To discover what a sale nexus is and why you could end up paying sales tax in numerous states that you don’t have physical premises in, it’s well worth reading the sales tax nexus guide which is listed below. Especially if you want to avoid having to pay fines in multiple states, for failing to abide by sales tax nexus regulations. States tend to be pretty strict when it comes to collecting sales tax from out-of-state businesses, especially successful online businesses.
What a sale nexus is and how it can affect your business?
What is a sale nexus?
A sale nexus refers to an economic interest that your business may be deemed to have in a state which doesn’t have a physical presence. If you’re confused and recall that businesses need a physical premise in a state to be eligible to pay sales tax in the state in question, the regulations around sales tax for businesses have recently changed. Now if a state believes that your business has significant business interests in their state, you may be required to pay sales tax in their state.
In order to find out the regulations surrounding sales taxes in each state, continue reading to discover a few examples of the regulations which have been passed in multiple different states.
While some states such as South Dakota, which was the first state to order out of state businesses to pay sales taxes, only requires sales tax from businesses that exceed 200 transactions a year or earn over $100,000 in sales per year, California doesn’t require businesses who only earn $100,000 in California to pay sales taxes. Instead, businesses must earn over $500,000 in a single year in order to be deemed a sales tax nexus in the state of California.
Texas is somewhat similar to California as it requires out-of-state businesses that earn $500,000 or more in Texas-based sales in order to be deemed an economic nexus. If your business is an out-of-state, remote-based business, do keep in mind that you’re required to apply for a sales permit in order to start selling your products or sales to Texas-based customers.
If you make over $100,000 in sales in the state of Washington, you will be deemed a sales nexus for Washington-based sales taxes. Or if you make over 200 transactions in Washington, you’ll also need to register your business as a Washington sales nexus.
If your business targets sales in sunny Florida, remember that if your business makes over $100,000 of sales in Florida in a single calendar year, the very next fiscal year you’ll be required to register your business as a sales nexus in Florida. In order to avoid getting into legal strife.
If you don’t want to be stuck paying excessive sales taxes in numerous states, it may be a good idea to target states for customers that have high thresholds and require over $500,000 a year in sales to be deemed a sales nexus.