Sales tax software vs. hiring a tax professional: Which is best for your business?

by TaxJar January 10, 2025

Managing sales tax compliance is a critical aspect of running a successful business. As your company grows, you’ll face an important decision: should you invest in sales tax software or hire a tax professional?

Both options have their merits and the right choice depends on your business’s unique needs, growth stage, and complexity of operations. Whether you’re just starting out or managing a growing enterprise, making the right decision can save time, reduce risk, and improve efficiency. Let’s explore the pros and cons of each to help you make an informed decision.

Three major benefits of using sales tax software

For growing businesses, managing sales tax compliance manually can become increasingly complex and time-consuming. As your business expands, you must keep up with changing tax rates, filing deadlines, and jurisdictional requirements. Sales tax software offers a modern solution to these challenges, providing tools and features that can significantly streamline your tax management processes. While the initial transition to software requires some investment, many businesses find that the long-term benefits far outweigh the setup costs. Here are some of the most notable benefits of using sales tax software:

Automated accuracy

Sales tax software as a service has revolutionized how businesses handle tax compliance. Many solutions automatically calculate rates across multiple jurisdictions, reducing the risk of human error and ensuring consistent accuracy. Sales tax automation is particularly valuable for businesses operating in multiple states or dealing with frequent tax rate changes. Additionally, sales tax automation can help businesses stay aware of where they have sales tax obligations, referred to as nexus monitoring. Automation takes guesswork out of the equation, saving valuable time and resources.

Real-time compliance

One of the most significant advantages of sales tax software is its ability to update in real-time. As tax laws and rates change, the software automatically incorporates these updates, ensuring your business stays compliant without manual intervention. This feature is especially crucial given the complex and ever-changing nature of sales tax regulations across different jurisdictions. Keep your business quick on its feet by ensuring that you’re always working with the most current and accurate data.

Cost-effective scalability

For growing businesses, sales tax software offers predictable pricing and scalable solutions. Unlike hiring additional staff or consultants, software costs typically scale more gradually with your business growth. This makes sales tax software as a service an attractive option for businesses looking to manage their compliance budget effectively. You can confidently budget for tax management without worrying about fluctuating costs.

Pros and cons of manual sales tax management

When considering tax professionals vs. software solutions, it’s important to understand the implications of manual tax management, whether handled in-house or by an external professional. By doing so, you’ll be better equipped to choose the solution that best aligns with your business’s growth.

Advantages of professional expertise

Professional sales tax preparers bring valuable benefits to your business:

Deep understanding of custom and complex tax scenarios
Personalized attention to your specific business needs
Strategic tax planning advice
Expert handling of unusual transactions or special tax situations
Direct representation during audits

Limitations and risks

Manual tax management, however, also comes with notable drawbacks:

Higher susceptibility to human error, risking costly penalties
Time-intensive processes that can delay other business operations
Potential bottlenecks during peak tax periods
Risk of knowledge gaps when key personnel change
Difficulty scaling with business growth

The professional tax preparation price vs. tax software cost difference can be significant, especially as your business scales. While initial professional services might seem comparable to software costs, the scalability factor often tips the financial equation in favor of automation tools.

When is the right time to invest in sales tax automation?

Sales tax software can be a game-changer, but how do you know when it’s time? Here are some common questions and considerations to help you determine whether your business is ready to take the next step:

Is the cost worth it?

When evaluating the investment in sales tax software, consider these factors:

Transaction volume and complexity
Number of jurisdictions where you collect tax
Current time spent on manual tax processes
Cost of errors or non-compliance
Growth projections for your business

For most growing businesses, the return on investment becomes clearly positive once they operate in multiple jurisdictions or handle more than a few hundred monthly transactions.

What types of businesses are best suited for sales tax automation?

Sales tax software is particularly beneficial for:

E-commerce businesses selling across multiple states
Companies with high transaction volumes
Businesses experiencing rapid growth
Organizations with limited tax expertise in-house
Companies prioritizing scalability and efficiency
Service-based and subscription-based businesses

The key is to evaluate your business’s specific needs against the capabilities and costs of both software solutions and professional services.

Should I hire an in-house tax and finance professional?

This decision often isn’t an either/or choice. Many businesses find success with a hybrid approach:

Using sales tax software for day-to-day calculations and filing
Maintaining a tax professional relationship for strategic guidance
Employing in-house staff to manage the software and oversee compliance
Consulting specialists for complex scenarios or audits

The tax professional vs. software decision becomes less binary when you consider how these resources can complement each other. Implementing a hybrid strategy allows you to balance cost-effectiveness with expert guidance as your business grows.

How TaxJar can guide you through sales tax compliance

Today’s sales tax compliance requires a balanced approach that leverages both technology and expertise. TaxJar’s solution offers the best of both worlds:

Automated calculations and filing capabilities
Expert support when you need it
Integration with major e-commerce platforms
Real-time rate updates and compliance monitoring
Scalable solutions that grow with your business

By combining powerful automation tools with access to tax expertise, businesses can create a sales tax compliance strategy that’s both efficient and accurate.

The decision between sales tax software and hiring a tax professional ultimately depends on your business’s specific needs, growth trajectory, and compliance complexity. Professional expertise brings valuable insights and personalized attention. However, the scalability and efficiency of sales tax software often make it an increasingly attractive choice for growing businesses.

Consider starting with a hybrid approach that leverages both software automation and professional expertise. You can always make changes as your business needs evolve. This flexible strategy allows you to maximize the benefits of technology while maintaining access to specialized knowledge when needed.Ready to explore how automated sales tax solutions can benefit your business? Contact our sales team to learn more about how TaxJar can streamline your sales tax compliance process while providing the expert support you need to grow confidently.