Let’s be honest, no one loves taxes. They can be confusing, frustrating and come back to haunt you if filed incorrectly. Especially business taxes. And online sales have only complicated things for sales tax nexus.
What the heck is sales tax nexus?
Sales tax nexus occurs when your business has some connection to a state. All states have a slightly different definition of nexus, but most of the time, states consider that a “physical presence” or “economic connection” creates nexus.
It’s used so states can collect sales tax from retailers who had a presence in their state, such as a location, employee, or inventory.
Now, it also includes “economic” presence in a state such as online sales. Game changer, right!?
Let’s simplify things…
Take a look at the map, if you say yes to any of the below questions about the states in green, you have sales tax nexus and may owe taxes in other states:
1. Do you sell products in any of these states, either in-store or online?
For example, your own website, your own store location, Amazon, Target, Whole Foods, Sephora…
2. Do you have a physical presence in any of these states?
For example, a warehouse where you store goods/products, a production facility, a storefront…
3. Do you run click-through website adds with companies in any of these states?
For example, joescoffee.com links to your business from their site via an affiliate program. When they send sales your way, they get a small cut of the profits.
4. Do you provide services to a company in any of these states?
For example legal services, consulting, CFO services…
5. Do you have employees (not contractors) in any of these states?
Had a yes in there? Think you might owe? Time to hire a professional! (Like us!)
Since each state holds different thresholds, to ensure you don’t get slapped with costly fines, doing a Sales Tax Nexus Report for your company is imperative.
Let’s chat! We keep up with the ever-changing world of tax laws to ensure you’re meeting tax compliance, allowing you to sleep easy and grow your business.
