Sales tax is one of the most confusing parts of running a US ecommerce brand. Rules vary state by state, thresholds change, and marketplace-facilitator laws add another layer.
This checklist is a starting framework, not tax advice. Every seller should confirm their obligations with a qualified US sales tax advisor or CPA who knows their state footprint.
What is sales tax nexus?
Nexus is a legal connection between your business and a US state that requires you to register, collect, and remit sales tax there.
Types of nexus to know
- Physical nexus — offices, employees, contractors, or inventory (including FBA warehouses) in a state.
- Economic nexus — exceeding a state's revenue or transaction threshold, triggered by the Supreme Court's Wayfair decision.
- Click-through and affiliate nexus — relationships with in-state partners in certain states.
- Marketplace-facilitator laws — the marketplace collects and remits on your behalf for that channel; owned channels are still your responsibility.
The nexus checklist
- List every state where you have employees, contractors, or offices.
- List every state where you store inventory, including third-party warehouses and FBA fulfillment centers.
- Pull trailing 12-month revenue and transaction counts by state.
- Compare each state's totals against its economic nexus threshold.
- Identify which of your channels are marketplace-facilitated and which are owned (Shopify, Woo, wholesale).
- For each state where nexus exists, decide when to register based on triggering date.
- Determine product taxability by category and state.
- Set up rate tables or a compliant sales tax tool.
- Calendar your filing frequencies per state.
- Reconcile marketplace-collected sales tax against your own bookkeeping monthly.
A monthly workflow to stay compliant
1. Update your revenue map
Pull sales by ship-to state from every channel and your own site.
2. Track approaching thresholds
Flag any state where trailing 12-month revenue or transactions are within 20% of the state threshold.
3. Confirm marketplace-facilitated coverage
For each marketplace, confirm which states they collect and remit for. Keep documentation.
4. File in registered states
File on the schedule the state assigned — monthly, quarterly, or annually.
5. Reconcile
Compare filed amounts with what you actually collected. Fix under- or over-collection promptly.
Example calculation (USD)
Illustrative scenario — a small US Shopify + Amazon brand
A brand ships from a warehouse in Texas, has FBA inventory in California, Nevada, and Georgia, and sells nationally through Shopify and Amazon.
- Physical nexus: Texas (warehouse), California, Nevada, Georgia (FBA inventory).
- Economic nexus: any additional state where trailing 12-month Shopify revenue or transactions exceed that state's threshold.
- Marketplace-facilitated: Amazon collects and remits for the brand in most states; the brand still tracks it.
- Owned channel obligation: Shopify sales in nexus states are the brand's responsibility to collect and remit.
A CPA would then design a registration and filing calendar around that footprint.
Common mistakes to avoid
- Assuming marketplace-facilitator collection covers your Shopify or Woo sales.
- Ignoring FBA inventory locations when assessing physical nexus.
- Treating economic nexus as a one-time check instead of an ongoing monitor.
- Forgetting that some states measure transactions, not just revenue.
- Registering everywhere immediately without a strategy — creates filing overhead you may not need.
Best practices
- Work with a US sales tax specialist for initial mapping.
- Use a compliant tool or spreadsheet to monitor thresholds monthly.
- Keep a documented state-by-state playbook and update quarterly.
- Store marketplace facilitator reports for at least the statutory record-keeping period.
- Reassess nexus footprint after any major channel or 3PL change.
Frequently asked questions
Does having FBA inventory in a state create nexus?
In many states, physical inventory — including inventory held by a fulfillment provider such as FBA — can trigger physical nexus. Confirm the current position with a qualified US sales tax advisor for your specific facts.
What is economic nexus?
Economic nexus is triggered when your sales into a state exceed its revenue or transaction threshold in a defined lookback period, following the Wayfair decision. Thresholds vary by state.
Does Shopify collect sales tax for me?
Shopify can calculate and apply sales tax at checkout based on your setup, but it does not act as a marketplace facilitator. You are typically responsible for registering, collecting, and remitting on Shopify sales in your nexus states.
How often should I review nexus?
At least monthly for growing brands, or immediately after any material change in channel mix, inventory locations, or hiring.