The essential sales tax toolkit for growing businesses
by May 5, 2025
As businesses grow and expand their customer base in new states, the complexity of sales tax compliance grows as well. It can be particularly challenging for growing businesses without extensive resources or dedicated tax tools to manage all the different aspects of sales tax compliance, from nexus monitoring to filing and remittance. The right tools can simplify the sales tax process, ensure compliance and allow you to focus on growing your business.
We’ve put together a sales tax toolkit for growing companies with the most important tools to streamline sales tax compliance as their business expands.
1. Nexus monitoring tools
Sales tax nexus refers to the connection between your business and a state that requires you to collect and remit sales tax. Each state has different criteria, also known as economic nexus thresholds, that require you to register for a sales tax permit and begin collecting sales tax in that state. These thresholds are either revenue or transaction based, or both.
While manually keeping up with these thresholds is time consuming, there are tools available that can automate this process on your behalf. TaxJar’s Nexus Insights Dashboard makes it easy to see which states require you to collect sales tax based on your economic activity without having to rely on manual workflows. Our dashboard warns you when you may need to register in a new state, so you don’t have to worry about keeping up with different thresholds. This type of tool can save countless hours while ensuring you stay compliant.
Once you hit an economic nexus threshold, you’ll need to register for a sales tax permit before collecting sales tax in that state. TaxJar can manage that for you as well, so you don’t have to worry about each state’s unique registration form and requirements.
2. Automated sales tax calculation
In the US, there are over 13,000 different sales tax jurisdictions with their own unique tax rate. As a business scales, it often faces diverse tax rates and regulations that vary by state or even city, which can become overwhelming without the right tools. This is why automated sales tax calculation is crucial for growing businesses, as it streamlines the complex process of managing sales tax rates across the many different jurisdictions.
Automation also eliminates the need for manual data entry and reduces the risk of human error, ensuring that sales tax is calculated accurately in real-time at the point of sale. This not only helps a company maintain compliance by staying aligned with ever-changing tax laws but also frees up valuable time and resources, allowing teams to focus on growth strategies rather than getting bogged down in administrative tasks.
To help illustrate how a growing businesses can quickly find themselves managing tax obligations in multiple states, we did some research:
- Businesses processing 1,000 orders per month (or 12,000 per year) are estimated to meet the economic nexus threshold in 48% of the 28 states that take transaction volume into account when determining economic nexus. That’s about 14 states with sales tax obligations.
- When order volume reaches 10,000 orders per month (or 120,000 per year), a business is likely to be subject to economic nexus in all 28 states that use order volume as a determinant for economic nexus.
Now, for argument’s sake, let’s assume a $100 average order value. Businesses in the $1 million to $10 million dollar annual revenue range will now find themselves with sales tax liability in at least half the states with an economic nexus order threshold.
It’s easy to see how quickly sales tax obligations creep up on a business, and how much work it will take to manually keep track of rates in those states and other tax jurisdictions. That’s why many growing companies turn to an automated sales tax solution like TaxJar, which uses rooftop-level calculations to ensure that your customer’s precise address corresponds to the right rate in their jurisdiction, keeping you compliant as your sales tax obligations grow.
3. Filing and remittance automation
Eventually, a sales tax due date will roll around and you’ll need to file and remit to each state where you are registered to collect sales tax. Since sales tax is governed at the state level, each state sets their own due dates, filing processes, and filing forms. Manually filing and remitting in each state is time consuming, as your paperwork grows exponentially as you collect sales tax in more states.
That’s why automating filing and remittance is important for growing businesses looking to streamline their operations and ensure compliance. Automated filing ensures that tax returns are submitted accurately and on time, reducing the likelihood of penalties and interest from late payments. TaxJar’s AutoFile does just that, preparing filings according to each state’s specific requirements. Once you enroll in a state, you can be confident that your returns will be filed correctly and on time, without you having to think about them.
Using sales tax software to automate your compliance
Sales tax compliance doesn’t have to be a daunting task for growing businesses. By equipping yourself with the right tools, you can simplify the complexities of sales tax and focus on what truly matters: scaling your business.
That’s why a reliable sales tax automation software is one of the most important tools for any growing business. The right sales tax software includes all these tools, from nexus monitoring to automated filing and remittance. TaxJar is a great fit for growing companies looking to streamline their entire compliance process. Our 30-day free trial gives you the opportunity to see how TaxJar can support your compliance goals and allow your company to continue growing without sales tax management slowing you down.
Ready to automate sales tax? Sign up for your free trial of TaxJar today.
