Your phone pings. It’s that reminder you set: “Tax Returns Due.” Your stomach drops. Between hustling for clients in Nairobi’s CBD and managing deliveries, who has time for KRA’s iTax portal? You’re not alone. Filing tax returns for your small business or sole proprietorship in Kenya can feel confusing, but it’s a must-do to avoid penalties and sleep peacefully.
This guide breaks it down for you, step-by-step, in plain language. We’ll cover what you need, how to file online, and crucial deadlines. Let’s get your compliance sorted, so you can get back to growing your hustle.
What You Need Before You Start Filing
Before you even log into iTax, gather your documents. Trying to file without them is like going to Gikomba market without your tote bags – you’ll waste time and come back frustrated.
You need your business records for the year. This includes your sales records (invoices or M-Pesa statements) and expense receipts (rent, supplies, transport).
Essential Documents and Details
Have these ready on your desk or saved on your phone:
- Your KRA PIN Certificate: The one for your business. A sole proprietor often uses their personal PIN.
- Financial Statements: A simple summary of your income and expenses. You don’t need a fancy accountant’s report if you’re small-scale.
- Bank Statements: For all business accounts. They help reconcile your figures.
- Previous Tax Returns: If you filed last year, have the copy handy for reference.
- Your iTax login credentials: Your username, password, and that KRA pin sent to your phone.
Step-by-Step: Filing on the iTax Portal
The main event. Set aside 30-60 minutes of focused time, maybe after the morning rush. Use a stable internet connection—don’t try this on a shaky matatu WiFi.
Logging In and Navigating to Returns
Go to itax.kra.go.ke. Log in with your credentials. Once in, look for the “Returns” menu. Click on “File Return.”
You’ll see a list of tax obligations. For most small businesses, the key ones are:
- Income Tax (Principal Tax): This is the tax on your business profits.
- Turnover Tax (TOT): If your annual sales are below KES 1 million, you might be on this simpler, monthly tax.
- VAT: Only if you are registered for VAT (annual sales above KES 5 million).
Filling the ITR Form for Your Business
Select the correct form. For a sole proprietor filing annual income tax, it’s often the ITR (Income Tax Return) for individuals. The form will ask for your total business income and allowable deductions.
Pro Tip: Be honest but smart. All your business expenses (like boda boda trips for deliveries, airtime for client calls, or rent for your small workshop in Industrial Area) are deductible. The more legitimate expenses you claim, the lower your taxable profit.
Fill in the figures carefully. Double-check every entry. A simple typo can cause a huge headache later with KRA assessments.
Kenyan-Specific Deadlines and Penalties You Must Know
This is where many people get burnt. KRA deadlines are not suggestions. Missing them is expensive.
The deadline for filing your annual income tax return for the previous year is 30th June. Yes, every year. Mark it on your calendar with a big red alert.
What Happens If You File Late?
KRA charges penalties and interest. It’s a straight-up loss for your business.
- Late Filing Penalty: KES 2,000 for individuals/sole proprietors or KES 10,000 for companies, plus
- Late Payment Interest: 1% per month on the unpaid tax amount.
Imagine you owe KES 20,000 in tax and file 3 months late. You could pay an extra KES 2,600 (KSH 2,000 penalty + KSH 600 interest). That’s a new smartphone gone. Don’t let that happen.
The M-Service That Makes It Easier: KRA’s *572#
Stuck without a computer? No problem. KRA has a USSD code for basic services. Dial *572# on your phone.
You can check your tax compliance status, see pending returns, and even make payments via M-Pesa directly from the menu. It’s a lifesaver when you’re on the move between meetings in Westlands or waiting for a client in Thika.
However, for the actual filing of annual returns, you’ll likely need the full iTax website for now. Use the USSD to check what’s due and make payments after filing.
Getting Help: Where to Go in Kenya When You’re Stuck
If the iTax portal is giving you a headache, don’t suffer in silence. Help is available.
KRA Tax Service Offices
Visit your nearest KRA office. The one at Times Tower in Nairobi is the main hub, but there are smaller offices in major towns like Mombasa (Mbaraki), Kisumu, and Nakuru.
Go early to beat the queues. Have all your documents with you. The officers can guide you through the process. Their helpline (020 4 999 999) is also an option, but be patient with the hold times.
Affordable Local Accountants
If your business is growing, hiring a small-scale local accountant is a smart investment. They’ll handle everything for you. Costs vary, but you can find reliable professionals who charge between KES 3,000 to KES 10,000 to prepare and file your annual returns, depending on complexity.
Ask for referrals from other business owners in your estate or at your local SACCO. A good accountant saves you money and stress in the long run.
Local Insight: Filing During the “Long Rains” Season
Here’s a practical tip only a Kenyan hustler would know: Avoid last-minute filing in April/May. Why? That’s the start of the long rains season.
Power outages from KPLC become more common. Internet connectivity can get flaky. The last thing you need is to be halfway through your iTax form when the lights go out in your estate, or your internet bundle runs out because you’re stuck indoors.
Plan to file your returns before the long rains peak or immediately after the June 30th deadline is announced. Don’t let the weather be the reason you pay a penalty. Treat it like beating traffic on Mombasa Road – leave early.
Common Mistakes Small Business Owners Make
Let’s learn from others’ errors. Avoid these pitfalls:
- Filing “NIL” Returns When You Had Income: If you made money, you must declare it. Filing a nil return when you had sales is tax evasion.
- Ignoring Turnover Tax (TOT): If you’re on TOT (monthly 1% on sales), you must file monthly returns, even if you have no sales that month (file a nil return).
- Mixing Personal and Business Expenses: Keep separate records. You can’t claim your personal Netflix subscription as a business expense.
- Forgetting to Update Contact Details: If KRA sends an SMS to an old number, you’ll miss crucial alerts. Update your mobile and email on iTax.
Conclusion
Filing your small business tax returns in Kenya is a non-negotiable part of the entrepreneurial journey. It seems daunting, but by breaking it down—gathering documents, using the iTax portal step-by-step, and respecting the June 30th deadline—you can conquer it. Remember, compliance keeps KRA off your back and gives your business legitimacy. It allows you to access formal loans and government tenders in the future.
Your call to action is simple: Log into your iTax account today. Don’t wait for the last-minute rush. Check what’s pending, start gathering those receipts from your drawer, and take control. Got a specific question? Drop it in the comments below, and let’s help each other grow.