What is Nexus?
Nexus is the level of connection between an entity (such as a seller) and a taxing jurisdiction (such as a state)
As an online business, it is your responsibility to charge your buyers the correct amount of sale tax and remit the taxes you collected back to the state.
Many online sellers have confusion when it comes to charging sales tax in certain states that they might not even think they have nexus in.
Nexus laws vary by each state, and thus, if you have an ecommerce company and sell on multiple channels, or have an FBA, you must know the laws in each state that you have either physical or economic nexus.
While there is no basic rule, because each company functions uniquely and each state varies by legal definition of nexus, here’s a few tips you can apply now:
- Your business has sales tax nexus in the same state as your customer.
- You’ll always have sales tax nexus in your home state. (*Certain business activities create sales tax nexus in other states, too.)
- If you have over $100,000 in gross sales revenue in any state over the last year, STOP and get a nexus assessment in each state that exceeds or meets that sales value.
Inside our Sales Tax Nexus Guide you will learn about:
- The historical legal precedence and how “nexus” has been established.
- What economic nexus is.
- What physical nexus is.
- How to conduct tests for all types of nexus.
It is important to note: Regardless of how it is established, once nexus is identified, an important note is the need to collect and remit sales tax.
This can be a dubious task in and of itself considering that sales tax nexus is associated with your legal entity and spans all sales channels.
Thus, if you have a direct sales channel and an internet sales channel, once nexus is established in a state both channels are subject to the sales and use tax laws of that state.
To learn more about your unique ecommerce business needs, and whether or not you have sales tax nexus within a state or multiple states, please call: 1-877-330-9401 or visit: www.fullyaccountable.com/call to schedule an appointment with one of our eCommerce finance experts. We speak digital.
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