You may or may not be aware that your business may need to pay sales tax in more than one state. In order to discover why your business needs to comply with sales tax nexus regulations that have recently been implemented, simply continue reading. Especially as it’s prudent to alter your business’ long-term plan in order to account for the extra out-of-state taxes that you may have to start paying. If it’s deemed that your business has a significant economic presence in numerous states outside of the state that your business is currently registered in.
How sales tax nexus could increase your business’ costs:
Several states may be able to prove that your business has a significant economic presence in their states:
If you’re confused and assume that you only have to pay sales tax in the primary state in which your business operates in, think again. While this may have been the case in the past, rules have changed as states have sought to increase their annual revenue and have decided to try and get extra sales tax from out-of-state businesses that are successful in their state.
How do you know if your business is deemed to have a serious economic presence in a particular state? You’ll have to check the rules in each state but in many states such as South Dakota, if your business receives more than $100,000 in sales from customers in the state or makes over 200 individual transactions in a state, they are deemed to have a serious economic presence in the state. As a result, these companies will need to pay sales tax in these states in order to avoid being the target of prosecution. As the laws in each US state vary slightly, it pays to make sure that either yourself or your business’ accountant is aware of the regulations in all 50 states. To find out for certain, which states your business may have to pay sales tax in.
Alternatively, you may want to use a DIY accounting program to find out this information, if you’re currently the owner of a relatively small business and you want to keep your business costs as low as possible.
The term sales tax nexus:
If it’s deemed that your business does have an economic presence in a specific state, legally your business has a nexus in the state that is concerned. So if you were curious what the term sales tax nexus referred to, hopefully, this term has now been cleared up.
How to make sure that your meet your nexus tax obligations:
It’s a prudent idea to set up a tax calendar which you can use to digitally keep track of all of your sales tax obligations from each state. So that you don’t miss filing tax obligations in each state that your business has a nexus presence in. As doing so can result in high legal fees.
So if you want to ensure that your business meets all of its nexus’ tax obligations, it’s definitely well worth rereading all the valuable content in the article listed above.