Where should I collect taxes?
You're required to register to collect sales tax in states where you have nexus, or a physical presence that's significant enough for you to be required to comply with that state's sales tax laws.
You'll always have nexus in your home state where you are located, and the most common causes for nexus in other states are:
- A warehouse
- An affiliate
- Stored inventory
- Drop shipping from a 3rd party provider
- Temporarily doing physical business in a state for a trade show or craft fair
This blog post contains more details about nexus and sales tax collection that you may find helpful.
Once you know where you have nexus, the next step is registering for a sales tax license, because the states expect you to register to before collecting any sales tax. We talk about the timing of registering on our blog. (We also tell you how to get registered to collect sales taxes here.)
NOTE: If you're an Amazon FBA seller, TaxJar will automatically tell you the states where you have nexus because of FBA inventory.