Nine Questions to Ask About Your Business Location

Quick! Where do you do business? I bet you just answered with the state that your office is in, or if you’re a home-based business, the state where your home is. And you’re probably right with that answer, but there could very well be other states that think you’re doing business in them as well.

A recent survey found that 96% of all businesses (small, medium and large) had underestimated their nexus footprint. That meant they didn’t know how many states they actually were doing business in. Nexus means connection. If you have a connection, or nexus, with a state, you’re going to pay some extra tax.

When it comes to determining the nexus (locations) of your business, there are several questions you must answer to make sure that you know where you may have taxation and legal obligations. Start by answering these questions:

1. Where do you live? If the business has multiple owners, where do they live?
2. Where is the work being done?
3. Where is your business inventory stored?
4. Where does your business inventory ship from?
5. Where are your website servers located?
6. Where do your customers or clients live?
7. Where are your employees or independent contractors located?
8. Where are sales people (including affiliates) located?
9. Where do you give presentations or hold live events?

Every state that you listed above might be able to claim you owe some tax.

Knowing about nexus and your potential risk is the first step. Now you’ve got to figure out your action plan. Get more information and talk to a qualified tax advisor.

We’ve got a full section in Smart Business Stupid Business discussing nexus strategies and other critical topics for your business.