Sales tax nexus is the legal link between your business and a state that requires you to collect and remit that state's sales tax. It is created either by physical presence — a home studio, inventory stored there, doing markets in the state — or by economic activity, where crossing a state's sales or transaction threshold creates an obligation even with no physical footprint.
For online sellers the economic-nexus rules are the surprise. Cross a state's threshold (often a dollar amount or transaction count) and you can owe collection there despite never setting foot in it, and each state sets its own numbers. Marketplaces frequently collect and remit on your behalf for marketplace sales, but direct sales through your own channels can remain your responsibility.
Nexus determines where you must register, collect, and file — a compliance map that grows as you sell into more states. The rules are state-specific and change, so treat this as an orientation and confirm your obligations with a tax professional.
Related terms
Tax Category
An IRS Schedule C expense or income category used to classify transactions for tax reporting. Helps organize your financial data for end-of-year tax preparation.
Transaction Method
The payment method used for a transaction, such as cash, credit card, PayPal, or Venmo. Can include fixed or percentage-based fees for accurate cost tracking.
Schedule C
An IRS tax form (Schedule C - Profit or Loss from Business) used by sole proprietors. Ardent Seller can categorize expenses and generate reports aligned with Schedule C line items.