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What a Tax Nexus Is and Why It Is Important

Posted by Admin Posted on Sept 07 2018

A tax nexus is a network. It refers to your presence in the state or doing business there. If you have an online business, then you have a nexus. For tax purposes, a nexus refers to how much and how often you do business in a state. If you have a nexus in a state, you have to collect and remit sales tax and pay income taxes based on those sales. Working with a tax accountant in Las Vegas can help you understand your responsibilities related to tax payments.



Nexus for Income Tax Purposes


Each state has its own nexus rules. When it comes to income taxes, you may be responsible for paying income and property taxes if you have a nexus in the state. Property taxes apply if your business owns property in the state. Income taxes apply to your nexus if you have employees or capital assets in a state or you derive any business income there.



Nexus for Sales Tax Purposes


Sales tax nexus rules are more confusing. You might have a sales tax nexus if you have property in a state. This includes intangible property. If you have remote employees working in a state, you may have a sales tax nexus there. Owning or leasing property in a state also means that you have a sales tax nexus. When you have sales people soliciting consumers in a state, their activity constitutes a sales tax nexus.



Online Sales Nexuses


There are two types of online sales nexuses that could apply to your business. The first type is a click-through. This refers to direct contact between the buyer and seller. The second type is an affiliate nexus. This means that there is an affiliate between the buyer and seller.