Conducting business all across the country has never been easier than with the advent of digital marketplaces. Many businesses can now sell their products from coast to coast without having to set up complicated shipping and logistics, and businesses can now easily operate online stores, allowing them to sell to anyone in the country. Managing tax liability, however, is still a very complicated process, even for small businesses.
If your business has a significant amount of stake in another state, it may be considered a multi-state business. The threshold for when your business is considered to be established in another state, or to have nexus in that state, varies in each. For instance, the threshold for New York is $500,000 and 100 transactions, whereas Oregon has no economic nexus at all. If your business is found to have a nexus in another state, it will need to comply with that state’s tax laws, including income taxes if applicable. All states with a sales tax also have physical nexus laws, so if your business expands out of the state, it will establish nexus in your new location unless you’re expanding to one of the few states without sales tax.
For those who do business online, there was a significant change in July of 2021, when Florida passed a law specifying that any business which made over $100,000 in taxable remote sales in the past tax year must now collect and remit the state’s sales tax. It followed a decision from 2018 by the U.S. Supreme Court, which ruled that state and local governments could collect their sales taxes from online sales. The threshold for developing nexus in most states is $100,000, so for small businesses, this likely will not be an issue. For expanding corporations, this threshold may be easier to hit than they’d like.
If all of this seems confusing, that’s because it is – with a multi-state or online business, figuring out which taxes your business needs to pay can quickly become a complicated process. That’s why it’s always recommended to work directly with a tax accountant or CPA to figure out your business’s tax liabilities and ensure your business is compliant in remitting any necessary sales taxes to the correct states. For the rest, Trembly Law Firm is here to help – if your business is struggling with litigation, trademarks, business law, or needs general counsel to start moving forward, contact us today at (305) 985-4571 to get started.
Trembly Law Firm
9700 South Dixie Hwy Penthouse 1100
Miami, Florida 33156