each state is different but they generally look to nexus to determine if you have to register in that state and file various returns.
What is a Tax Nexus?
Nexus in general means a connection. The term nexus is used in tax law to describe a situation in which a business has a "nexus" or tax presence in a particular state or states.
The Sales Tax Institute notes that the origin of tax nexus is two clauses of the U.S. Constitution, the due process clause, which requires a connection, and the commerce clause, which "requires substantial presence.
Nexus also describes the amount and degree of business activity that must be present before a state can tax an entity's income or for taxes on sales within the state. If a taxpayer has nexus in a particular state, the taxpayer must pay and collect/pay sales taxes in that state and pay income tax on income generated in that state.
Everything about nexus has to do with "presence," but that presence is defined differently for different types of taxes and within the sales tax area.
What Determines Nexus?
Nexus is determined differently for income taxes and for sales tax purposes. Each state has its own rules for determining nexus.
For Income Tax Purposes
Nexus is typically created for income tax purposes if an entity derives income from sources within the state, owns or leases property in the state, has employees in the state in activities that exceed "mere solicitation," or has capital assets or property in the state. The requirements vary from state to state.
For Sales Tax Purposes
Nexus is determined for sales tax purposes more loosely. A few cases in which a business might have a sales tax nexus in a state:
If the business has a physical location in the state
If there are resident employees working in the state
If the business has property (including intangible property) in the state
if there are employees who regularly solicit business in the state (i.e., salespeople).
The issues relating to whether a business has a nexus in a state and is thus subject to the state's taxing authority are complex and each state views the concept of nexus differently.
so your best course of action is to contact the CPA society in your state
having a bank a/c out of state does not create nexus in that state.
here are a few of the questions they may ask
from where do you conduct your business
in what states does the company store inventory, if any
in what states does the company have business assets other than inventory including rent business property - real or personal.
in what states does the company have a sales office
in what states dos the company have employees
