State nexus analysis is the process of determining whether a business has sufficient physical or economic presence in a state to warrant tax obligations. Understanding your nexus is critical for multi-state businesses because it dictates where you must collect and remit sales taxes, file income taxes, and report on other taxable activities. Mismanaging nexus can result in back taxes, penalties, and audits. CPAs conduct state nexus analysis to ensure accurate tax filings and avoid unnecessary liabilities.