If you’re selling in the US, you may be required to collect and remit sales tax based on where you do business. The main factor to look out for is whether you have sales tax nexus in a state.
Nexus means you have a connection to a state that requires you to follow its sales tax laws. There are two main types of nexus to be aware of: physical presence and economic nexus.
Physical presence
Most sellers have a physical presence in their home state, which means you likely need to register for a sales tax permit in your own state.
You may also have physical presence in other states if:
- You have an office, warehouse, or second location
- You employ someone working remotely in another state
- You store inventory in another state
Economic nexus
You may also be required to collect tax in states where you exceed a certain sales threshold, either by total revenue or number of transactions. This is called economic nexus.
For example, in most states, you’ll trigger economic nexus if you make 100,000 USD or more in sales, or 200+ transactions. But this varies by state.
You can find up-to-date economic nexus thresholds in TaxJar’s Economic Nexus Guide.
What to do if you have nexus
If you have nexus in a state or territory, the next step is to register for a sales tax permit there:
Once you’re registered, you can start collecting sales tax from your customers in those states.