Sales Tax
Sales Tax for Small Businesses: When You Owe It and How to Collect
Sales tax used to be simple: you collected it where you had a store. Online selling changed everything. Here's what applies now.
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01What does sales tax nexus mean?
Nexus is the connection that requires you to collect sales tax in a state. It's created by physical presence (an office, inventory, employees) or, increasingly, by economic activity.
02Economic Nexus and Online Sales
After a landmark Supreme Court decision, states can require out-of-state sellers to collect tax once they cross a sales threshold in that state. If you sell online, you may owe tax in states you've never set foot in.
03Registering to Collect
Before collecting, you register with each state's tax authority. Collecting without registering, or registering and not filing, both cause problems.
04Filing and Remitting
You collect the tax, hold it, and remit it on the state's schedule. It's not your money; treat it as pass-through you're holding in trust.
05Getting Help Early
Multi-state sales tax gets complex fast. Setting up a system early, ideally with professional help, prevents a painful cleanup later.
Common questions
Do I have to collect sales tax in states where I have no office?
Possibly. Since a landmark Supreme Court decision, states can require out-of-state sellers to collect once sales into the state cross a threshold. If you sell online, you may owe tax in states you have never visited.
What is the first step before collecting sales tax?
Register with each state's tax authority. Collecting without registering causes problems, and so does registering and then not filing.
Is the sales tax I collect my money?
No. You collect it, hold it and remit it on the state's schedule. It is pass-through money held in trust, never revenue.
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Schedule a ConsultationThis article is general information, not individualized tax, legal, or financial advice. Every situation is different. Reach out and we'll look at yours directly.