Let’s be honest. As a freelancer, what’s the one thing that gives you more stress than a difficult client or a looming deadline? For most of us, it’s taxes.
That dreaded email from the KRA, the confusion around what to pay, and the constant fear of penalties can be overwhelming. It’s especially tough when your income isn’t a fixed monthly salary. One month you’re crushing it, and the next is quiet. How are you supposed to manage your tax obligations with that kind of unpredictability?
Well, what if I told you that you might be leaving money on the table? What if there were simple, 100% legal ways to not just pay your taxes, but to actually save money in the process?
Stop stressing and start saving. Here are three powerful, yet simple, tax strategies every freelancer and small business owner in Kenya needs to know for 2025.
1. Make Withholding Tax Work FOR You
First up is a concept that many freelancers find confusing: Withholding Tax. You might have seen it on a client’s contract—a 5% deduction—but what is it, really?
Think of it like this: Withholding Tax is a client pre-paying a small part of your annual tax bill on your behalf. It’s like a forced savings account specifically for your taxes!
Here’s how it works in simple terms. Let’s say you’re a freelance consultant and you send an invoice for a project worth 100,000 shillings.
When your client pays you, they are required by the KRA to “withhold” 5% of that service fee, which amounts to 5,000 shillings. You receive the remaining 95,000 shillings in your bank account.
But that 5,000 shillings isn’t gone forever. The client remits it directly to the KRA under your KRA PIN. It now sits safely in your KRA account as a tax credit.
So, how does this save you money?
At the end of the year when you file your annual returns, imagine the KRA calculates that your total income tax for the year is 50,000 shillings. Instead of paying the full amount, you get to deduct all the withholding tax credits you’ve accumulated. If you completed ten projects just like the one above, you’d have 50,000 shillings (5,000 x 10) already sitting in your KRA account.
Your tax bill just went from 50,000 down to ZERO.
By operating as a registered business (even a simple Sole Proprietorship), you can turn this tax deduction into a powerful tool for managing your end-of-year tax bill.
2. Turn Your Business Expenses into Tax Savings with VAT
This next strategy is a game-changer, especially if you’re looking to grow your freelance work into a serious business. We’re talking about VAT (Value Added Tax).
Don’t let the term intimidate you. Imagine you have two piggy banks:
Tax Bank #1 is for the VAT you collect from your clients.
Tax Bank #2 is for the VAT you pay on your business expenses.
When you register for VAT, you must add 16% to your invoices. So, if you charge a client 100,000 shillings, you actually invoice them for 116,000 shillings. That extra 16,000 goes into Piggy Bank #1. It’s not your money—you’re just holding it for the KRA.
Here’s the magic part.
Whenever you buy something for your business—a new laptop, an internet subscription, software, or even office supplies—you also pay 16% VAT. That amount goes into Tax Bank #2.
At the end of the month, the KRA asks for the money in Piggy Bank #1. But you get to say, “Hold on! I can subtract everything that’s in Tax Bank #2 first.”
For example:
You collected 32,000 Ksh in VAT from your clients this month (Tax Bank #1).
However, you bought a new office chair and paid 5,000 Ksh in VAT. You also paid for software and paid 3,000 Ksh in VAT. In total, you paid 8,000 Ksh in VAT on your expenses (Tax Bank #2).
So, the amount you actually remit to the KRA is 32,000 minus 8,000, which equals 24,000 shillings.
You just saved 8,000 shillings! You’re essentially getting a discount on all your legitimate business purchases, which encourages you to reinvest in your own growth. Just remember to always get a proper ETR receipt with your business KRA PIN on it to make a claim.
3. The Easiest Money You’ll Ever Save
This last one isn’t a fancy loophole. It’s the most simple, most overlooked way to save money, and it costs you nothing but a bit of discipline: File your taxes on time.
Seriously.
The KRA charges fixed penalties for late filing that can add up quickly.
For an individual or a sole proprietorship, it’s Ksh. 2,000.
For a registered company, it’s Ksh. 10,000.
That’s money you are literally throwing away for no reason. Think about it—saving Ksh. 2,000 is just as good as earning an extra Ksh. 2,000.
Set a reminder on your phone. Put a big red circle on your calendar for June 30th. Do whatever it takes to file on time, even if you have zero income to declare for the year. Avoiding that penalty is the easiest profit you’ll make all year.
