Njogu kabari & associates Certified Public Accountants

22/04/2021

22/04/2021

For assistance please call
0722 255084
Or
Email [email protected]

21/04/2021

For the outlined services
Please contact Haniel 0722 255 084

Or email [email protected]

04/03/2020

Accounting Tips for landlords
Good bookkeeping is the backbone of any business. This is the same when it comes to managing rental properties. There are three main reasons it’s important. Understanding your properties performance and ROI (return on investment), calculating claimable expenses, and auditing by the tax authority
1. Keep your Business and Personal Accounts Separate
Our very first tip is to create a separate bank account for your business transactions. This should come with its own debit or credit card. Any expenses relatable to your property can come out of this account, and any income you receive from your property will go into this account.

The second is that it will undoubtedly make your accounting life easier!
One, all your income and expenses are going through a single account. This is the same account you buy lunch with, pay for concert tickets, buy clothes, purchase groceries, pay bills, and splurge in bars.
The end of the tax year comes along, you’ve been good and kept your accounts updated throughout the year. You just need to go through them and make sure you’ve got everything accurately accounted for. You now need to go through a full year’s worth of bank statements from your personal accounts trying to determine what was related to the property and what was a personal expense. This is going to be thousands of transactions.
Now imagine all your rentals income and expenses are kept in a separate account. At the end of the year you go through your bank statements for the business account, you know every expense here is relevant to your properties so running them against your books is easy.
2. Set up your ‘Books’ with Supporting Documents
When you set up your books (you can do this with the help of accounting software like Quickbooks) you want to do it right the first time. This can be a time-consuming task.
Supporting Documents
Supporting documents consist of all the receipts or proof of financial transaction noted in your book.
Supporting documents provide evidence in the event of a tax audit by the KRA that the expenses you claimed for your business are valid.
3. Track and Itemize all your Expenses
All your expenses should be carefully recorded in your accounts so that you can accurately calculate your profit or loss. This is vital to determine the strength of an investment as well as for tax purposes. Having detailed and accurate itemized accounts means you will be able to claim a number of expenses back against your taxes which could substantially reduce your end of the year tax bill.
Another important item to include is to track the interest on any loans. You need to track the monthly amount that you owe, payment due dates, any changes in interest rates, and the amount of time until the loan is paid off in entirety.
4. Reconcile your Books with your Bank
The next tip is to carefully reconcile your bank accounts with your books. It’s perhaps not surprising that with data entry there are often mistakes.
The process of matching your books to your bank account is called bank reconciliation. Making sure your receipts match the amount debited from your account is imperative. Mistakes happen, and companies can overcharge you, or even charge you twice!
5. Creating Quality Reports
Once you’ve got your books all set up you need to quickly and easily be able to generate professional reports that draw out the key figures you need and give you fast access to an overview of your financials.

Reports are a quick reference point to determine how well your business is running.
Talk to us
0722 255 084

01/02/2020

For assistance in filling please call 0722 255 084

09/01/2020

👇For those in business...

KENYA TAX CHANGES IN 2020

A look at some of the Tax changes that become effective on January 1, 2020, as a result of the Finance Bill 2019 that was signed by the President on 7 November 2019.

The highlight was the repeal of Section 33B of the Banking Act which had put an interest rate cap on commercial bank loans, but there are also other taxation clauses of note.

-Import Declaration Fee levy has been increased from 2% to 3.5%.

Also, the Railway Development Levy,which is an important component of paying for the SGR, has been increased from 1.5% to 2%.

Companies that list under the Nairobi Securities Exchange’s GEMS program for the next three years can be forgiven tax penalties and interest, provided they pay the principal amount. This move to encourage listing at the NSE became effective in November 2019. But if they delist within five years, that window lapses and all taxes due before listing will again become payable.

Taxes also go up for ci******es, electronic ci******es, fruit wines and spirits.

Motor vehicle excise taxes go up from 20 to 25% for cars over 1500 cc, and that for station wagons and race cars go up from 30 to 35%, but for electric-powered motor vehicles, that goes down from 20 to 10%.

Sports betting companies take another hit with a 20% tax lopped on to each bet amount, regardless of the outcome of the wager.

New economy taxes: The new year ushers in taxes on the digital economy market place – this encompasses “platforms that enable interaction between buyers and sellers of goods & services through electronic means” who are now liable for income tax and value-added tax (VAT).

Along with that, a taxpayer PIN is mandatory when one is registering for a paybill and till numbers (to process mobile payments) through a telephone company

Real Estate Investment Trusts (REIT’s), which were exempt from corporate tax are now also exempt from income tax.

There is an income tax exemption for people who register under the Government’s Ajira Digital (online work) program from January 2020 to December 2022.

Green bonds: Interest income on all listed infrastructure bonds, or green bonds,that are a minimum three years to maturity will be exempt from income tax as will income on the National Housing Development Fund.

