Step 1: Know where your business must collect and remit sales tax
You may not need to collect and remit sales tax everywhere, so determining where your business has nexus is the first step. Many business activities create a nexus obligation with a jurisdiction, including having physical locations, remote employees, affiliate relationships, or economic activity in that tax jurisdiction.
What to do:
First, understand the different business activities, then review your activities to determine where you may have an obligation. Nexus laws can change frequently, so stay informed of changes in legislation that may affect state and local tax jurisdictions. Avalara has many resources to help you understand the concept of nexus and stay up to date with nexus-related rules and policies.
Let Avalara help:
If you’re unsure about your current or expanding sales tax obligations, an Avalara nexus study can help. We offer an in-depth nexus study and ongoing nexus monitoring to help you decipher where you have an obligation to ensure you’re ready for Step 2.
UNCOVER ECONOMIC NEXUS
Use our free Sales Tax Risk Assessment tool to get a breakdown of states where you might be obligated to collect sales tax. Economic thresholds vary from state to state so review your activity against sales and transaction thresholds often to ensure you’re ready to register, collect, and remit when you need to.
Existing Avalara AvaTax customer? Sign in to your account today to find your risk assessment prepopulated with your sales that flow through AvaTax.