Taxes don’t have to be a source of stress. When you understand the system, you can make it work for you.
For more expert tips on freelance, media, tech, and business, make sure to follow me on all social media platforms @cheptionymutai. Let’s level up together!
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Ever thought about diving into the world of cabbage farming? It can be an incredibly rewarding venture, but as I recently learned, it also comes with its fair share of surprises and tough lessons. This past July 2024, I decided to invest some timber sale profits into something new: cabbage farming here in Kenya. Let me tell you, it was quite the adventure!
Cabbages seedlings on a nursery seedbed – Photo Cheptiony Mutai
Choosing the Right Seeds: A Crucial First Step
My wife and I kicked off our journey by researching on the best cabbage seedlings. The general consensus among experienced farmers pointed us towards ‘F1’ seedlings for optimal results.
It turns out, the best F1 variety really depends on your specific region in Kenya. For instance, ‘Gloria F1’ is a popular choice for highland areas like my home in the Southern Rift Valley. We also discovered ‘Baraka F1’ and ‘Greenboy F1’ as other promising varieties from different companies that thrive in similar conditions.
From Seedbed to Field: The Transplanting Challenge
For our first batch, we purchased 50g sachets of both Gloria F1 and Queen F1 seeds. We carefully sowed them in a nursery seedbed, letting them grow for 30 days before transplanting. The companies claimed each 50g sachet contained roughly 10,000 seedlings, enough to plant an acre, depending on your spacing (an acre can typically hold 10,000 to 20,000 seedlings). Based on this, we estimated we had about 20,000 seeds, enough for 1.5 of our 2 acres.
Gloria F1 and Queen F1 Cabbage seedling after transplanting -Photo By Cheptiony Mutai
However, reality hit during transplanting! We only managed to plant around 8,000 seedlings – that’s all that germinated. This covered just half an acre.
It makes you wonder, right? Did we really lose 12,000 seeds, or are the manufacturers’ claims a bit optimistic? This is a question I’d love to hear your thoughts on in the comments below, especially if you’re a regular cabbage farmer! Many in my area report similar experiences with fewer seedlings than expected.
More Seeds, More Land: A Glimmer of Hope
Undeterred, we dipped back into our pockets and bought more seedlings, this time opting for Greenboy F1 and Baraka F1. We sowed them in the seedbed, and thankfully, these varieties did much better than Gloria F1. When they were ready, we transplanted them, and this time, we managed to plant almost another acre! We were so motivated, especially seeing how well Greenboy performed compared to the others.
Greenboy F1 and Baraka F1 showed better results when compared to Gloria f1 – Photo By Cheptiony Mutai
I distinctly remember planting these seedlings in mid-October, a time when rainfall was quite low. Despite the harsh weather, Greenboy surprisingly held up remarkably well! By the end of this phase, we had planted about 1.5 acres, leaving just 0.5 acres to go. At this point, we had approximately 21,000 cabbage plants in the ground.
The First Harvest: A Taste of Disappointment
As we contemplated getting seeds for the remaining plot, our first batch of cabbages was ready for market. Unfortunately, only Gloria F1 looked good. We lost about 60% of our Queen F1 crop due to stunted growth; they simply didn’t mature and remained small with unhealthy leaves.
Gloria F1 and Queen F1 in the third month – photo By Cheptiony Mutai
While searching for buyers for our ready cabbages, I also went looking for seeds for the last section of the farm. Since Greenboy F1, which had done so well, wasn’t available, I decided to purchase another 100g of Gloria F1. This was early November, and the rainfall was still inconsistent. My farm worker had to diligently sprinkle water on the seedbeds to keep the young plants alive.
The Cabbage Market Crisis: A Hard Fall
Typically, cabbage buyers visit farms looking for crops. For weeks, I spoke to numerous potential buyers for our first 0.5 acres of mature cabbages, but not a single one came through. It was incredibly disheartening. I kept pushing, hoping to find a buyer for the rest of our cabbages. In the end, in December, I had to sell them at a throwaway price of Ksh. 6,000 to a neighbor for cattle feed.
Just imagine, if I had sold 5,000 cabbages (accounting for some that didn’t mature from the initial 8,000) at Ksh. 20 each, I would have made Ksh. 100,000. Ouch!
Second Batch and Continued Challenges (January-February)
My hope was that January to March, usually a dry season in most parts of Kenya, would bring a good market. I had about 12,000 cabbages ready to sell during this period. However, I soon discovered there was an oversupply of cabbages, leading to consistently low demand.
