Review Nexus at End-of-Year

One task that you should put on your end-of-year to do list is checking your nexus to make sure that you’re not running into trouble with sales tax. Each state determines what qualifies as nexus, which can create lots of problems when trying to determine where your business has nexus. Doing a quick review at the end-of-year of what aspects of your business might create nexus can help your business stay in the clear when it comes to sales tax. The first step is to take an inventory of sales tax nexus. We have a basic list to go through for sales tax liability triggers you can use to take a quick inventory of what your business might have that can cause sales tax nexus problems.

Go through this list item by item and think of all of the different ways your business interacts with customers and potential customers in different locations. After you’ve written down what sales tax triggers your business has, the next step is to check what sales tax nexus rules say for each state and how you might trigger sales tax. For instance, if you’ve had an affiliate program in Missouri or Maine in the last year, it is time to either pull that program or start collecting sales tax. Law changes in both states now determine that nexus is created by affiliate programs. It’s also a good idea to check things like thresholds and calculate out how much room you have to grow before creating nexus. For instance, in New York, affiliate programs can do up to $10,000 worth of business before creating sales tax nexus. If you plan on growing marketing and affiliate programs in the coming year, plan ahead for when you need to cut them off or to collect sales tax.

There are plenty of other ways you might create sales tax, such as independent contractors or trade shows. If your 2014 plans involve any of these types of nexus creators, be sure to check the rules for each state where you might have contractors or attend trade shows—business decisions like these need to plan for sales tax. Another thing to consider in your sales tax liability and nexus review is how your sales tax software handles the newly created nexus—if you’re updating your sales tax processes and need to add additional states, how much more will it cost you in your program’s features and time to set it up for payments? It might also be time to upgrade your sales tax software.

Latest Articles

Sales Tax Software

Sales Tax Software

Sales tax calculations and filing can be done by hand. When you make a sale, you figure out whether the goods and services are taxable and whether you have nexus in the buyer's tax jurisdiction. More on that later. Once you've determined that you need...

read more
Customer Service and Your Sales Tax Solution

Customer Service and Your Sales Tax Solution

Sales tax is complicated. We've just gone through the annual flurry of back to school tax holidays, for example. If you're a remote seller of clothing, you probably sell mostly through retail. But you might have some direct to consumer sales. In some...

read more
Sales Tax Holidays for E-commerce

Sales Tax Holidays for E-commerce

A lot of our clients are manufacturers, contractors, or in some other industry that doesn't usually have to think much about sales tax. Retailers know they have to collect sales tax, and usually plan for it. We often hear from people who had no idea...

read more