A Nexus provides a connection between a business owner and the state the company resides. A business owner who sells goods or services must register that business, collect specific taxes and remit those sales taxes for all sales within that state. The business owner must establish a physical presence in that state. As that company reaches a sales tax ceiling the company establishes a Nexus with the state.
All entrepreneurs commonly and routinely ask what is it that triggers a tax Nexus and how is the determination of tax nexus made. When this is determined owners naturally need to know when nexus established.
Entrepreneurs need to be aware that tax laws frequently change. As of 2019, the following is said about a tax Nexus. In the simplest form, a tax Nexus means to join or tie a business owner to their state. Thus, connecting that company to the state for the simple reason of paying taxes as ordained by that state. Business owners must know the sales tax law.
Keeping up with sales tax law and compliance with current law can be demanding and complicated when a business becomes an online seller of products and services. It is for this reason that a business owner hires sales tax outsourcing. A Nexus robs business owners of energy, makes owners frustrated and causes a great element of confusion. When business owners do sales tax outsourcing more time is spent on building that company.
When a business has ties to its state due owners have a responsibility for sales tax nexus when your company makes a physical presence or economic connection. Online sellers must know that a physical presence means several different things, such as,
. Do you have an office setting?
. Do you have an employee?
. Do you have a storage area or warehouse for storing your inventory?
. Do you have an affiliate?
. What level of dollar amount do you declare in sales do you within your state?
. Do you have sales from such temporary sources such as being a vendor at a fair or trade show?
If a company knows know that sales were made in their state, a business must have an obligation to check with that state and decide if there is a sales tax nexus and refer to the sales tax calculator. If the state concludes that a company has a Nexus it is the responsibility of that owner to collect those taxes from buyers. This Nexus means the business must collect any state tax and local taxes that apply. Owners must check with that state because all states set different tax percentages, rules, and regulations.
Whenever owners send merchandise out from a warehouse to consumers, taxes must be collected according to that state’s sales tax calculator. A sales tax deduction must be figured. Taxes collected are dependent upon the location of your warehouse and office or business base. In some instances, a company is obligated to multiple taxes. As an example, your business collects taxes from the state where merchandise is sent out plus the state that merchandise is sent and performs a sales tax deduction.
What is the Wayfair Tax Case?
The Wayfair Sales Tax Case had to do with states that took the company, Wayfair, to court to demand payment of a Nexus. The courts overturned all cases saying that Wayfair had to have a presence in that state to collect sales tax from buyers. The overturning of cases against the Wayfair Sales Tax Case set a presence for all other companies selling outside the home state of that business. Remote workers need to become familiar with a Nexus.
In Conclusion
Check into sales tax outsourcing. Let this outsource find out how your state views a business while selling products or services, such as, are you a remote seller or do you live in the state where you have a home state nexus? When a business connects to the state that business is tied to that state, that owner then has a tax account dashboard. This dashboard shows in simple terms how much was collected from customers and how much that company should have collected from customers
