# Sequence for configuring taxes

When setting up taxes in Maitre'D, following a logical sequence will make the work easier. It will also avoid having to go back-and-forth between various configurations to achieve the desired result.

The general steps are:

1. Research and understand local tax laws.
2. Determine how taxes need to be grouped for reporting, and create the required tax categories in Maitre'D.
3. Create taxes in Maitre'D.
4. Assign taxes to Divisions in Maitre'D.

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### 1. Research and understand local tax laws

This is the first and most important step. Understanding the local tax regulation will ensure that taxes will be configured properly in Maitre'D. The Maitre'D tax calculation engine is powerful and flexible. To be able to select the appropriate options for your region, you first need to understand the regulation thoroughly. Here are some general guidelines:

#### Determine which taxes and rates are applicable

Some jurisdictions have federal taxes, provincial taxes, liquor taxes and even special taxes on sodas or sweetened beverages. Some areas apply taxes on food items, while others don't. Some areas have variable tax rates based on whether the food is consumed on-premises (dine-in) or off-premises (take-out).

#### Determine how taxes will be calculated

Taxes can be added to the price of an item (add-on tax) or can be included in the list price of the item (inclusive tax). Also, some areas may require that the tax be calculated on an individual item before being multiplied by the quantity of items purchased (tax before quantity).  It is also important to understand how rounding works. Most areas calculate rounding to the nearest cent ($0.01) while some simply truncate everything after the second decimal. 

***

### 2. Create Tax Categories in Maitre'D

Once you understand how taxes work in your area, you need to determine how taxes will be grouped for reporting purposes. Taxes are grouped together using Tax Categories in Maitre'D.  Every tax needs to belong to a tax category. Here are some common tax category examples:

* Federal Tax
* Provincial Tax
* State Tax
* Liquor Tax
* Food Tax

***

### 3. Create taxes in Maitre'D

Create each tax in Maitre'D. Each tax will be assigned to a tax category and configured according to local tax laws.

***

### 4. Assign taxes to Divisions in Maitre'D

Each Division in Maitre'D can have up to 2 taxes. When divisions are created in Maitre'D, care should be taken to group similar items together. Generally speaking, similar items should have the same taxes applied to them.


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