San Diego Web Development Blog

Repost from our partner, Avalara

What’s new with your business? If it’s any of the below, then congratulations are undoubtedly in order. And, while we certainly don’t want to put a damper on the wrap party for your latest launch, we do want to pipe in with a quick tax-wise nugget: New business growth often leads to new sales and use tax obligations.

When you’re busy growing and promoting your business, it’s easy for such obligations (known as nexus) to sneak up on you. But never fear. We’re here to help you better understand the potential sales tax implications of four of the most common — and exciting — ways your business may be expanding.

If you have recently or will soon engage in similar activities, it’s a sure sign that it’s time to rethink what nexus entails for your business.

  • New products
  • New sales channels

If you’re an online retailer setting up your first physical location, you’ll need to account for sales tax refunds when someone returns an online order in the store. These and a slew of other scenarios are best addressed in the planning stages to help minimize tax missteps from the outset.

  • New go-to-market efforts
  • New relationships

Remember, if it’s new to your business, it may be creating new nexus for you. Activities like expanding your product line, advertising online, contracting with a drop shipper, and more, can all have a positive impact on your bottom line. But if you don’t understand how they affect your sales tax obligations, the negative impact can be staggering.

An audit, for example, costs an average of $100,000, according to Wakefield Research. Just think if multiple states audit you in the same year, each fining you for not correctly identifying and/or managing your nexus responsibilities. It’s simply too much to risk. That’s why it’s better to address nexus as part of every growth initiative. If you plan ahead, you can oftentimes minimize trouble with nexus and audits. If not, you may soon realize that your business growth came at too high a price.

How does your growing business handle nexus?

Get your free copy of the Evolving for Growth whitepaper for more tips on evolving — and automating — your tax compliance as your business grows into new areas.

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