Due to the diverse nature of small businesses, they need to carefully analyze the tax system. Taxes are a financial and administrative burden for small businesses, limiting their capacity to invest in their company, their workers, and compete in the larger market. Taxes lower the profit on hand and hence are a matter of great consideration specially and most importantly for small businesses, where every buck is valued.

Tax difficulties are often a major source of concern for small businesses. Four of the top ten most onerous concerns reported by small company owners are tax-related. So let’s debunk how to avoid tax drama.

Hire a Bookkeeper

Running a business is challenging enough without adding the added difficulty of paying taxes each year. Experts say that working with your Bookkeeper throughout the year, rather than just while filing your tax return, is the key. A bookkeeper should work with you throughout the year to track revenue and spending, make sure you don't have a cash flow problem, and keep track of your gross and net earnings.

In addition, hiring a professional for tax purposes is better than doing it yourself or using online software. There are many bookkeeping service providers, who provide great services at affordable prices. Small companies should avail these services to boost their business.

Type of Tax Return

Every firm in Canada is required to file an annual business income tax return. The type of return you file, however, is determined by your company's legal structure:

If you're self-employed or own a sole proprietorship or partnership, you'll need to declare your company revenue on both your T1 personal tax return and Form T2125 (Statement of Business or Professional Activities).
If your company is incorporated and has a separate legal identity as per law, you'll need to file a T2 corporate income tax return form to disclose your earnings.

The deadline for submitting your tax return is June 15 each year. You must, however, pay any unpaid taxes from the preceding tax year by April 30. By March 31, each individual partner must also complete an annual partnership information return.

Now understanding the legal requirements is very important and for this, a professional bookkeeper or tax professional can really help you have a smooth experience. Understanding the process in itself is key because tax filing is a complex process.

**Keep Detailed Records**

Maintaining detailed and precise records of your financial activities throughout the year can ensure the accuracy of your tax return. Trying to gather all the financial requirement at the eleventh hour will only make it worse. It is a yearlong process and keeping an organized data is a game changer.

Keep track of receipts and invoices of your business activities
Back up any tax deductions with proper documentation
Stay prepared in the event of an audit

The Canada Revenue Agency can audit up to six years of prior taxes, so hold onto claimed receipts for at least that long. Your bookkeeper or tax preparer will need an updated trial balance for the fiscal year to prepare and file your return, so the sooner you can get your books organized, the better.

**Claim Tax Deductions**

If you purchase tangible property or equipment for your business, you may be able to take a significant deduction. Capitalization is an accounting method in which a cost is included in the value of the asset and expensed over the asset's useful life, rather than being expensed in the period in which the cost was originally incurred. Make sure your bookkeeper is familiar with the capitalization standards. Team up with your bookkeeper to avail as much of the deductions as you can. This will save you some profit that you can reinvest in your business for future growth.

Stay updated on changes and important date

Stay informed about any changes to the tax system. Similarly, if you've grown or moved to a different province, be sure you have all of the essential documents. Also, keep track of critical dates and timetables for tax purposes. Deadlines are wicked monsters that creep up on you at the most inopportune times. Keep these dates in mind in your calendar or any other planning tools you use this year and in the future. It is recommended that you start working on your tax return far ahead of the deadline to avoid any last-minute hassles.

You don't only operate your business during tax season; you do it all year. You can make tax season a lot less "taxing" on your time, emotions, and bottom line by applying best practices and employing the finest technologies. By availing bookkeeping services available you can stay ahead in the game.

Saving Small Businesses from Tax Season Horror