How to determine where you have sales-tax nexus
Nexus is the tie that obligates you to collect a state’s sales tax. Here is how to figure out where you have it - and how to keep watching as you grow.
The two kinds of nexus
- Physical nexus - an office, employees, inventory, or property in a state
- Economic nexus - enough sales into a state to cross its threshold
- Either can obligate you to register, collect, and remit
- Economic nexus is the one that sneaks up on growing sellers
A framework to determine nexus
Work through these
- 1
Map physical presence
List every state where you have people, offices, or inventory - automatic nexus.
- 2
Pull sales by state
Total your trailing-12-month sales and transaction counts per state.
- 3
Compare to thresholds
Check each state’s dollar and/or transaction threshold and its rule.
- 4
Flag over and approaching
Identify states you have crossed and states nearing the line.
- 5
Monitor continuously
Re-evaluate as sales grow, not once a year.
How Fintra does this for you
| Step | What Fintra does |
|---|---|
| Pull sales by state | Aggregates trailing-365-day sales and transactions per state |
| Compare to thresholds | Applies each state’s threshold and combinator |
| Flag over/approaching | Status per state with an 80% early-warning band |
| Account for registrations | Reads your nexus profile for registered states |
| Monitor continuously | Re-evaluates as new sales post to the ledger |
Nexus-determination checklist
Confirm these
- Every state with physical presence is on your list
- Trailing-12-month sales and transactions are totaled per state
- Each state’s threshold and rule has been checked
- States over the line are queued for registration
- States approaching the line are being watched
- Monitoring is continuous, not annual
Frequently asked questions
What triggers sales tax nexus?
Two things: physical presence (an office, employees, inventory, or property in a state) creates physical nexus, and enough sales into a state creates economic nexus once you cross its threshold. Either obligates you to register, collect, and remit sales tax in that state.
How do I know if I have economic nexus in a state?
Total your trailing-12-month sales and transaction counts for that state and compare them to the state’s threshold and rule. Fintra does this automatically - aggregating your activity per state and returning a status of over, approaching, below, registered, or no-tax.
How often should I check nexus?
Continuously, not once a year. Economic-nexus obligations are retroactive to when you cross, so a growing seller can accrue uncollected liability between annual checks. Fintra re-evaluates your status as new sales post, so nexus is monitored in real time.
Does physical presence still create nexus?
Yes. Physical nexus - an office, employees, inventory, or property in a state - creates a sales-tax obligation regardless of your sales volume. Start your nexus map with every state where you have a physical footprint, then layer economic nexus on top.
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Find your nexus, then watch it
Fintra monitors economic nexus continuously. Start free, no card required.
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