Matured Greenboy F1 cabbage heads ready for market. – Photo By Cheptiony Mutai
By the end of February, I managed to sell only about 2,000 cabbages at Ksh. 7 each, bringing in Ksh. 14,000. The remaining were sold in smaller batches for Ksh. 5 each, adding another Ksh. 3,000, for a total of Ksh. 17,000.
The Final Stretch (The Last 0.5 Acres)
The seeds for the final 0.5 acres were ready in January, but the weather was still dry with no signs of rain. Despite this, I went ahead and planted them. A week later, I had to spend Ksh. 1,000 every four days just to sprinkle water on them. After three rounds of watering, it finally rained! About half of these cabbages matured well, while the rest were affected by the dry spell. When they finally matured in April, the market was still poor. I ended up selling cabbages worth only Ksh. 3,000. Another loss.
The Financial Reality: Expenses vs. Sales
Let’s break down the numbers.
Total Sales: Ksh. 26,000
Total Expenses:
Land preparation: Ksh. 8,000
Labor (planting): Ksh. 10,000
Fertilizer: Ksh. 10,000
F1 seeds (300g): Ksh. 24,610
Weeding: Ksh. 6,000
Insecticides: Ksh. 2,000
Total Expenses: Ksh. 60,610
Net Loss: Ksh. 34,610
Rotten cabbages in the farm after failing to secure market for them – Photo By Cheptiony Mutai
What Could Have Been: Projected Profits
If everything had gone perfectly and the market was strong, what kind of returns could we have seen? For two acres, you can typically harvest between 30,000 and 40,000 cabbages.
Let’s say we managed 30,000 cabbages and sold them at a wholesale price of Ksh. 20 each. That would have brought in a whopping Ksh. 600,000! Subtracting our Ksh. 60,610 in expenses, we would have made a profit of Ksh. 539,000. That’s roughly ten times the amount invested in raw materials! A stark contrast to my actual experience.
Key Lessons Learned from My Cabbage Farming Experience
It’s certainly discouraging to face losses, especially when the market is the primary issue. However, I truly believe that firsthand experience trumps hearsay any day. Here are my biggest takeaways:
Mindset is Everything in Farming: You absolutely won’t succeed if you’re not mentally prepared for both profits and losses. Whichever comes your way, you need to be ready to learn from it and move forward.
Capital is King: Ensure you have sufficient capital for your intended farming land. Buyers often look for large quantities of cabbages to fill a lorry, and if you have less, they might simply move on.
Market Research is Non-Negotiable: Before you even think about investing, do your homework! If possible, start looking for buyers yourself when your cabbages are nearing maturity. This proactive approach prevents you from holding onto your harvest, desperately waiting for a better price.
Sell at the Current Market Price: Don’t hold out hoping for a higher offer. In farming, delays can cost you everything. Selling at the current market rate, even if it’s not ideal, is often better than losing your entire crop.
Wrapping Up My Farming Tale
This journey has been a tough but invaluable teacher, filled with unexpected turns and a few financial bumps. While the losses were certainly disheartening, the hands-on experience and the profound lessons learned are truly priceless.
I hope sharing my real-world insights into cabbage farming in Kenya helps aspiring farmers better navigate the challenges and seize the opportunities that come with agricultural ventures. Remember, every setback is a setup for a comeback, and the knowledge gained is always a step forward!
What do you think? Let me know your thoughts in the comments section below.
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You might remember that last year, I had the pleasure of featuring Kijani Curlcare and Skincare at the KICC during their exhibition. Their commitment to quality, natural ingredients for both skin and hair really stood out. So, when I heard they were launching a brand-new hair product, I knew I had to be there!
This a Video interview of Kijani Curlcare Founders At KICC During Exhibition
The destination was Utawala Shompole Salon & Spa, and the buzz was all about Kijani’s latest innovation. I even got to catch a ride with Co-Director Rodgers Egesa, and our journey to the launch was as insightful as the event itself.
The Road to a New Product: Resilience and Customer Focus
Heading to the venue, Rodgers shared some candid thoughts on the realities of building a brand like Kijani. “Every foundation requires time,” he mused. “You find yourself always exhausted until you feel you’re almost giving up… now that is when you’re almost there.”
