Sales tax can be complicated, confusing, and frankly, a bit intimidating — but it's also something you absolutely can't afford to ignore.
The good news? The right sales tax service provider can handle the heavy lifting for you, ensuring your business stays compliant without unnecessary stress.
But how do you know which sales tax service provider is the best fit for your business?
In this article, we'll explore the different types of providers available and help you ask the right questions to confidently select a partner that keeps your business protected and compliant.
Your sales tax service provider options
The first part of finding the right service provider is understanding what options are available to you, and their strengths and weaknesses.
Option 1: Your CPA or accountants
It’s very common for a company to turn to their accountant or CPA for sales tax advice and assistance. This seems logical as they’re already helping with managing the books and handling corporate or income tax to ensure IRS compliance.
Some accountants will be able to help with some aspects of sales tax, but there’s a huge difference between general tax and sales tax, and it would be unreasonable to expect them to be experts on both.
If your sales tax needs are very simple and straightforward, your accountant might be enough for what you need. But in most cases you’re better off finding specialist support.
Option 2: Software
The good news is there are plenty of sales tax tools that promise to solve all your sales tax problems for you. The bad news is that, for most companies, they’re not actually fit for purpose.
There are exceptions, though.
If you only sell on one platform, have a small number of products, and you’re 100% clear on their taxability, you might be fine. You just need to make sure it’s set up and configured correctly [and continuously monitored to ensure it stays working right].
But for everyone else, software won’t be enough to ensure compliance.
Option 3: Sales tax advisors/analysts
Hiring a sales tax advisor is an excellent option if you’re only paying sales tax in one or two states. They will quickly join your accountant on the list of people you couldn’t live without.
They can help you with compliance management, risk assessment, tax planning, and audit support as and when you need it. They will also keep on top of tax law changes in those one or two states.
The problem with sales tax advisors arises when you’re selling in more than a handful of states. Their expertise will likely be limited, and you can’t expect one person to keep up with tax law from all 50 states. It can also cost $50-70k to hire one sales tax analyst, despite these limitations in knowledge.
Option 4: Fractional Sales Tax Department
If you’re selling across multiple states, what you need is a team of experts to take care of your sales tax for you. That’s exactly what a Fractional Sales Tax Department is — a group of specialists with knowledge across the whole spectrum of sales tax, including the different states tax laws.
It’s like having your own sales tax department, but without having to invest huge amounts of time and money into hiring one. You’re getting the expertise of a whole team, for the same money (or often less) that you would have to pay a single sales tax advisor.
At first glance, this might seem like too much if you're only in a few states, sell exclusively on marketplaces, or have simple products. But even “simple” businesses can run into local tax quirks — like Colorado home-rule cities, Louisiana parishes, or Washington’s B&O tax — that require extra filings and expertise. A fractional team can help you stay ahead of these curveballs without stretching your internal resources.
Questions to help you choose your sales tax service provider
To make it easier to decide which of these options is best for you, here’s a list of questions you can ask yourself. This list isn’t exhaustive, but should give you a good idea of what to expect if you move forward. For a more detailed list check out our free download here.
Are they able to keep up with sales tax updates across all the states you sell in?
If you know for sure which states you need to collect sales tax for, your service provider needs to be an expert on the tax law in these states. If you’re not sure, they need to be able to help you work it out.
What does their sales tax audit support cover?
You need to fully understand what they mean if they say they provide sales tax audit support. They might just help you prepare for an audit, or they might cover the whole audit process.
Outside of sales tax filings, are there any additional costs?
Sales tax goes way beyond just filings. You need to be confident that if they provide support beyond that, there aren’t any unexpected extra costs. Look for transparent pricing where they clearly outline what they do for you.
Just because something is the cheapest today, that doesn’t mean there won’t be unwanted strings attached later on that drives the price up.
Do they manage your mail, too?
There can be a lot of mail correspondence when dealing with sales tax, so you need to know if they take care of it for you. You should also check if you’re expected to forward the mail on to them, and whether they commit to how quickly they’ll deal with it.
Will they configure and manage your sales tax settings for you?
Unless your business is very straightforward, you’ll ideally want ongoing assistance with your sales tax settings. They need to be checking and updating your settings constantly, otherwise you risk under or overcollecting. The first one pisses off the jurisdictions, and the latter pisses off your customers!
Make sure to check if your service provider offers this, so your team doesn’t get stuck trying to ensure the settings are still working and accurate.
How comprehensive is their nexus analysis?
Some service providers (especially software) only focus on economic nexus, but there are multiple types of nexus to be considered. Make sure they’re transparent about the depth of their nexus analysis, otherwise you could end up wasting time and energy registering in a state with a false nexus reading.
Do they have someone that will discuss your options for addressing historical liabilities?
Unless your business is brand new, you will probably want a sales tax service provider that can also discuss and advise you on your historical liabilities. This includes knowing the different options across all the states you sell in.
Getting this step right could save you a lot of money and headaches. But if they don’t know what options are available in each state, it could cost you money, instead.
Need help picking the best service for your business?
Book a free call with TaxValet to discuss how we can help you manage your sales tax.
