Nexus is a blockchain-based platform which allows for the creation of decentralized marketplaces. It’s also designed to be low cost, and there are no fees on transactions or listing services. In this article, we’ll look at some of the most important factors small businesses should know about Nexus and sales tax
The “sales tax nexus by state chart” is a great tool for small businesses to use. It will show you the states that have nexus and the states that do not.
Customers have been flocking to the internet in droves for years because of “tax-free” online buying. States lacked the ability to require out-of-state enterprises with no physical presence in the state to collect sales taxes.
That changed on June 21, 2018, when the United States Supreme Court overturned the physical presence rule in South Dakota v. Wayfair, Inc. States may now charge distant merchants a sales tax based on both economic nexus (the volume or monetary worth of transactions into the state) and physical presence.
There are three things that every small company or startup should undertake in light of the new sales tax reality:
1. Reevaluate your nexus: Where do you and your present (and potential) consumers stand?
Why now is the right time: Now that the Supreme Court has cleared the way for South Dakota to impose a sales tax collection requirement on distant sellers who make more than $100,000 in sales or conduct at least 200 transactions in the state, other states are following suit. New rules should be kept in mind whether you want to establish an internet company or currently sell over state boundaries.
More than 30 states have either enacted or are considering enacting economic connection legislation. Even if you don’t have a physical presence in one or more of those states, you’ll almost certainly need to register, collect, and return sales tax to the appropriate taxation authorities if you sell in volume (as low as $100,000 or 100 transactions).
Remember that a sales tax collection responsibility might be triggered in a variety of ways, depending on the state. Physical presence in a state, affiliate links to in-state enterprises, and sending staff into a state are just a few examples.
The bottom line: Doing some research is a smart idea whether you’re just beginning your firm or expanding into other states. Businesses’ sales tax requirements aren’t as straightforward as they formerly were. If you’re not clear what nexus means for your firm, it’s time to get advice from a tax professional.
2. Double-check your registration: Do you need to collect and pay sales tax in other states?
Why now is the right time: If you make retail sales in your home state, you’re probably aware that you must register for sales tax collection. If you sell over state lines, you may need to register in one or more more states. The first step is to figure out where you’re responsible for sales taxes. The next step is to figure out how and when you’ll have to submit taxes and pay sales tax. These standards vary from one state to the next.
The bottom line: Outsourcing registration and refunds to a third party may be more cost-effective and accurate than doing it in-house. You may put your company at danger if you don’t have a comprehensive suite of IT solutions that cover every step of sales tax compliance, from real-time rate computation to on-time returns filing to business licensing and tax registration services.
3. Reconsider compliance: Is there a better way to go about it?
Why now is the right time: Manually managing sales and use tax is always difficult, particularly for new and developing enterprises. It may be plain intimidating, especially now that more than 30 states have imposed sales tax collection responsibilities on distant merchants as a result of the Wayfair verdict.
If your new business expands or plans to expand, your sales tax responsibilities will almost certainly expand as well. Sales tax compliance, like all other aspects of your company, requires planning.
The bottom line is that having a solid sales tax solution in place now will better prepare you for future sales tax demands. You need a system that can scale with your company, beginning with low-cost pricing for small businesses and progressing to a strong enterprise-level platform as you expand into new states.
Compliance with sales taxes is difficult, and it isn’t expected to become any simpler very soon. That doesn’t mean it has to consume resources and be a drain on your company’s resources. Do your homework and don’t be hesitant to seek professional assistance with sales tax computations, state registrations, and return filing.
Some companies need an automated sales tax solution to remain afloat, while others may be handled in-house. However, all businesses can benefit from speaking with an expert to decide the best plan for them.
Check out the latest on law and taxes on Bplans if you’re seeking for additional tools to keep your small company legal and functioning efficiently.
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The “who is responsible for sales tax buyer or seller” is a question that many small businesses have to answer. In this article, I will go over what you need to know about Nexus and sales tax.
Frequently Asked Questions
How would a business determine if it has sales tax nexus?
A: Sales tax nexus is the point in time where a business becomes subject to taxation by federal, state or local taxing authorities. A common place for this to happen would be when goods are transferred from one location within your companys territory of operation to another location within that same companys territory.
How do small businesses handle sales tax?
A: Small businesses have to calculate the sales tax for their business by state and then charge consumers accordingly. If a consumer buys something from your store, you would collect the calculated amount of money that corresponds with how much they paid according to their states regulations on taxation.
What triggers sales tax nexus?
A: Sales tax nexus occurs when a company does business with more than $10,000 in sales within any given state. This is due to the fact that taxes must be paid on these transactions and it is easier for companies who sell to many people all over the United States to pay taxes as opposed to just one location such as New York State.
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