He spoke of venturing into “a territory that very few people have entered into,” where the “terrain is a bit rough.” It’s a stark reminder of the dedication behind every product we see on the shelves.
Team From Kijani Curlcare And their Customers Pose For a Photo At Shompole Salon And Spa during their new hair Product testing. Photo By Moses Gitahi.
So, what sparked this new addition to their line? Rodgers explained, “People have been asking for it, and then most of our competitors, that’s the journey they took.” But more than just following trends, it was about completing their offering.
He used a fantastic analogy: “With skincare, it’s like you want to be selling food; you need to do Ugali and Mboga and everything so that somebody doesn’t have to buy Mboga here and Ugali on the other side… you are totally responsible for the results.” This holistic approach ensures customers get a complete solution from a brand they trust.
Since our chat at KICC about six months ago, Kijani has been busy. “Business is good,” Rodgers shared. “We opened a pick-up point in Platinum Plaza [Nairobi CBD] and Posta in Mombasa.” They’re eyeing Nakuru and Eldoret next!
Their strategy involves smart growth, like utilizing pick-up points in high-traffic areas – “it’s a bit cheaper, you just rent shelves.”
Marketing, Rodgers emphasized, is “a very key component,” especially in the beauty industry. They work with influencers who can “communicate the product better,” often collaborating with those who are also looking to grow and prove themselves.
He also highlighted the invaluable role of small distributors – “people who have two branches, five branches” – as crucial partners in their journey. “I will never forget those people,” he stated, appreciating those who opened doors for Kijani in the early days.
The Star of the Show: Introducing the Flaxseed Gel Curl Cream
Our arrival at Shompole Salon and Spa in Utawala marked the official unveiling. The new product? A Flaxseed Gel Curl Cream!
Linda, a customer and user of Kijani Curlcare products poses with New hair product Flaxseed Gel Curl Cream From Kijani Curlcare. Photo By Moses Gitahi.
Rodgers graciously welcomed everyone, emphasizing that the launch was a testament to “our customers’ trust and faith in the brand.”
Inside the salon, we got to see the Kijani range in action. Linda, a client, had her hair washed with the Kijani Shampoo Bar. “It’s not your ordinary shampoo because most shampoos come in liquid form,” she noted. “I feel my hair is so detangled, fresh, and I’m excited to see the aftermath.”
The Kijani conditioner followed, praised for its moisturizing and detangling properties. “It doesn’t hurt and it can be used on a child,” was the feedback, highlighting its gentle nature.
Then came the moment for the new Flaxseed Gel Curl Cream. Applied to damp, freshly washed hair, the cream is designed for styling, particularly for twist-outs.
The stylist explained, “The curling cream makes the hair have this springing effect and makes it last longer.” It’s all about defining those curls without the need for harsh treatments.
Happy custumers pose for a photo with the new Flaxseed Gel Curl Cream from Kijani Curlcare product after it being applied on their hair. Photo By Moses Gitahi.
Later, after a product photoshoot at the beautiful Serene Gardens, I sat down with Sarah Guantai, Director of Kijani Curlcare and Skincare, to get the full scoop on their latest creation.
Sarah Guantai, The CEO of KIjani Curlcare Pose with the New Flaxseed Gel Curl Cream during the Product photoshoot at Serene gardens in Utawala. Photo By Moses Gitahi.
“The new product that we’re launching today is called the Flaxseed Gel Curling Cream,” Sarah confirmed. She elaborated on its impressive benefits:
Defines Curls: Works for various hair types – kinky, curly, coily, and wavy.
Softens and Moisturizes: Acts as a treatment for your hair.
Curbs Frizz: Leaves hair revitalized, healthy, and fuller.
Why launch it now? “We just turned 3 years old!” Sarah announced. “We decided, you know, instead of waiting for too long, just to go ahead and launch it. We feel this is the right time for us.”
The inspiration, true to Kijani’s ethos, came directly from their customers. “There was a gap,” Sarah explained. “We’ve been selling them the shampoo bar… the deep conditioner… the aloe vera hydrating leave-in treatment.
But most of them wanted something that, you know, they could just leave their hair styled differently without really going through the path of braids and these other things.”
This customer-centric approach led them to develop the Flaxseed Gel Curl Cream with their team of industrialists and chemists.
How to Use It and Who It’s For
Sarah emphasized the versatility of the new cream. “Anyone can use it – men, women, and kids because it’s very safe.” What’s more, “it gives you the freedom to actually do it yourself… you can style yourself if you know how to.”
