Why This Matters

There is a big difference between having customers in many states and having sales tax obligations in many states.

Registering everywhere unnecessarily can create a significant administrative burden because registration often comes with continuing filing requirements, even during periods when little or no tax is due.

On the other hand, failing to register where you actually have nexus can lead to unpaid tax, interest, penalties, and costly cleanup work.

Common Mistakes

• Registering in all states just to be safe

• Assuming one state's tax rules apply everywhere

• Ignoring sales that occur through your own website

• Forgetting to monitor sales as the business grows

• Assuming software determines your legal filing obligations automatically

• Continuing to collect tax in a state without filing the required returns

Harvest's Recommendation

Take a targeted approach.

Identify the states where your business has the most activity and determine whether your physical or economic presence has created a filing responsibility.

Then develop a process for monitoring sales into other states going forward.

Good to Know

Not every state has a general statewide sales tax, and states can differ considerably in what products and services they tax.

This is one reason sales tax should be reviewed based on the specific business rather than through a one-size-fits-all rule.

When It's Time to Get Help

Consider getting help if:

• You regularly sell nationwide

• Sales in several states are increasing quickly

• You are launching a large online store

• You have never reviewed nexus

• Your e-commerce software is showing sales tax warnings

• You have received correspondence from another state