State Taxes

[HannahGR]

I'm sorry to post again. 

But if I'm selling products online to all 50 states, would I then have to file state tax returns for those states? 

Example: I live in CA and that is where my business would be out of.

Would I have to only file a tax return in CA? Or would I have to keep track of tax rates in all of the other states and then file multiple returns at the end of the year?

Thank you! 

[FranklinF · Accepted solution]

Nexus takes place when a business has a sufficient connection to or presence in a state or jurisdiction, as defined by said state or jurisdiction, such as a physical presence or economic activity, which could create a SALES Tax collection obligation and even a STATE Tax filing obligation.

I definitely advise you not to attempt doing the above solo, but rather consult/hire a company that provides this service, that is, they have software that performs or tracks nexus automatically for you. Oftentimes these same companies also provide payroll services.
🙂

But you can do this yourself, by using Excel spreadsheets (or something of the like) while reading up on every single state requirement about NEXUS. (I still don't advise the latter because it just takes getting one state wrong to be in a situation that may cause you a lot of aggravation due to the back and forth with said taxing jurisdiction.


 
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[rjs]

@HannahGR 

You will file and pay income tax only in California.

You may have to pay sales tax in any state that you deliver products to, depending on either the number of sales or the dollar amount of sales in the state. Each state has different requirements, and different sales tax rates. In many states there are also local sales taxes, so the sales tax might depend on the specific location that the product was delivered to. The multiplicity of rules and rates is why you need software or a service to handle the sales tax for you.

You will definitely have to pay sales tax on any sales delivered to California, because your business is located there. And California is one of the states that has lots of local sales taxes, so the sales tax rate depends on the specific delivery location for each sale. The sales tax rate can even be different in different parts of the same town, because there are special taxing districts for specific purposes.