For those who prefer a professional touch or lack the time, it’s perfect for salon use too. “This is actually a product by us, for us,” she proudly stated.
Get Your Kijani Fix!
Interested in trying out the new Flaxseed Gel Curl Cream or any of Kijani’s other wonderful products? Here’s how you can get them:
She reiterated their commitment to listening: “We’ve grown as a result of us listening to our customers… even for those who are not buying… This product is actually the culmination of all that process of listening and giving people solutions that work for them and that are safe for them.”
Sales representatives from Kijani Curlcare display their products range outside Shompole Salon & Spa during their new product launch. Photo by Moses Gitahi.
So there you have it! An exciting new launch from a brand that truly cares about its customers and the journey of natural hair and skincare.
Watch the Video on Youtube on How Kijani Curlcare and Skincare Launched their new product
If you’re looking for a curl cream that defines, moisturizes, and gives you styling freedom, the Kijani Flaxseed Gel Curl Cream might just be your new holy grail.
If you need cool blog content and videos to market your business, do not hesitate to reach out to me here. I will be happy to help work on cool content to market your business.
Don’t hesitate to reach out to them with any questions. Until next time, take care!
In Kenya, individuals and business owners typically file two main types of tax returns: Income Tax and VAT (Value Added Tax). Income Tax returns are filed annually and are mandatory for all taxpayers. VAT, on the other hand, is declared monthly and is only compulsory for businesses with an annual turnover exceeding KES 5 million; otherwise, registration is voluntary.
In this article, I’ll explain two expensive mistakes every taxpayer should avoid when filing their returns.
Counter Check The Type of Withholding Tax Client Has Withheld
When a company engages your services, they are often required to withhold tax from your payment. This typically includes both VAT and income tax, depending on the invoice you’ve issued. It’s crucial to pay close attention to these withholdings.
Be careful: some clients might mistakenly withhold 2% VAT even if you haven’t charged them VAT on your invoice. You’ll receive an email notification each time they declare this withholding. It’s crucial to cross-check these notifications immediately. If they’ve withheld 2% VAT but should have instead withheld 5% income tax, KRA will assume you did charge VAT. This could lead to KRA expecting you to pay the 14% difference between the actual VAT rate and the incorrect 2% withheld.
Failure to declare this monthly incurs a penalty of KES 10,000. Neglecting this obligation can lead to prolonged resolution efforts and prevent you from obtaining a Tax Compliance Certificate.
A crucial point to remember is that if a client withholds VAT from you when you aren’t registered for VAT obligations, it can lead to significant issues. The Kenya Revenue Authority (KRA) will likely forcefully add the VAT obligation to your account, compelling you to declare the return regardless
It’s crucial to consistently verify the accuracy of any withholding tax declared by clients on transactions you’ve completed. This proactive step helps ensure everything is correctly accounted for.
Expense Data in The Profit Loss Page
For income tax filers, particularly consultants, freelancers, and sole proprietors, the profit and loss account section on the second page of the income tax return excel sheet requires meticulous attention. Errors in data entry here can lead to significant issues.
When classifying expenses for individuals paid daily or per job, who are not permanent employees, the most accurate categorization is often Direct Wages or Contract Labor/Freelance Fees.
While “salaries and wages” typically refers to permanent employees, and “direct expenses” is a broader term, “direct wages” specifically applies when these payments are directly tied to the production of goods or services.
If they are providing services that aren’t directly part of your core product/service creation (e.g., a one-off IT fix), “contract labor” or “freelance fees” might be more appropriate.
It’s crucial to distinguish these from regular salaries and wages for tax and accounting purposes.
If you employ permanent staff in Kenya, you are required to register for P.A.Y.E (Pay As You Earn). This system mandates that you deduct income tax directly from your employees’ earnings and remit these amounts to the Kenya Revenue Authority (KRA).
It’s important to note that the PAYE rates starts from 10% for every KES 24,000 and only applies to the first KES 24,000 of monthly taxable income (or KES 288,000 annually). KRA utilizes a graduated tax scale, meaning different portions of an employee’s income are taxed at varying rates, ranging from 10% to 35%. Additionally, a monthly personal tax relief of KES 2,400 is also applied.
For accurate calculations, you’ll need to refer to the latest KRA PAYE tax bands and rates, which are subject to changes based on the Finance Act.
