these.