Sales Tax Nexus refers to the presence that a business has in a particular state, which can impact the business’s tax obligations. Understanding Sales Tax Nexus is important for Ecommerce businesses that operate in multiple states, as they may need to register, collect and remit sales tax in each state where they have significant sales.
Nexus, Ecommerce and Bookkeeping all work closely together when it comes to managing an online retail business. Effective bookkeeping is essential for ecommerce businesses to accurately track sales revenue and taxes, adhere to tax laws, and to ensure taxes get paid in a timely manner.
Understanding how your Marketplace and Platform handles the taxes for your sales is also important, as you are ultimately responsible for ensuring your tax compliance. Some Marketplaces offer tax collecting and remittance, while others do not.
There are many ways in which your business might be subject to Nexus, such as hitting a certain sales or transaction threshold, having employees in a state, storing inventory in a warehouse, selling at a trade show or sponsored event, and more. Each state has their own filing requirements.
Luckily, because of the nature of the beast of Sales Tax Nexus, there are also great Sales Tax Software programs to assist in the process: Avalara, Davo, and Tax Jar, just to name a few.
Let me help with the daunting tax issues so that you can focus on running your ecommerce business.