Sales tax with nexus refers to the legal requirement for businesses to collect and remit sales tax in states where they have established a physical or economic presence. Nexus is the determining factor that establishes the responsibility for a business to register and comply with the sales tax laws of a particular jurisdiction. Nexus can be established through various factors such as having a physical store, warehouse, office, or even employees located within a state. Additionally, nexus can also be triggered by reaching a certain threshold of sales or transactions in a particular state, known as economic nexus. There are different types of sales tax nexus that businesses should be aware of: 1. Physical Nexus: This type of nexus is established when a business has a physical presence, such as a brick-and-mortar store, office, warehouse, or any physical location within a state. It includes having inventory stored or owned within that state. 2. Economic Nexus: This type of nexus is determined by the business's economic activity within a particular state. Each state sets its own threshold for economic nexus, typically based on either the amount of sales revenue or the number of transactions conducted within the state. Once a business exceeds the threshold, it is required to collect and remit sales tax. 3. Affiliate Nexus: Affiliate nexus is established when a business has a connection with another business, known as an affiliate, within a state. This connection can be through common ownership, control, or any other relationship. If the affiliate has nexus in a particular state, the business may also be obligated to collect and remit sales tax in that state. 4. Click-Through Nexus: Click-through nexus is relevant to businesses participating in online affiliate marketing programs. If a business's website is linked to an affiliate's website, and the affiliate generates sales through these links, the business may trigger click-through nexus and be required to collect sales tax in the state where the affiliate is located. 5. Marketplace Nexus: Marketplace nexus refers to the obligation of online marketplaces to collect and remit sales tax on behalf of their sellers. If a business sells through an online marketplace that has nexus in a particular state, the marketplace may collect and remit the sales tax, relieving individual sellers from the responsibility. Understanding the concept of sales tax with nexus is crucial for businesses to ensure compliance with tax laws. It is essential to monitor changes in individual state legislation regarding nexus thresholds and obligations, as they can vary significantly from state to state. Compliance with sales tax laws helps maintain a business's reputation, avoids potential penalties, and ensures fair competition within the marketplace.
Sales Tax With Nexus
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There are no local sales tax rates in Michigan, so you would charge buyers in Michigan the 6% state sales tax rate on regular taxable items. This is true whether you are based in Michigan or considered a ?remote seller? (i.e. based outside of Michigan but have sales tax nexus in Michigan.)
Sales tax nexus is the connection between a seller and a state that requires the seller to register then collect and remit sales tax in the state. Certain business activities, including having a physical presence or reaching a certain sales threshold, may establish nexus with the state.
It doesn't matter whether they work from a home office, co-working space or coffee shop; just the fact that they perform work for an out-of-state business is enough to trigger nexus.
Sales tax nexus defines the level of connection between a taxing jurisdiction such as a state and an entity such as your business. Until this connection is established, the taxing jurisdiction cannot impose its sales taxes on you.
Sales tax nexus is a term used to describe the connection between a business and state or local government that triggers the requirement to collect and remit sales tax. It is the minimum threshold of activity that a business must have in a state before it is obligated to collect and remit sales tax in that state.