Understand the economic nexus for sales tax

Learn about your sales tax obligations in QuickBooks Online.

You can use the economic nexus page in QuickBooks Online to stay on top of your sales tax obligations. Economic nexus refers to your sales tax obligations in another state apart from your original location. You have to pay and collect sales tax if you meet the economic threshold, which varies by state.

View the economic nexus page

Use the economic nexus page to check if your sales meet a state’s threshold.

1. Go to Taxes.
2. Select Sales tax.
3. Select Economic nexus.

Learn more about the economic nexus page

View the following information in the economic nexus page:

Note: The green check mark beside a state indicates that the state has met the threshold for the nexus. A red exclamation point means that the tax setup is incomplete.

• State
• Date range
• Sales
• Transaction count
• Threshold met
• Agency setup
• Date last updated

Business activities that create a tax obligation

You may have tax obligations in a state if you do one or more of the following business activities:

• Physical nexus or presence in a state. This includes owning or renting an office or warehouse with a mailing address.
• Online sales to customers inside and outside of the state.
• Employees and other independent contractors in the state.
• Providing services in the state.
• Soliciting orders at trade shows in the state for more than three days in one year.

If you have, you’ll need to register and collect sales tax and add tax agencies.

Business examples

Here are some basic business situations that will create an obligation to collect sales and use taxes in a given state.
Note: The requirements for tax obligations vary from state to state. It's always best to check a state's specific nexus laws.

Example 1: You operate a cupcake shop in New York.

Obligation: The location of the shop creates a tax obligation. You’re then responsible for registering a sales tax permit and collecting sales tax from your customers.

Example 2: You operate that same cupcake shop in New York, but you ship to a second one-man distribution office just over the border in Massachusetts.

Obligation: You’re now required to collect sales tax for sales inside Massachusetts.