Tax Compliance · April 12, 2025
Running an online store today means navigating more than just customer orders and shipping. E-commerce sellers face one of the most confusing challenges: sales tax compliance. With laws varying across states and countries, compliance is no longer optional. In fact, failure to manage sales tax properly can lead to audits, fines, and even forced business shutdowns.
We recently worked with a Shopify store owner selling home goods across the U.S. They didn’t realize that shipping to customers in multiple states triggered sales tax nexus in those states. After falling behind on filings, they faced thousands in back taxes and penalties. Once they partnered with our tax compliance team, we registered them correctly, automated filings, and brought them back into compliance within 60 days.
This blog explains the basics of sales tax for e-commerce sellers and how to stay compliant without losing sleep.
What is Sales Tax Nexus?
Sales tax nexus is the connection between your business and a state that obligates you to collect and remit sales tax. Nexus can be created in two primary ways:
- Physical Nexus – Having a physical presence in a state (warehouse, office, employees).
- Economic Nexus – Reaching a certain sales threshold in a state (often $100,000 in sales or 200 transactions).
For e-commerce sellers, economic nexus is the most common trigger.
Why Compliance is Challenging for Online Stores
- Different state rules: Each state has its own tax laws, rates, and filing deadlines.
- Marketplace rules: Platforms like Amazon and Etsy may handle tax collection, but sellers are still responsible for compliance.
- Digital products: Some states tax software or digital downloads differently than physical goods.
- Rapid scaling: Sellers often don’t realize when they cross nexus thresholds.
How to Stay Compliant
- Automate sales tax collection through platforms like Avalara or TaxJar.
- Track thresholds carefully for each state.
- File on time to avoid penalties.
- Work with an outsourced tax team to handle registrations, filings, and compliance monitoring.
The Value of Professional Sales Tax Management
A client selling supplements online saw their sales expand into 18 states within a year. Instead of hiring an in-house accountant, they outsourced compliance to us. By automating filings and monitoring nexus thresholds, they avoided penalties and kept cash flow healthy.
Key Takeaway
E-commerce sales tax compliance is complex, but with the right systems and partners, it doesn’t have to slow growth.
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