Last reviewed October 7, 2026 · By the NYBACS advisory team
Short answer
A US business needs sales tax registration in a state when it sells taxable goods or services there and has nexus with that state, either through a physical presence such as an office, employees or stored inventory, or by crossing the state's economic nexus sales threshold. Registration must usually happen before the first taxable sale is made or within a set period after crossing the threshold. There is no federal sales tax, so every state is handled separately.
Key takeaways
- Sales tax is a state and local tax; 45 states and the District of Columbia impose a statewide sales tax, while Alaska, Delaware, Montana, New Hampshire and Oregon do not.
- Two things must both be true before you register: the product is taxable in that state and you have nexus there.
- Inventory in a third-party or marketplace warehouse is a physical presence that can create nexus in that state.
- Sales made through a marketplace facilitator such as Amazon are generally taxed by the marketplace, but your direct sales into the same state are not.
- Once registered, you must file returns on the schedule the state assigns, including zero returns for periods with no sales.
The two questions that decide whether you register
Before registering anywhere, answer two questions for each state:
- Is what you sell taxable there? Physical goods are taxable in almost every sales tax state, with exemptions such as groceries or clothing in some. Software as a service, digital downloads and professional services vary widely: SaaS is taxable in some states and exempt in others, and most states do not tax consulting.
- Do you have nexus there? Nexus is the connection that lets a state require you to collect its tax. It comes from physical presence or from economic activity above the state's threshold.
If the answer to either question is no, you generally do not need to register in that state. If both are yes, you do, even if your customers are individuals who do not ask for a receipt.
Physical presence that creates nexus
Physical nexus is the older and broader trigger. It typically arises from:
- An office, shop, coworking desk or warehouse in the state.
- Employees working in the state, including a single remote employee in many states.
- Inventory stored in the state, including goods in Amazon FBA, Shopify Fulfillment or third-party logistics warehouses.
- Sales agents or representatives soliciting orders in the state.
- Attending trade shows and making sales there, in some states.
For non-US ecommerce sellers, inventory is the trigger most often missed. A marketplace may move stock between fulfillment centers in several states without telling you, so check inventory location reports rather than assuming goods sit in one place.
Economic nexus and marketplace sales
Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can also require registration from sellers with no physical presence once their sales into the state exceed a threshold. Thresholds are commonly $100,000 of sales a year, with larger states such as California, New York and Texas set at $500,000.
Marketplace facilitator laws, now in place in every sales tax state, make platforms like Amazon, Etsy and Walmart Marketplace collect and remit tax on sales made through them. That removes the collection burden for those sales, but it does not cover orders from your own website, wholesale orders, or sales through a platform that is not a facilitator. Some states also count marketplace sales toward your threshold, so a seller who uses only Amazon can still be required to register.
What registration commits you to
Registering is quick, but the obligations that follow run every period:
| Obligation | What it means in practice |
|---|---|
| Collect tax at the correct rate | Usually the destination rate where the buyer receives the goods, including local taxes |
| File returns on schedule | Monthly, quarterly or annual, as assigned by the state, often based on volume |
| File zero returns | A return is still due when you had no taxable sales; missing it triggers penalties |
| Keep exemption and resale certificates | Needed to support tax-free sales to resellers and exempt buyers |
| Reconcile platform and bank data | Marketplace and website sales must tie to what you report |
Timing also matters. New York, for example, asks businesses to apply for a Certificate of Authority at least 20 days before they begin selling, and Texas gives remote sellers until the first day of the fourth month after crossing its threshold. Registering late does not erase tax that should have been collected; it usually means paying it from your own margin.
When registering early is a mistake
Registering in states where you have no nexus is not harmless. Each registration creates a filing obligation, so a seller who registers in 20 states "to be safe" now owes 20 sets of returns, including zero returns, and penalties for any that are missed. A better approach is to register where you have nexus today, monitor sales and inventory in the remaining states, and register promptly when a trigger is reached.
Common mistakes to avoid
- Assuming a non-US company selling into the US has no sales tax obligations because it has no US office.
- Ignoring inventory held in Amazon FBA or third-party warehouses in other states.
- Relying on marketplace collection while also selling directly through a Shopify or WooCommerce store.
- Registering in many states without nexus and then missing the zero returns those registrations require.
- Treating SaaS or digital products as non-taxable everywhere without checking each state's rules.
- Charging customers sales tax before holding a valid permit in that state.
Documents and records to prepare
- Formation documents and EIN confirmation
- Sales reports by state for the last 12 months, split by direct and marketplace channels
- Inventory location reports from marketplaces and logistics providers
- Product list with descriptions to assess taxability
- Details of any US employees, offices or contractors by state
NYBACS 360° support
How NYBACS helps
- Builds a state-by-state nexus map from your sales, inventory and staff locations.
- Identifies which products are likely taxable in each state where nexus exists, flagging items for tax adviser review.
- Coordinates sales tax permit applications in the states where registration is required.
- Sets up bookkeeping that separates marketplace-collected tax from tax you must remit yourself.
- Maintains a filing calendar so returns, including zero returns, are not missed.
Frequently Asked Questions
Do I need to register in my state of formation if I sell nothing there?
Not for that reason alone. Forming a company in Delaware or Wyoming does not create sales tax nexus there; Delaware has no sales tax at all. Registration follows where you sell and operate.
Does a sales tax permit replace foreign qualification?
No. A sales tax permit is issued by the state's tax department; foreign qualification is filed with the Secretary of State. A business may need one, both or neither, depending on its activity.
What if I already made sales in a state where I should have registered?
Many states offer voluntary disclosure agreements that can limit look-back periods and waive some penalties if you come forward before being contacted. A review of past sales should come first so the scope of the disclosure is accurate.
Do I charge sales tax to business customers?
Often yes, unless the buyer gives you a valid resale or exemption certificate for that state. Keep the certificate on file, because without it the sale is treated as taxable in an audit.
Is sales tax the same as VAT?
No. US sales tax is generally charged only on the final retail sale and varies by state and locality. There is no input-tax credit system like VAT, and business purchases are usually taxable unless an exemption applies.
