What generally dictates tax obligations for a business?

Tax obligations for a business are primarily dictated by the concept of nexus between the business and the taxing jurisdiction. Nexus refers to the level of connection or presence that a business has in a particular state or locality that justifies taxation by that jurisdiction. This connection can be established through various factors, such as having a physical location, employees, property, or significant sales activities in the jurisdiction.

When a business has nexus, it is subject to the tax laws of that jurisdiction, which can include income taxes, sales taxes, and other types of taxation. Consequently, understanding where a business has established nexus is crucial for determining its tax responsibilities.

In contrast, while the amount of revenue generated can influence the tax rates or types of taxes owed (e.g., higher revenue may lead to higher income tax liabilities), it does not alone determine the obligation to pay taxes in a jurisdiction. The domicile of the business owner could affect personal tax obligations but does not directly impact the business's tax duties in relation to nexus. Similarly, the number of employees may play a role in certain tax calculations or employment taxes, but it is not the primary determining factor for overall business tax obligations.