Preparing for tax season

Tax season in Kenya runs from January to June, and if you're a small business owner, it can feel like a cloud hanging over your head. But here's the truth: tax filing is simple if your records are in order. The panic only happens when you're scrambling for receipts from six months ago.

Let's talk about what KRA actually needs from you, and how to prepare without the headache.

What Records KRA Expects You to Keep

KRA requires you to keep records of everything for at least five years. Here's what they'll ask for:

• Sales records , every invoice you issued, whether cash, M-PESA, or bank transfer
• Purchase records , everything you bought for the business, with receipts or invoices
• Expense receipts , rent, electricity, transport, staff salaries, advertising
• Bank and M-PESA statements , shows money movement in and out of your business

Most audits happen because business owners can't produce these documents. Not because they cheated, but because they lost the papers.

Common Mistakes That Trigger KRA Audits

KRA's system flags certain patterns. Avoid these:

Mismatched records. If your M-PESA statement shows KES 500,000 in payments but your return shows KES 200,000 in sales, that's a red flag. KRA can see your M-PESA data.

Expenses that don't match your business. Claiming KES 2 million in expenses on KES 500,000 in sales? That gets attention.

Missing returns entirely. Filing late or not at all. Late filing carries penalties of KES 10,000 or more per return.

Consistent losses year after year. If you report a loss every year, KRA may visit to check if you're actually in business.

How to Make Tax Time Easy

The secret is to stop preparing when tax season comes and instead keep records all year. With SokoWise Accounting, this is automatic:

• Every sale you record in SokoWise is saved and categorized
• Every expense you enter is logged with date, amount, and category
• Your M-PESA transactions can be imported against your records
• At tax time, export a summary of income and expenses instead of digging through a drawer of receipts

SokoWise also keeps a running total of your VAT obligations if you're registered, so you know what you owe before the deadline.

A Simple Tax Prep Routine

Once a month, open SokoWise and check that:

1. All sales are entered (or synced from your POS)
2. All expenses for the month are logged
3. Your bank and M-PESA deposits match your recorded sales
4. You've saved receipts for any big purchases

Do this monthly and tax season becomes a 30-minute exercise of exporting your reports and filing on iTax. No panic, no searching, no penalty fees.