Want to understand economic nexus for Florida?
This guide is going to cover everything that your business needs to know.
What is economic nexus?
Economic nexus refers to the concept that companies or businesses with a certain amount of presence in the state must pay taxes. The size of their economic nexus will determine how much they need to pay.
Who qualifies as having an economic nexus in Florida?
To have an economic nexus, you don’t necessarily have to be located in Florida. Your business can have an economic nexus in Florida if you have more than $500,000 worth of property or payroll in the state. There are other factors that can affect your company’s economic presence as well. In general, businesses that do any kind of activity that is taxable would be considered to have some sort of economic nexus by default.
What are the consequences of having an economic nexus in Florida?
If your business has created any kind of economic presence in the state, then you are responsible for paying taxes to the state. The size of that presence will determine how much you need to pay. There are also other areas where businesses with an economic nexus would have responsibilities besides just paying taxes. One area that must be given attention is that businesses with an economic nexus have a responsibility to collect the state’s sales tax on behalf of the government.
Economic Nexus in Florida: A Closer Look
The concept of economic nexus was established when brick and mortar businesses were much more common. Digital companies weren’t considered to be a part of this sphere because they didn’t have any physical presence in the state. This has changed recently since digital companies are getting more and more traction.
Why should businesses be concerned about having an economic nexus in Florida?
If your business has a significant economic presence in the state, then you are responsible for sending tax payments to the state. There are some businesses that have more of an economic presence in Florida than others. One example of a business with more of an economic nexus is digital companies versus brick and mortar ones. Additionally, if your business has any kind of financial activity in Florida, it is probably wise to look into your economic nexus. Financial activities are usually associated with the creation of an economic presence.
How do you know if you have an economic nexus in Florida?
If you just started a company, it is easy to find out if you have any kind of economic presence. One way to figure this out is by using the Florida Department of Revenue’s online economic nexus tool. They provide a simple way to figure out if you have any kind of presence in Florida and how much it is worth.
What can businesses do to avoid having an economic nexus in Florida?
If your business doesn’t want to pay taxes, then it makes sense that you will want to avoid having an economic presence. In order to do this, you would need to make sure that your company doesn’t have any kind of measurable activity in Florida. This means that you shouldn’t have a physical location or employees located in the state. You can also avoid having an economic nexus by not transacting with residents of Florida.
Conclusion
If your business has a presence in Florida, then you will need to pay taxes. The size of that economic nexus will determine how much you need to pay and what other responsibilities there are besides just paying taxes.
If your company doesn’t want to have an economic presence, then it is important that they don’t have any kind of activity that would create one. This means not having a physical location or employees in the state and making sure that you aren’t transacting with residents of Florida.
