Nowadays, buying and selling through the marketplace platforms is becoming a very common economic activity in any country. It’s the same with the United States. More and more people are building businesses by opening an online store in a marketplace platform like eBay, Amazon, and others. The thing that these sellers need to pay attention to is that sometimes, they are selling their items across different states. For this, the local taxes for each state might apply for their business, and this is where the economic nexus takes place.
What is economic nexus? For marketplace sellers, economic nexus is something they need to keep in mind. It is the sales tax rules applicable in certain states in the United States, whereby sellers need to collect sales taxes for the items they sell in those states. However, the sales taxes only apply after they reach a certain sales threshold. For the threshold, each state will apply different rules for the marketplace sellers, so sellers need to comply with the rules for each state depending on where their business is operating.
About the Economic Nexus Threshold for Marketplace Sellers
Some marketplace sellers will need to reach a certain threshold in sales before they can collect sales taxes for the items they sell in certain states. For instance, one state might require you to collect sales taxes once you reach the $100,000 sales threshold for your sales. Other states might require you to do that after you sell the 200th item from your inventory. Also, there are states that require you to collect sales tax with no threshold.
Be sure to check the local tax laws of the state where your business is operating, as you need to know the threshold for the economic nexus laws applied to your business. Marketplace sellers will also need to adjust their selling price by following the sales tax rules, and if possible, they need to tell their customers about the changes in their pricing.
Here are some important things to know about economic nexus:
- You still need to comply with the economic nexus laws even if you don’t have any business presence in the state. So, you still need to pay for the economic nexus taxes if you are doing business with the customers in that state, even though you don’t have any office or business establishment there.
- Some states require a certain threshold, while some others do not. You need to reach a certain sales threshold before you can collect sales tax and pay economic nexus taxes to the state. This rule will depend on the state, as some states might not require any threshold for you to pay the economic nexus tax.
- It’s a simple tax calculation. Economic nexus taxes are easy tax calculations based on the transactions you get from your business in certain states. The state can apply the tax rules based on the number of transactions or based on the value of the transactions. Whichever way you reach first, you need to pay the sales nexus tax for the state according to their local tax rules.
- Compliance is mandatory. Compliance with the economic nexus laws is mandatory for marketplace sellers in the United States, such as those who are selling products to other states. Non-compliance to this tax law might put your business under the risk of audit, investigation, penalty, or interest.
How to File for a Divorce
The divorce rate in the country is steadily rising. This is a very common occurrence in today’s society, and most…