Sales tax nexus. Where you owe, when you owe, what triggers it.
Before 2018, sales tax obligations required physical presence in a state. The Supreme Court's Wayfair decision (2018) changed everything: economic activity alone (sales volume into a state) now creates nexus. Most US states adopted economic nexus laws within 2 years. This guide explains the rules, thresholds by state, and the multi-state filing reality for modern ecommerce, SaaS, and dropshipping businesses.
Start here.
Office, employees, inventory (FBA), property, salespeople, contractors in a state. Always creates nexus.
Revenue or transaction volume into a state. Threshold typically $100k revenue OR 200 transactions, but varies.
Amazon, Etsy, eBay, Walmart Marketplace, and others collect and remit sales tax on behalf of sellers. Sellers may still need to register.
Origin states tax based on seller's location. Destination states (most) tax based on customer's location.
Whether software/SaaS is taxable varies dramatically by state. About 20 states tax SaaS; the rest do not.
The full explanation.
Physical nexus triggers
Office, warehouse, retail location, employees working in a state, inventory stored there (including third-party warehouses like Amazon FBA), independent contractors performing work, attending trade shows for extended periods, owning property. Any of these creates physical nexus.
Economic nexus (post-Wayfair)
South Dakota v. Wayfair (2018) upheld South Dakota's law requiring sales tax collection from sellers with $100k revenue or 200 transactions in the state. By 2020, nearly every state adopted similar laws. Common threshold: $100k revenue. Many states dropped the 200-transaction prong as redundant.
Threshold examples
California: $500k. Texas: $500k. New York: $500k AND 100 transactions. Florida: $100k. Washington: $100k. Most states: $100k OR 200 transactions.
Marketplace facilitator laws
Amazon, eBay, Etsy, Walmart Marketplace, Shopify (in some cases), Mercari, and other marketplaces are required by state law to collect and remit sales tax on behalf of third-party sellers. Sellers may still need to register but the marketplace handles collection/remittance for marketplace sales. Direct-from-website sales bypass marketplace facilitator coverage.
Registration process
Once nexus is established in a state, register with the state Department of Revenue for a sales tax permit (free in most states; $20-$100 in a few). Begin collecting sales tax on taxable sales. File returns monthly, quarterly, or annually depending on volume. Some states allow voluntary disclosure for prior-period sales tax obligations with reduced penalties.
Software platforms
TaxJar, Avalara, Anrok, Vertex automate nexus monitoring, registration, calculation, and filing across multiple states. Pricing typically $20-$200/month plus per-return fees. Our books integration includes basic sales tax tracking; complex multi-state operations benefit from dedicated platforms.
Use tax (companion)
When sales tax was not collected (e.g., online out-of-state purchase to a customer in a state where seller had no nexus), customer technically owes "use tax" to their own state. Rarely enforced for individuals; aggressively enforced for businesses.
Non-taxable services
Most professional services (legal, accounting, consulting, healthcare) are not subject to sales tax in most states. Some states tax some services (Hawaii general excise tax covers most services; New Mexico gross receipts tax similar).
Worked example: Shopify store with $300k revenue, 5 states
| Home state (Texas) | Physical nexus. Register, collect, remit Texas sales tax. |
| California: $120k revenue, 800 transactions | Economic nexus crossed (CA threshold $500k). NOT crossed. No registration needed yet. |
| Florida: $110k revenue, 600 transactions | Economic nexus crossed ($100k threshold). Register, collect, remit Florida. |
| New York: $30k revenue, 50 transactions | Below thresholds. No registration needed. |
| Washington: $90k revenue, 700 transactions | Threshold $100k. Not crossed. Watch as you scale. |
| Result | Register in Texas + Florida initially. Monitor California, Washington for crossing. |
Common questions.
What is the difference between sales tax and use tax?
Does selling on Amazon create nexus?
Are SaaS sales taxable?
What if I exceed nexus thresholds without registering?
Do I need to file in every state I have nexus in?
Do marketplace sales count toward economic nexus?
What about international sales?
Can I file my own returns?
What happens if my LLC is in Wyoming but I have nexus in California?
Tax setup, done right.
Form your entity, elect the right tax classification, and get matched to a specialty CPA in one place. Files.Business is not your tax advisor; we connect you to one.
This guide is educational. Specific situations require professional advice from a licensed CPA or tax attorney.
How we deliver, end-to-end.
Four-step path from request to confirmation. State and IRS turnaround varies; our steps run in parallel where possible to compress the timeline.
Intake + scope
You tell us what you need through a short intake form (or a call for complex matters). We confirm scope, surface any gating issues (deadlines, missing documents, entity status), and quote any state fees that pass through at cost.
Prepare + verify
Our specialists draft the filing, verify entity details against state databases, run internal QA, and route any items needing your sign-off. You see drafts before anything gets submitted.
File with the authority
We submit directly to the state Secretary of State, FinCEN, IRS, USPTO, or whichever authority your filing requires. We pay state fees at cost and track the submission identifier in your account.
Confirmation + vault
Stamped certificate, IRS notice, or filing receipt arrives in your SOC 2 encrypted document vault the moment we receive it. Next filing deadline auto-added to your compliance calendar where applicable.
Built on the same infrastructure used by 220,000+ businesses.
SOC 2 Type II audited
Independent annual security audit covering access control, change management, incident response, and data handling. Current report on request.
All 51 US jurisdictions
Every state plus DC plus Puerto Rico - direct filings, not third-party reseller. We hold registered-agent qualifications in every state we operate.
Deadline guarantee
If we miss a filing deadline on a service you pay us to manage, we pay the state penalty. Specific to each plan and the filings it includes.
4.9 from 8,200+ verified reviews
Independently verified by Trustpilot + Google + our own NPS infrastructure. Customer success team within reach by email, chat, or phone.
60-day money-back promise
Change your mind in the first 60 days and we refund our service fee in full. State filing fees pass through at cost and are non-refundable once paid to the state.
E&O insured
Errors and omissions coverage protects you from service errors. Carrier and certificate available on request for enterprise clients.
Recommended add-ons
Most customers add these to keep their business compliant year-round.
Multi-state Coverage
Best valueAdd states for $9/month each. Track deadlines across every jurisdiction.
Auto-File Annual Reports
RecommendedDon't just track - let us file every report automatically.
BOI Auto-Update
When beneficial owners change, we re-file with FinCEN within the 30-day window.
Premium compliance, no service-fee markup.
Trust you can verify
SOC 2 Type II audited platform. 220,000+ businesses served. 60-day money-back on service fees. State fees passed through at cost with no hidden markup. Explicit AUP on restricted industries.
A compliance partner, not a transaction
Most providers go quiet after checkout. We auto-track every annual report, registered agent renewal, and license deadline across your entities. The Business OS dashboard keeps your compliance score visible year-round.
Premium experience competitors cannot match
Premium positioning, transparent pricing, no service-fee markup on state or federal filings. Premium positioning, transparent pricing, no service-fee markup on state filings.