Published February 5, 2025
Should You Change Your Sales Tax Provider?
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Sales tax in one word – complex. With different tax rates, processes, and regulations in each state, plus regularly changing rules, it can be challenging for businesses to stay on top of sales tax and collect and remit it properly. That’s where sales tax providers come in. These partners use technology and expertise to streamline sales tax collection and remittance, ensure compliance, and stay current on changes. However, not all providers are created equally. Some are better for certain types of businesses, and as your business grows and evolves, you may find your provider is no longer the best option.
Switching sales tax providers can open the door to easier processes and compliance. But how do you know it’s time to switch, and how do you actually change to a new provider? In this article, we’ll cover everything you need to know about switching sales tax providers and best practices to create a smooth transition.
Choosing a sales tax provider is a crucial business decision. You likely felt confident about your current provider at one point, so how do you know it’s time to move on and switch sales tax providers? Here are some common complaints:
Sales tax costs can quickly add up and cut into a company’s revenue. If you don’t feel like you are getting enough value for the cost of a provider or notice that there are more competitively priced options, you may be able to save a significant amount of money in the long run by switching providers. Your usage or transaction volume also may have changed, meaning your pricing model is no longer effective for your needs.
If the sales tax provider isn’t providing reliable work or is difficult to contact with questions or concerns, it may be time to switch. Common service quality concerns are a lack of responsiveness or a loss of confidence in the quality of the tax preparation. A reliable and knowledgeable tax partner can walk you through options and answer questions to become a true tax partner.
Sales tax is complicated, and most providers rely on technology to calculate, collect, and remit sales tax. A common issue with some sales tax providers is that the technology is unreliable, glitchy, or holds them back from making transactions. This is common as a business grows and its needs evolve, but the technology can no longer support it.
Compliance is at the heart of sales tax, and failure to comply can lead to costly penalties and business limitations. If you have questions about your sales tax compliance or are unsure your current provider is following all rules or regulations, it might not be worth the risk of sticking with them.
Knowing it’s time to switch is only half the battle — you also need to find a new provider who can take over the sales tax responsibilities. As you consider switching, take time to research your options to find a new partner who will be able to support your company for the long term.
There are many sales tax provider options, but here are key features to consider.
In a technology-driven world, there’s no reason for companies to manually calculate sales tax. Look for a new provider with reliable and leading technology that can grow with your business and adapt to sales tax changes. Is the technology user-friendly? Does it meet your sales tax needs? Can it integrate into your existing sales systems? Does it keep your data secure?
Consider what your business needs from a sales tax provider, including the size and volume of your sales and the complexity of your transactions. Those numbers will dictate much of the pricing model of a new provider. Look for a provider with a pricing model that matches your usage or that has room to grow with your business.
A major benefit of using a sales tax provider is having an expert on your side. As you look at new options, consider their customer support to assist with technology questions and stay current on sales tax best practices and regulations. Some providers are difficult to communicate with, while others have open lines of communication.
Most sales tax providers offer trial or testing periods. If possible, take advantage of this opportunity to test the product and be sure it meets your needs. Transitioning to a new provider can be daunting, so it’s important to feel confident about your new partner before making the move.
When you’re ready to make the move to a new sales tax provider, it’s helpful to plan ahead and give yourself time to adjust to a new platform.
Use this checklist to ensure you have everything in place:
One of the most important aspects of the transition process is the documentation. Plan ahead to collect and transfer all the necessary information. A best practice is to collect as much documentation as possible, even if you might not need it all with the new provider. Migrating this historical data to your own records and your new provider ensures a smooth transition and that you maintain compliance during the switch.
What should you collect? Here’s some of the most critical documentation:
The cost of switching sales tax providers depends on your contract terms with your current provider. Some providers may include penalties for canceling a contract early or ending service without enough notification. Depending on the providers, there may also be fees for getting a new quote or testing a new service, so try to look for quality providers that don’t charge for potential customers gathering information.
Planning ahead and securing documentation helps create a smooth transition, but companies may still face some common challenges, such as the following:
However, companies can adopt best practices to help mitigate or avoid these issues.
Before moving to a new provider, test that the data will be compatible and that your other systems will be able to integrate. Running a test transfer can prepare you for any challenges and ensure the data can be moved. Collect data in different formats to have a backup in case it doesn’t migrate easily.
Switching sales tax providers doesn’t need to be the sole responsibility of one person or department. Involve employees in the process and ensure they have the training to jump in and work with the new system immediately. Proactively training your employees and letting them test the new system before the official transition helps create a smooth process without transactions falling through the cracks. You should also create an ongoing training schedule for employees beyond the initial implementation to keep them current on the system and ensure they know how to use all key features. Early and regular employee training creates a team of strong users for a streamlined transition process and new provider experience.
Choosing to switch sales tax providers is a decision that shouldn’t be taken lightly. If you’re considering the move, take your time to research and test other providers and give your current provider as much notice as needed.
When making the transition, it’s important to collect and retain as much information and data as possible and be clear with both providers about your transition needs and schedule.
Looking for a reliable and trustworthy sales tax provider? Trust the expert team at The Sales Tax People. Click here to learn more. Or Schedule a call with an expert today to find some peace of mind.
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