Turnover tax of 3% has been reintroduced and will be payable monthly by any person whose turnover does not exceed Kshs 5 million (~$50,000) in any year.

Environmental stuff: Plastic recycling companies will get a preferential corporate tax rate of 15% for five years and machinery and equipment used for plastic recycling plants are now VAT exempt. But, going the other way, equipment for the development of solar and wind energy, including batteries, which were previously exempt from VAT, now require the Cabinet Secretary for Energy to approve any such exemptions.

A taxpayer PIN is now mandatory when one is renewing membership in a professional body or with any licensing agency.

Mitumba and shipment consolidators are now recognized – if they have warehouses in the country of origin and Kenya, and have no history of dealing with substandard or counterfeit goods.

03/10/2019

TYPES OF TAXES IN KENYA

1. Income Tax
Income tax is a direct tax charged upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.

Income Tax is imposed on;
• Business income from any trade or profession
• Employment income
• Rent income
• Investment income
• Income from services rendered among others
• Pensions among others

There are different methods of collecting income tax from companies & partnerships, based on their sources of income.

These methods include:

a. Corporation Tax
This is a form of Income Tax that is levied on corporate bodies such as Limited companies, Trusts, and Co ? operatives, on their annual income.

Companies that are based outside Kenya but operate in Kenya or have a branch in Kenya pay Corporation Tax on income accrued within Kenya only.
Do partnerships pay corporation tax?

b. Pay As You Earn (PAYE)
This is a method of collecting tax at source from individuals in gainful employment.

Companies and Partnerships with employees are required to deduct tax according to the prevailing tax rates from their employees? salaries or wages on each payday for a month and remit the same to KRA on or before the 9th of the following month.

c. Withholding Tax (WHT)
This is a tax that is deductible from certain classes of income at the point of making a payment, to non-employees.
WHT is deducted at source from the following sources of income:
• Interest
• Dividends
• Royalties
• Management or professional fees (including consultancy, agency or contractual fees)
• Commissions
• Pensions
• Rent received by non-residents
• Other payments specified

Companies and partnerships making the payment, are responsible for deducting and remitting the tax to the Commissioner of Domestic Taxes.

d. Advance Tax
This is a tax paid in advance before a public service vehicle or a commercial vehicle goes for the annual inspection.

e. Installment Tax
Installment tax is paid by persons who have tax payable for any year that amounts to Kshs. 40,000 and above.

2. Rental Income Tax
This is a tax charged on rental income received from renting out property. Taxation of rental income depends on how the rented property was used for residential or commercial purposes.

Companies and Partnerships that rent out property to other persons for either residential or commercial use are required to pay income tax on rent received

To facilitate compliance, KRA appoints agents to withhold and pay, a percentage of the gross rent as tax. These agents can be verified via the agent checker on iTax.

3. Value Added Tax (VAT)
Value Added Tax is charged on supply of taxable goods or services made or provided in Kenya and on importation of taxable goods or services into Kenya.

While companies & partnerships can voluntarily register for VAT they MUST register if their annual revenue exceeds Kshs. 5,000, 000.

To facilitate compliance, KRA appoints agents to withhold and pay, VAT on supplies made. These agents can be verified via the agent checker on iTax.

4. Excise Duty
This is a duty of excise imposed on;
• goods manufactured in Kenya, or;
• imported into Kenya and specified in the 1st schedule to Excise Duty Act, 2015.

Companies and Partnerships dealing in excisable good and services are required to pay excise duty.

The List and types of Excisable goods and services are listed in the 5th Schedule as read together with Section 117 (1) (d) of the Customs and Excise Act, CAP 472 Laws of Kenya.

They includes;
• Mineral water
• Juices, soft drinks
• Cosmetics and Preparations for use on hair
• Other beer made from malt
• Opaque beer
• Mobile cellular phone services
• Fees charged for money transfer among others

5. Capital Gains Tax (CGT)
This is a form of income tax which is charged on a net gain that a business makes after sale of land or building.

6. Agency Revenue
This is a type of payment that KRA collects on behalf of various revenue collection agencies in Kenya.
The two types of Agency Revenue include;
• Stamp Duty
• Betting and Pool Tax

a. Stamp Duty
Stamp duty is a tax charged on transfer of properties, shares and stock.

It is collected by the Ministry of Lands, which has seconded the function to Kenya Revenue Authority (KRA).

b. Betting and Pool Tax
This is a tax charged on winnings from betting, gaming and lottery activities.

Betting, gaming and lottery businesses are required to withhold as tax, and pay to KRA, a percentage of the winnings being paid out to winners.

Talk to us for timely by our trusted professional team via:
sms/call/whatsapp 0722 255 084

20/08/2019

Do you have or do you know someone who have a small business in need of bookkeeping services? Whether the need is daily/monthly data entry or high volume payroll, we handle it all contact 0722,255,084