Hi everyone.!

This week's tip is about nexus.

If you’re running a business or if you are a bookkeeper trying to figure out sales tax, you’ve probably heard about “nexus.” It’s super important to understand because it can affect you or your client's tax responsibilities. Let’s dive into the three big questions people usually ask about nexus!

1. Do I Have Nexus?
First things first, what is nexus? Simply put, it means your business has a significant presence in a certain area that makes you register to collect sales tax there.

There are two kinds of nexus:

Physical Nexus: This happens if you have a real place in that area, like an office, a warehouse, or employees working there. (FYI- Check the tax laws in the jurisdictions where you or your client conducts business. Nexus triggers are not consistent in all jurisdictions.)

Economic Nexus: This kicks in if you’re selling a lot of stuff or if the total sales amount hits a certain level in that area.

Once you know you have nexus, it’s time to register with the tax folks in that area!

2. Can You Just Ignore Sales Tax Registration?
Short answer: Nope! Just because you don’t want to deal with it doesn’t mean you can ignore it. If you don’t register to collect sales tax, you could still face audits and penalties later on. So, it’s best to get it sorted out now!

3. What Do I Do After Registering?
After you register, the next step is to make a sales and use tax plan. This includes figuring out things like:

What goods or services you sell that need tax or don’t need tax.
What paperwork you need when selling things that aren’t taxable.
What the current tax rates are for your products.
You’ll also need to decide if you want to file your tax returns yourself or hire someone to help you out. No matter what you choose, make sure it’s affordable and can grow with your business.

Understanding nexus is really important for keeping you or your client's business on track with sales tax. Pay attention to these details so you don’t run into trouble later on.

That’s your tax tip for the week!

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