Since the 2018 South Dakota v. Wayfair Supreme Court decision, states can require out-of-state sellers to collect sales tax based on economic activity alone — no physical presence required. This is called "economic nexus," and it's one of the most common blind spots for growing e-commerce businesses.
How It Catches Businesses Off Guard
Each state sets its own threshold — commonly a certain dollar amount of sales or number of transactions within the state per year. Cross that threshold, and you may owe sales tax registration and collection obligations in that state, even if you've never set foot there and have no employees or warehouses located in it.
Because thresholds are state-specific and change over time, a business selling well across multiple states can accumulate nexus obligations in several states without anyone flagging it — until an audit or a compliance review surfaces it.
Why This Matters for Your Bookkeeping
Nexus tracking isn't a one-time setup — it needs to be monitored continuously as sales grow and shift across states and channels (your own storefront, Amazon, other marketplaces). Bookkeeping that tracks revenue by state, not just in aggregate, is what makes this visible in the first place.
What to Do About It
- Track sales by state, not just total revenue
- Review your nexus footprint periodically as you grow, not just once
- Work with a sales tax filing service or tax advisor for actual registration and filing once nexus is triggered
This is general information, not tax advice for your specific situation — sales tax rules vary by state and change over time, so confirm your specific obligations with a qualified tax advisor.
How We Help
Our e-commerce accounting support includes tracking sales by state and channel, so this visibility exists in your books before it becomes a surprise.