Nexus Who? Nexus What? 🤔

Why Your Business Might Owe Taxes in States You’ve Never Set Foot In**

If you’ve ever thought, “We don’t even operate there—why would we owe anything?” congratulations, you’ve officially met nexus.

Nexus is one of those tax and compliance concepts that sounds complicated, feels intimidating, and is often ignored—until a notice shows up in the mail. Let’s break it down in plain English.

What Is Nexus (Really)?

Nexus simply means a connection between your business and a state that gives that state the right to tax you.

If a state can reasonably say, “Your business is doing something here,” then you may have nexus.

And no—having an office isn’t the only way to create it anymore.

Common Ways Businesses Create Nexus (Without Realizing It)

• You may have nexus in a state if you have:

• Employees working remotely from that state

• Independent contractors or subcontractors located there

• Sales shipped into the state above certain thresholds

• Inventory stored in a warehouse or fulfillment center

• A physical location, job site, or temporary project

• Repeated in-state services (construction, consulting, installations)

In today’s remote and digital economy, nexus can be created without you ever stepping foot in the state.

Economic Nexus: The Game Changer

Many states now enforce economic nexus, which focuses on sales activity, not physical presence.

Typical thresholds look like:

• $100,000 in sales or

• 200 transactions into the state

Once crossed, the state may require you to:

• Register with the state

• Collect and remit sales tax

• File income, franchise, or gross receipts tax returns

• Comply with payroll and employment tax rules

Why Nexus Matters (Even If You’re “Small”)

Ignoring nexus doesn’t make it go away. It usually results in:

• Back taxes

• Penalties and interest

• Forced registrations

• Compliance clean-up under pressure

  
  

States are sharing data more than ever. Marketplace platforms, payroll providers, and payment processors make it easier for states to identify non-compliant businesses.

Translation: Waiting is expensive.

The Most Common Nexus Mistake We See

Businesses often assume: “We’ll deal with it later when we’re bigger.”

The problem?

Nexus usually starts earlier than you think, especially once you hire remotely or cross state lines with services or sales.

How to Stay Ahead of Nexus Issues

You don’t need to panic—but you do need a plan.

Smart steps include:

• Reviewing where employees and contractors are located

• Monitoring sales by state

• Evaluating state registration requirements annually

• Addressing issues before receiving a notice

• Working with advisors who understand multi-state compliance

Bottom Line: Nexus isn’t just a tax buzzword—it’s a business reality.

If your business is growing, hiring remotely, or selling across state lines, understanding nexus is no longer optional. A proactive review today can save you time, money, and stress later.

If you’re unsure where your business may have nexus, that’s usually the first sign it’s time for a conversation.