Home > Accounting & Bookkeeping, Business Consulting, Tax News & Info > Sales Tax: Nexus in other states…

Sales Tax: Nexus in other states…

With the continuing trend to take business to the internet, companies can sell their product or service all over the country pretty easily.  But a company considering e-commerce should be aware of the tax effect and compliance requirements they will have to face. Specifically, businesses will have to consider the sales tax effect when selling to other states.  Sales tax can be a tricky subject especially when other states are involved, and what in the world does something called Nexus have to do with anything?

What is Nexus? Nexus generally means that a business has a physical presence in a state.  A physical presence could include having property, employees, or soliciting sales in a state.  The determination of nexus will be the primary component determining whether that state may impose a sales tax on your product or service.

If you have Nexus. If you determine you have a physical presence, or nexus, in a state, you may have a sales tax obligation in that state.  A sales tax obligation comes from selling a product or service that is taxable in that state.  Every state is different so once Nexus is established it is important to research to see if your product or service is taxable in that state.

Compliance. Another thing to consider when you have nexus is the compliance requirement.  This means that if your product or service does have a sales tax due, a business will need to consider the exemption rules and filing requirements.

Knowing when to collect sales tax and how much to collect can be a tedious process. If you are considering expanding your company to sales outside of your home state, please contact your CPA for assistance with this matter.

Comments ( 0 )
  1. No comments yet.
Comments are currently closed.
Trackbacks & Pingbacks ( 0 )
  1. No trackbacks yet.
  2. Trackbacks are currently closed.