An online seller has the same sales tax obligation as a shop, plus a second one that shops do not have: working out which other states can require them to collect too.
That second question used to be simple. It is not any more, and the answers are different in every state.
Nexus, in two kinds
Nexus is the connection between a business and a state that lets the state require it to collect sales tax. It comes in two forms.
Physical nexus is the old rule: premises, staff, inventory, equipment. If you store goods in a state, you have physical nexus there — which matters more than sellers expect, because fulfilment programmes move inventory between warehouses without asking, and inventory in a state is presence in it.
Economic nexus is the newer one, and it does not require any physical presence at all. Sell enough into a state and that state can require you to register and collect, whatever your address.
South Carolina's own threshold
For a seller outside South Carolina selling in, the threshold is $100,000 of gross revenue into the state in the previous or current calendar year. There is no transaction-count alternative.
If you are based in South Carolina, none of that applies to your home state — you have physical nexus here already and register regardless of volume. It matters when the position is reversed and you are the out-of-state seller somewhere else.
Every state is different, and that is the problem
There is no national threshold. Each state sets its own, and they differ in ways that are easy to get wrong.
- The revenue figure differs from state to state
- Some states count transactions as well as revenue, so a low-value, high-volume seller can trip a threshold on units alone
- Some measure the previous calendar year, some a rolling twelve months, some either
- Some count gross sales, others only taxable sales — which changes the answer for a seller of exempt goods
- Whether sales made through a marketplace count toward your threshold varies
That last point is the one that catches people. A seller with most of their volume on a marketplace may believe they are far below a threshold, when the state in question counts marketplace sales toward it. The marketplace collects the tax on those sales; whether they count for your registration is a separate question with a state-specific answer.
What marketplaces do and do not do for you
Marketplace facilitator laws require large platforms to collect and remit sales tax on sales made through them. If you sell on a major marketplace, the platform is generally handling the tax on those orders.
This is genuine relief, and it is routinely over-read. It does not cover sales through your own website. It does not cover wholesale, trade shows, or anything sold off-platform. It does not necessarily remove your own registration obligation in a state. And it does not mean the platform is handling it correctly — the reporting it gives you is what you file from, and it needs checking rather than trusting.
The common shape of the problem: a seller does most of their volume on a marketplace, opens their own storefront, and assumes the tax situation is unchanged. It is not. Those sales are theirs to collect on.
Registering somewhere is a commitment
Once you register in a state you file there, every period, on that state's schedule and its forms, whether or not you sell anything there again. Registering in fifteen states means fifteen recurring filings — most of them for small amounts, and all of them capable of generating penalties if missed.
Deregistering is possible but is its own process, and some states are slow about it.
So registering early "to be safe" is not the cautious choice it appears to be. The cautious choice is knowing exactly where you have crossed a threshold and registering there, promptly, and not registering where you have not.
What to do if you are already behind
A seller who has crossed thresholds in several states without noticing has an exposure that grows with time, and the instinct to register quietly and start filing forward is usually the wrong one — it puts the state on notice of a business that plainly existed before the registration date.
Most states operate voluntary disclosure programmes, which typically limit how far back the liability reaches and often abate penalties in exchange for coming forward. They are considerably better than being found, and they are only available before you are found.
Establish the actual exposure first — which states, from when, how much. That assessment is the work. What to do about it follows from it.
A workable approach
- Track sales by destination state from the start, not just total revenue
- Know where your inventory physically sits, including anything held by a fulfilment programme
- Check thresholds against your own numbers at least twice a year
- Keep marketplace and direct sales separate in the books — the tax treatment differs
- Reconcile what the platform reports as collected against what you recorded
- Register when a threshold is actually crossed, not before and not late
- Treat each registration as a permanent filing obligation, and diarise it
Sales tax software helps with the calculation and does not decide where you have nexus, which is the part that actually matters. That determination is a judgement about facts, and it is the one worth getting a person to make.
About the author
Latoya Clark founded Elite Pro-Tax & Financial Services to give individuals and small business owners in the Upstate straightforward, year-round tax and bookkeeping support — not just a filing service that disappears in April.
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