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.
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.
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