What is sales tax nexus in plain terms?

It's a connection to a state strong enough that the state can require you to collect and remit its sales tax. That connection can be physical (an office, employees, or stored inventory) or economic (enough sales into the state). Without nexus you have no obligation there; with it, you generally must register, collect, and file.

Does selling through FBA create nexus in other states?

It can. When Amazon stores your FBA inventory in a fulfillment center in a given state, many states treat that as physical presence and therefore nexus. Because Amazon distributes inventory widely, FBA sellers often have nexus in more states than they expect — though marketplace facilitator laws mean Amazon usually remits the tax on those sales.

Is there one dollar amount that triggers economic nexus everywhere?

No. Economic-nexus thresholds are set by each state individually — usually framed as a sales-dollar amount, a transaction count, or either — and they get revised over time. There is no single nationwide number, so you have to check the current threshold for each state you sell into rather than rely on one figure.

If Amazon collects the tax, do I still need to worry about nexus?

Often, yes. Marketplace facilitator laws make Amazon remit tax on sales it facilitates, but you may still owe registration or filing in states where you have nexus, and some states want a return reporting those sales. Tax on your direct channels, like your own Shopify store, remains entirely your responsibility wherever you have nexus.

How should collected sales tax appear in my books?

As a liability, not revenue. Sales tax you collect is money held for the state — it increases a sales tax payable account when collected and decreases it when remitted. Booking it as income overstates revenue and hides what you owe. Marketplace-facilitated tax should be netted out of your settlements so it doesn't inflate either figure.

Glossary

What is Sales tax nexus?

A connection to a state that creates sales-tax obligations there.

Sales tax nexus is the connection between your business and a U.S. state that's strong enough to obligate you to collect and remit that state's sales tax. No nexus, no obligation; cross the threshold, and you're expected to register, collect tax from buyers in that state, and file returns. For ecommerce sellers the tricky part is that nexus is determined state by state — each one writes its own rules, and they change.

There are two kinds. Physical nexus comes from a tangible presence: an office, employees, or inventory stored in a state. Economic nexus comes from your sales volume into a state, regardless of any physical footprint — the standard established after the 2018 South Dakota v. Wayfair Supreme Court decision. Most online sellers trip economic nexus first, and FBA sellers often have physical nexus they don't even realize, because Amazon stores their inventory in fulfillment centers across many states.

Physical nexus vs. economic nexus

Physical nexus is the older, more intuitive standard: if you have property or people in a state, you have nexus there. For ecommerce that includes inventory you store in a state — which is exactly why Fulfillment by Amazon complicates things. When Amazon moves your FBA units into a fulfillment center in another state, many states take the position that you now have inventory there, and therefore physical nexus.

Economic nexus is purely about how much you sell into a state. After Wayfair, states can require out-of-state sellers to collect tax once their sales into that state cross a defined threshold — commonly framed as a dollar amount of sales, a transaction count, or sometimes either one. Critically, those thresholds are set independently by each state and are periodically revised, so there is no single nationwide number. You have to check the current rule for every state you sell into rather than assume one figure applies everywhere.

•Physical nexus: an office, employees, contractors, or stored inventory in a state
•FBA inventory: Amazon placing your units in a state can create physical nexus there
•Economic nexus: sales into a state above that state's own threshold
•Thresholds vary by state and change — verify each state's current rule yourself

How marketplace facilitator laws changed the picture

Before you panic-register in 45 states, understand marketplace facilitator tax. Most states now require the marketplace itself — Amazon, eBay, Etsy, Walmart — to collect and remit sales tax on the sales it facilitates, on the seller's behalf. So for the orders Amazon processes, Amazon is generally handling the collection and remittance for you, and you typically don't separately remit tax on those marketplace sales.

That doesn't make nexus irrelevant. You may still have a registration or filing obligation in states where you have nexus, even if the marketplace remits the tax, and some states want a return that reports those facilitated sales. More importantly, marketplace facilitator coverage only applies to sales through that marketplace — tax on sales through your own Shopify store or other direct channels is still your responsibility wherever you have nexus. Sellers who run multichannel almost always have a mixed obligation.

How nexus shows up in your accounting

Sales tax you collect is never your revenue — it's money you're holding on behalf of a state. In your books it belongs in a sales tax liability account (a payable), increased when you collect and reduced when you remit. Booking collected tax as income is a common and expensive mistake that overstates revenue and understates what you owe.

Marketplace-facilitated tax adds a wrinkle: because Amazon collects and remits it, that tax flows through your settlement reports as amounts collected and withheld that you never touch. Your bookkeeping needs to net those out cleanly so they don't inflate your sales or your tax liability. This is exactly the kind of settlement detail BeanHawk is built to untangle, keeping facilitated tax separate from the tax you actually owe and remit yourself.

A practical approach to staying compliant

The workable sequence for most sellers is: figure out where you have nexus, register where you're required to, let marketplaces remit what they're responsible for, and remit the rest yourself. Nexus reviews aren't one-and-done — as your sales grow and FBA spreads your inventory, your nexus footprint expands, so revisit it periodically.

Because the rules are genuinely state-specific and shifting, this is an area where professional guidance pays off. A sales tax specialist or automated tax service can monitor your thresholds state by state, and a clean set of books makes that monitoring far cheaper. Treat the numbers below as a checklist of what to confirm, not as fixed law.

•Map physical nexus, including every state where FBA stores your inventory
•Track sales by state against each state's current economic-nexus threshold
•Register in states where you've established nexus
•Let marketplaces remit facilitated tax; remit direct-channel tax yourself
•Re-check your nexus footprint as sales and FBA placement change

Frequently asked questions

What is sales tax nexus in plain terms?: It's a connection to a state strong enough that the state can require you to collect and remit its sales tax. That connection can be physical (an office, employees, or stored inventory) or economic (enough sales into the state). Without nexus you have no obligation there; with it, you generally must register, collect, and file.
Does selling through FBA create nexus in other states?: It can. When Amazon stores your FBA inventory in a fulfillment center in a given state, many states treat that as physical presence and therefore nexus. Because Amazon distributes inventory widely, FBA sellers often have nexus in more states than they expect — though marketplace facilitator laws mean Amazon usually remits the tax on those sales.
Is there one dollar amount that triggers economic nexus everywhere?: No. Economic-nexus thresholds are set by each state individually — usually framed as a sales-dollar amount, a transaction count, or either — and they get revised over time. There is no single nationwide number, so you have to check the current threshold for each state you sell into rather than rely on one figure.
If Amazon collects the tax, do I still need to worry about nexus?: Often, yes. Marketplace facilitator laws make Amazon remit tax on sales it facilitates, but you may still owe registration or filing in states where you have nexus, and some states want a return reporting those sales. Tax on your direct channels, like your own Shopify store, remains entirely your responsibility wherever you have nexus.
How should collected sales tax appear in my books?: As a liability, not revenue. Sales tax you collect is money held for the state — it increases a sales tax payable account when collected and decreases it when remitted. Booking it as income overstates revenue and hides what you owe. Marketplace-facilitated tax should be netted out of your settlements so it doesn't inflate either figure.

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