With the advent of online businesses and internet, the customer and the company has become global. A firm may have a physical presence in one state but sell in many others. Earlier, sales tax was all about physical presence, and companies paid for it in the state they existed in. Today, while trades understand the obligation to collect sales tax in their home state, it is easy to skip the duty to collect it in other states too.
Let’s pick the example of trade shows to comprehend the scenario better. Let’s say a business executive puts up a stall for your firm at a trade show in another state. In such a case, the business could be obligated to pay taxes in that particular state. To grasp whether tax has to be paid or not, you need to have the answer to 3 vital questions.
• Does the business sell anything at the trade shows?
• Does attending the trade show lead to sales in the future?
• What is the amount of time spent at trade shows in other states?