What Is Nexus? A Beginner’s Guide to Sales Tax Obligations
- Lisa Jones
- Jun 2
- 2 min read
Updated: Jun 28
Understanding nexus is one of the most important—and often confusing—aspects of sales tax compliance. For businesses operating across state lines or selling online, knowing whether you have sales tax nexus in a state can mean the difference between smooth operations and unexpected tax audits.
This beginner’s guide will walk you through what nexus means, how it’s triggered, and how it affects your tax obligations—so you can stay compliant and confident as your business grows.
What Is Nexus?
Nexus is a legal term that means a connection or link. In the world of sales tax, having nexus in a state means that your business has enough of a presence there that you're required to collect and remit sales tax to that state’s tax authority.
If you have nexus in a state, you must:
Register for a sales tax permit
Collect the appropriate sales tax from customers in that state
File and remit sales tax returns
Types of Nexus
1. Physical Nexus
This is triggered by having a physical presence in a state. Common examples include:
A warehouse, office, or storefront
Employees, contractors, or agents working in the state
Storing inventory in a fulfillment center (like Amazon FBA)
2. Economic Nexus
Established by reaching a certain threshold of sales or transactions in a state—even if you have no physical presence there.
For example:
If you sell over $100,000 or conduct 200+ transactions in a year to customers in a state, you may have economic nexus there.(Note: Each state sets its own thresholds.)
3. Click-Through or Affiliate Nexus
Triggered when you generate sales through affiliates or referral links located in a state.
Why Nexus Matters
Nexus is not optional. If you have nexus and fail to collect sales tax, you could be liable for back taxes, interest, and penalties. With the rise of eCommerce and remote work, more businesses than ever are unknowingly creating nexus in multiple states.
The complexity increases when you're selling across several jurisdictions, each with different rules, thresholds, and filing frequencies.
How Manage My Sales Tax Can Help
Navigating nexus doesn’t have to be overwhelming.
At Manage My Sales Tax, we help businesses of all sizes understand where they have nexus and how to stay compliant. Our expert services take the guesswork out of multistate tax compliance.
We offer:
Nexus analysis & monitoring across all U.S. states
Sales tax registration in applicable states
Accurate sales tax calculation tools
Monthly and quarterly tax filing
Audit risk assessments and defense
With over 20 years of experience, we help you eliminate compliance headaches and focus on running your business with confidence.
Don't Wait Until You’re Audited
Nexus obligations can sneak up on growing businesses. The best time to act is before state tax authorities do.
👉 Visit our website at https://www.managemysalestax.com/ to book a consultation and ensure you're in full compliance today.
Schedule a free consultation with one of our sales tax experts — we're here to help.