As a business owner, it is important for you to know everything about sales tax nexus. It can be complicated to understand for many and the use of complex languages makes it even more difficult to understand. Sales tax nexus is the connection between a seller and the state which requires a seller to collect sales tax on behalf of the states for every sale that is made. It is very important for the state that you as a business owner follow the sales tax law so the state can collect the taxes properly. If you fail to follow the sales tax law your license to do business would be revoked. In this article, the sales tax would be simplified for you and you would know all that you are required to know about sales tax.
Origin of sales tax
The Wayfair sales tax case was responsible for the implementation of the sales tax. Before the Wayfair sales tax case, sales tax were only imposed on physical sale that was done on stores. After the verdict was passed on 21st June 2018 many states implemented sales tax on business owners and sales based on the nexus and till now 40 states are implementing the nexus.
Different types of Nexus
There are different types of Nexus that you would need to be aware of if you are running a business. If you are selling through a physical store then the state is entitled to sales tax generated from every sale you made. If you are hiring a person or an organization to market your products and sales are generated through that then it falls under click-through nexus. Affiliate nexus is also applicable if you earn a commission as an affiliate agent for selling products of another company. However, if the company is not paying any commission the nexus is not applicable. It is difficult to calculate the sales tax when the sales are made in various states. The sales tax varies from state to state and it can be very difficult for someone who has no idea of sales tax to collect the sales tax from their customers.
How to calculate sales tax
The process of calculating sales tax can be complicated for some persons. You can do sales tax outsourcing to an individual or a firm that is good at calculating sales tax. Sales tax outsourcing is very common in big organizations and they hire lawyers to calculate their sales tax. You can use a sales tax calculator that is available online on various websites. The sales tax calculator makes doing the sales tax easy. You need to do sales tax deduction when you would be calculating your revenues. Without doing sales tax deduction you won’t be getting your actual profit.
Importance of knowing about sales tax
It is very important for a business owner who wants to conduct business properly in any state in the USA to know about the sales tax laws of that state. If they are selling to different states as well then they need to have knowledge about the laws of other states as well. As a business owner, you need to constantly develop your knowledge about the changes that are made to sales tax law so you can be sure you are not breaking any law