Nexus

E-commerce has become easier than ever before, in many ways. We can innovate, build, sell and ship products from our shoebox studios or basement workshops, thanks to sophisticated, user-friendly platforms. And as a result, small businesses are more empowered than ever to succeed in the online marketplace. But while some things are easier than ever when it comes to starting and running an e-commerce business, there's one aspect that becomes tricky: sales tax.

With the rise of e-commerce, there's been a shift from a traditional sales tax system to a destination-based tax system, meaning that businesses now have the responsibility to collect and remit sales tax for each state where they have customers. This requires them to stay up to date on ever-changing sales tax laws, which can be difficult when there are so many states with different regulations.

There's a lot of talk about "nexus" in the world of sales tax. The term nexus refers to having a connection with a state that requires you to collect sales tax. In most states, having a physical location constitutes a nexus (also called physical presence or physical nexus). E-commerce companies also need to consider the economic nexus, which occurs when their business volume or transactions reach the threshold in a state for collecting sales tax. Every state has its own threshold, which changes periodically. Therefore, you must remain vigilant.

If you are interested to find out more about economic nexus, get in touch with a member of staff and we will be happy to assist you.