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Understanding who must pay tax and how to remit the tax is important

One of the first things to consider when setting up a new business or taking over an existing business is ensuring you are set up for all the proper taxes for your jurisdiction. Tax reporting varies depending on the type of business, where the business is set up to do business, what types of taxes are collected and on what type of products and services. Understanding who must pay tax and how to remit the tax is important because if done incorrectly you could be responsible for the outstanding taxes.

Thanks to the internet information about taxes and getting information from cities, states or provinces is much easier as each tax authority has information online available for download. Contact information and applications are also available at each city and state or province so you can determine who you need to contact to get your company set up and start reporting. When in doubt your accounting professional can help you get started.

Once you know how to collect and remit taxes you can set up your invoicing system to properly invoice your customers. Staying on top of tax rate changes is important when invoicing your clients and updating your invoicing system is generally designed for these changes. Most invoicing systems allow for multiple tax rates and when a tax rate is selected at the time of invoicing the system will calculate the taxes owed.

As a tax collector you must ensure you have proper procedures in place to remit the proper amount of collected tax and any have the ability to calculate any other taxes not collected but remittable. Having a special file set up just for tax remittances will help you stay organized and give you confidence in your system should the tax department need information about your remittances.

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