12 Sales Tax Tips for Small Businesses: #1, Nexus

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It seems that sales tax compliance has never been more complicated. To help your small business achieve greater success and security this new year, we offer you 12 sales tax tips for 2012. Each tip was selected by an Avalara sales tax expert, and is designed to help you stay on top of the ever-shifting sales tax landscape. Watch for a new tip and case study each day, for the first twelve days of the year.

 

Tip #1: Determine if you created nexus in any new jurisdiction over the year

Have you sent an agent or sales representative to a new state? Delivered and installed a product in a new state on a regular basis? Did you hire new employees that work from a remote location? Answering yes to any of these questions may mean that you will have nexus in a new state in 2012.

 

Nexus laws are often quite complex (see the case study below), and each state is different. Review the laws in each new state where you conducted business, and If you have indeed established nexus, check the state’s sales tax laws so that you can accurately calculate, file, and remit there in 2012.

Case Study: Illinois and Web Links 

Illinois considers a retailer to have nexus in the state if they meet the following three criteria. 1) A retailer has a contract with someone in-state who refers customers by a link on their website. 2) The retailer pays commission based on sales of “tangible property” through that website link. 3) Their cumulative gross receipts from all sales made by these referrals exceeds $10,000 per year.

Check back with us tomorrow for the next tip in the series. Also be sure to keep up with national legislation that affects issues of nexus and sales tax collection. Read this post for a summary of current legislation that may affect sales tax collection requirements for internet retailers.

Happy New Year!

Related content:

  1. 12 Sales Tax Tips for Small Businesses: #2, Mandatory E-filing
  2. Nexus Analysis Should be a Big Priority in 2011
  3. New Mexico Gives Ground on Nexus for Gross Receipts (Sales) Tax Collection
  4. 12 Sales Tax Tips for Small Businesses: #3, Pre-payment