Many people find themselves in dilemma when deciding which PIN to using for tax purposes in their business. Before making a decision on this, there are several factors that one must consider.
Before we delve in, its important to have in mind that one can use his/her personal Pin to run business.
In this blogpost, I will share with you 4 factors to consider when deciding which tax PIN to use in your business. The information I am going to share with you here is based on my personal experience.
Business Registration Level
Business registration levels vary and matters. There is the Sole Proprietor Business, Partnership Business, Private and Public Limited Company and Company Limited Guarantee. Each of these have different requirements at the time of registration.
Its only possible to use individual tax Pin with Sole Proprietorship and Private Limited Company businesses. This is because an individual can register and run them as the only director. The rest type of businesses don’t qualify because it requires more than one director when registering.
While with Private Limited Company, one can use their own personal pin, I recommend getting an independent Pin for this type of business. It will safe you a lot of trouble as your the business grow.
Some people prefer to have their business affairs separated from their personal life. In this case, it will be good to get a separate PIN for your business if you fall in this category of people. This way, all the activities associated with your business will be dealt with separately e.g VAT returns, WHT returns e.t.c.
Alternatively, if it’s a Sole Proprietorship business or Private Limited company and you are okay with using your individual PIN for business transactions, you can do so.
Number Of Business Owned
How many businesses do you own? If you own more than 2 businesses, I will advise you to have separate tax PIN’s for each of the businesses. This will make your record keeping and management easy. As each of your businesses grow, more accountability is needed.
This means that at some point, you will employ an accountant to help you keep the books of account and file your tax returns. For security purposes on your individual taxes, I recommend having a separate tax PIN for business.
Type of Taxes Your Business is Eligible
Your business will be taxed according to the products and services the business supplies. I suggest your check out the various taxes levied on different businesses in Kenya on the KRA website here.
When you know which taxes your business will be required to pay/remit, its easy to decide on whether to use your individual PIN or not.
When deciding on which TAX PIN to use in your business, its important to consider your business registration level, your individual preference, number of business owned and the type of taxes you are eligible for.
Additionally, its good to put into account your projected business growth. As your business grows, you employ people to manage your accounts. When this happens, it will be save not to allow people to access your individual tax account. This thus means that having a business tax PIN is preferable.
With all this said, I hope this information is helpful to anyone setting up their business out there.
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And until next time, bye bye and take care.
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