Most businesses do not intentionally create sales tax nexus.
Nexus is usually triggered quietly through growth, operational decisions, or third party relationships. By the time it is discovered, exposure has already accumulated.
Understanding how nexus is accidentally created is one of the most important steps in managing sales tax risk.
Use this sales tax nexus guide to stay compliant
Why Nexus Is Commonly Missed
Sales tax nexus is missed because:
- It is created by activity, not registration
- It develops gradually
- It is governed by state specific rules
- It is rarely flagged by accounting systems
Businesses often believe they are compliant until analysis proves otherwise.
Accident One: Growing Revenue Across States
The most common accidental trigger is simple growth.
As sales expand into new states:
- Revenue crosses economic nexus thresholds
- Transaction counts exceed limits
- Obligations arise without notice
Growth itself becomes the compliance risk.
Accident Two: Subscription and Recurring Revenue
Subscription models are especially risky because:
- Revenue accumulates quietly
- Transactions repeat monthly
- Thresholds are crossed incrementally
Many businesses cross economic nexus thresholds without a single large deal.
Accident Three: Hiring Remote Employees
Remote employees often create physical nexus.
Common examples include:
- Sales representatives
- Customer support staff
- Contractors performing core business functions
Even a single employee in a state can establish nexus.
Accident Four: Using Third Party Warehouses
Inventory stored in third party warehouses can create physical nexus.
This often happens through:
- Fulfillment services
- Dropshipping arrangements
- Marketplace logistics programs
Businesses may not even know where inventory is physically stored.
Accident Five: Marketplace Expansion
Marketplaces simplify selling but complicate compliance.
Common issues include:
- Marketplace sales still count toward economic nexus thresholds
- Sellers may still need to register
- Use tax obligations may remain
Marketplace collection does not eliminate all nexus consequences.
Accident Six: Attending Trade Shows or Events
Temporary physical presence can trigger nexus.
Examples include:
- Trade shows
- Conferences
- Product demonstrations
- On site sales activity
Short term presence can still create long term obligations.
Accident Seven: Acquiring or Merging With Another Business
Mergers and acquisitions frequently introduce hidden nexus.
This occurs when:
- Acquired entities have existing obligations
- Historical activity is inherited
- Registration gaps are uncovered post acquisition
Exposure often comes with the deal.
Accident Eight: Assuming Software Handles Everything
Many businesses assume:
- Their accounting software tracks nexus
- Their tax tool alerts them automatically
- Their CPA will catch issues early
In reality, most systems focus on filing, not exposure detection.
Accident Nine: Ignoring Use Tax
Use tax exposure creates nexus related risk through:
- Untaxed purchases
- Out of state vendors
- Software and services
Purchase side exposure is often larger than sales side exposure.
Accident Ten: Delaying Analysis
The biggest accident is delay.
When nexus is not evaluated:
- Exposure compounds
- Cleanup becomes more complex
- Filing decisions become reactive
Early analysis dramatically reduces risk and cost.
Why Nexus Feels Accidental
Nexus feels accidental because:
- It is not announced
- It is not billed
- It is not flagged automatically
- It develops over time
By the time it becomes visible, it already exists.
Understand your sales tax exposure before it becomes a risk
How Businesses Should Think About Nexus
Nexus should be treated as:
- An operational risk
- A growth side effect
- A data driven determination
- A planning problem before a filing problem
Proactive visibility prevents reactive cleanup.
Know what to do next before filing sales tax
Final Thought
Sales tax nexus is rarely created by a single decision.
It is created by a series of normal business activities that quietly cross legal thresholds.
Understanding how nexus is accidentally created allows businesses to regain control before exposure grows.
