Why manual sales tax management doesn’t scale
by July 17, 2025
As your business grows, and your sales increase, your sales tax obligations increase as well. While manual sales tax management may have worked in the beginning, it quickly becomes unsustainable as operations expand. Here’s why manual sales tax management doesn’t scale and what you can do to keep your business sales tax compliant.
1. Complexity of regulations
Sales tax regulations vary significantly from one state to another. With over 13,000 taxing jurisdictions (including cities and other local jurisdictions) in the US, keeping up with the specific rules, rates, and filing requirements has become increasingly complicated.
Manual management relies on spreadsheets and manually researching tax information, making it nearly impossible for businesses to accurately track the ever-changing laws that affect their sales tax obligations. Changes are announced often throughout the year. For example, Utah just announced changes to their sales tax requirements for remote sellers. Without a robust system in place, businesses risk penalties and interest for non-compliance if they aren’t keeping up with these changes in real-time.
2. Time-consuming processes
Managing sales tax manually involves significant time spent on calculations, tracking sales tax obligations, and preparing and filing returns. As your business grows, the volume of transactions increases—and with that, the time commitment required to manage sales tax compliance.
Small businesses may be able to devote a few hours a month to this task, but larger businesses may need a full-time employee dedicated solely to sales tax calculations and filings. This inefficiency takes resources away from more critical areas, like strategic planning and customer engagement.
3. Increased risk of errors
Human error is an inherent risk of manual processing, and mistakes can be costly. A simple data entry error or miscalculation can lead to under-collecting or over-collecting sales tax, resulting in financial penalties.
Additionally, compliance requires meticulous record-keeping; missing invoices or misplaced documents can lead to audit risks. As your transaction volume increases, so does the potential for errors, making manual systems increasingly unreliable.
The best way to scale: Automate your sales tax management
To solve these challenges, businesses should consider transitioning to an automated sales tax solution. Automation simplifies compliance by accurately calculating sales tax rates in real-time, filing returns on your behalf, and providing essential insights into your sales tax data.
With a tool like TaxJar, businesses can scale their operations without the burden of manual processes. Want to see how automation can save your business time and money? Start a free, 30-day TaxJar trial today. No credit card required.
If you’d like to learn more about how TaxJar can help support your compliance goals, feel free to schedule a time to chat with our sales team here.
