Sales Tax FAQs

Understanding nexus, taxability, and multi-state sales tax compliance

1.Do I need to collect sales tax for my business?

If your business sells taxable goods or services and has established a tax obligation, called nexus, in a state, you're generally required to register, collect, and remit sales tax there. Nexus can be triggered by having a physical presence in a state or, for online sellers, simply by exceeding a certain amount of sales or transactions into that state. We help identify where you currently have nexus and where you're approaching a threshold.

2.How do I know which states I need to register for sales tax in?

We review your sales by state, along with any physical presence such as employees, inventory, or offices, against each state's nexus thresholds to determine where registration is required. Economic nexus thresholds vary by state, commonly around $100,000 in sales or 200 transactions annually, but exact figures differ. Once we identify your nexus footprint, we handle the registration process in each required state.

• Key takeaway — You don't need an office or a single employee in a state to owe sales tax there — sales volume alone can create nexus

3.What is sales tax nexus, and how does it apply to online businesses?

Nexus is the connection between your business and a state that creates a legal obligation to collect and remit that state's sales tax. For online businesses, this is most often triggered through economic nexus, based on sales revenue or transaction volume into a state, even without any physical presence there. Because thresholds and rules vary by state and change periodically, we monitor your sales data to flag new nexus obligations as your business grows.

4.Do I need to charge sales tax on services or only on products?

This depends entirely on the state: some states tax only tangible goods, others tax a broad range of services, and many fall somewhere in between with specific rules for categories like digital products, SaaS, or professional services. A service that's taxable in one state may be completely exempt in another, which makes this one of the most commonly misunderstood areas of sales tax. We review your specific offerings against each state's rules to confirm what should and shouldn't be taxed.

5.How often do I need to file sales tax returns?

Filing frequency — monthly, quarterly, or annually — is assigned by each state based on your sales volume, and can change over time as your revenue grows or shrinks. Some states also require an additional prepayment for high-volume filers. We track each state's assigned filing frequency and due dates for you so returns are filed accurately and on time.

6.What happens if I don't collect or remit sales tax on time?

States can assess penalties and interest for late or missing sales tax filings, and in cases of significant non-compliance, may pursue back taxes covering several years plus penalties. Because sales tax is considered money collected on behalf of the state, enforcement tends to be stricter than for income tax. If you discover past non-compliance, we can help assess exposure and pursue voluntary disclosure programs that many states offer to reduce penalties.

Have a question we didn't cover?
Reach out to our team directly — we're happy to walk through your specific situation and recommend next steps.

Updated on: 21/08/2026