Comprehensive Nexus Analysis

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Where Do You Have Sales Tax Nexus?

Understanding where your company has sales tax nexus is the first step in the sales tax compliance journey. The experts at Source Advisors conduct a deep-dive analysis to help you understand where, when, and how you create physical or economic nexus, as well as review possible risks and strategies to improve your sales tax compliance process.

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Comprehensive Nexus Study Services

Completing business across state lines can often trigger tax obligations. Understanding and complying with these requirements are critical for compliance. Unfortunately, it isn’t always clear when your company may have a responsibility.

Cross border transactions take many forms, from making sales to customers, hiring employees, or renting property. Whether any of these transactions create a tax obligation hinges on the concept of nexus.

Nexus occurs when a company has sufficient connection with a state to allow the taxing authority to impose a tax. To help you remain compliant and avoid unknown tax liabilities.

Source Advisors experts will conduct a nexus analysis or study to review your business activities and identify when and where nexus was created.

What Is a Nexus Study?​

A nexus study analyzes every aspect of your business activities to determine if and why nexus is created. These studies can shed new light on your business’s tax requirements and help you discover ways to avoid costly tax penalties. During a study, the team also examines all applicable tax laws and regulations to determine your tax obligations.

When Should a Business Conduct a Nexus Study?

A nexus study is valuable for new and established businesses alike. Laws change, and business activities evolve and develop. So even if you’ve completed a nexus study in the past, an updated analysis can reveal whether you’re still compliant.

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Some of the Common Activities
that Trigger Nexus Include:

Creating a physical presence in the state, such as establishing an office or renting a warehouse

Selling products or services from an out-of-state location to customers in-state

Hiring remote employees

With These Activities in Mind, a Nexus Study is Essential for Businesses that are:

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Frequently Asked Questions

What is nexus?
Nexus is the connection between a state and a business entity. If a business is determined to have nexus in a particular state, that means the company has a sufficient presence in the state to create tax obligations. This means a business has obligations to register, collect, and remit sales tax to a state for sales tax purposes.
How is nexus created?

Nexus occurs under multiple circumstances. The most common way is through a physical presence in a state such as having employees, offices, or storing inventory. However, after the 2018 South Dakota v. Wayfair ruling, businesses can create nexus by simply delivering products or providing remote services into a state (i.e., economic nexus). Other forms of nexus exist, such as click-through, the marketplace, and affiliate nexus.

I am a foreign or out-of-state business with remote workers, agents, or contractors. Do I have sales tax nexus?

Having remote employees is enough physical presence to create nexus. The rules surrounding contractors and agents vary state-to-state. However, some states, such as Florida, would consider having a contractor working full-time hours in a client-facing role as enough presence to create nexus.[1]

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