It’s therefore crucial to correctly categorize expenses, especially when it comes to salaries and wages. If your company doesn’t have employees, avoid listing expenses under “salaries and wages.”
Instead, these should be recorded under direct expenses (direct wages). This accurate classification will prevent issues and ensure a smoother process if the Kenya Revenue Authority (KRA) audits your tax return.
Get A Professional With Accounting Background to Assist
For those new to income tax filing, don’t hesitate to visit your local KRA office where you can get direct assistance with your return.
If you have numerous transactions, it’s highly advisable to consult a professional accountant to assist with your tax filings. While there’s a fee involved, their expertise can save you a significant amount of time and eliminate potential headaches.
Conclusion
We all learn from our mistakes, and when it comes to tax returns, some lessons can be quite expensive. I’ve identified two common and costly errors that taxpayers frequently make. Failing to avoid these can lead to the denial of a Tax Compliance Certificate, a document often required by businesses and organizations before considering you for work.
And that is it from me here. Are there any other costly mistakes that people should watch out for? let me know in the comments section below.
If you need content creation and content marketing services, do not hesitate to reach out to me here.
As a freelancer or business owner, you’ve likely faced the frustrating situation of completing work only for a client to delay or decline payment. That feeling of “turmoil” is all too real.
But what if you could prevent this? Establishing a clear and efficient online payment procedure isn’t just about getting paid; it’s about protecting your time, effort, and bottom line.
In this post, I will walk you through the essential steps to ensuring you get paid reliably online, every time.
Step 1: Lay the Foundation with a Solid Written Agreement
The very first, and arguably most critical, step in ensuring you get paid reliably online is to formalize your working relationship.
Don’t just verbally agree on terms; create a comprehensive written agreement, whether it’s a formal contract or detailed terms of service published on your website and agreed to by the client.
This isn’t about being overly rigid; it’s about establishing clear expectations and demonstrating your professionalism. Your agreement should meticulously outline the scope of work you will deliver, the specific information, assets, or access the client must provide for you to complete the project successfully (and the implications if they don’t).
Furthermore, break down the cost of your service clearly, detailing what the client is paying for.
Crucially, this is where you define your payment terms: specify the total amount due, any deposit requirements, payment milestones (if applicable), the deadline for payment (e.g. within 7 days), acceptable online payment methods, and the exact process the client needs to follow to submit payment.
Having all of this in writing and agreed upon upfront significantly reduces the likelihood of misunderstandings and provides a clear reference point if any payment issues arise.
Step 2: Ask For Not Less Than 50% Upfront Commitment Fee/ Down-payment
Implementing a policy of requesting a commitment fee or down payment, ideally around 50% of the total project cost, is a crucial step in safeguarding your income as a freelancer or business owner operating online.
This isn’t about a lack of trust in your clients; rather, it’s a standard professional practice that offers significant benefits for both parties and drastically reduces your risk of non-payment.
Here’s why this step is so vital:
Demonstrates Client Commitment
When a client is willing to invest financially upfront, it immediately signals their seriousness and commitment to the project. This helps filter out potential clients who may not be fully invested or might be more likely to disappear before paying.
Provides Essential Operating Capital
Freelancing and running an online business often involve initial expenses, whether it’s software subscriptions, necessary tools, or simply the time invested in initial planning and setup before the main work is completed. A 50% deposit helps cover these upfront costs, ensuring you’re not out-of-pocket while you deliver the service.
Reduces Your Financial Risk
In the unfortunate event that a client becomes unresponsive or cancels the project midway, having received a significant portion of the payment upfront provides a safety net. It ensures you are compensated for at least a substantial part of the work and time invested, mitigating the impact of potential non-payment.
Improves Cash Flow
Waiting until a project is 100% complete to receive any payment can create unpredictable income streams. An upfront deposit provides an immediate influx of cash, helping you manage your business finances more effectively and providing greater stability.
Sets a Professional Tone
Clearly stating your requirement for a deposit in your initial terms and contract (as outlined in Step 1) reinforces your position as a professional business with established procedures. It sets a clear expectation from the outset and helps prevent awkward payment conversations later.
This 50% figure is a common starting point, striking a balance between securing significant commitment and not being an unreasonable burden on the client.
Depending on the nature and length of your projects, you might adjust this percentage, but the principle of getting a portion of the payment upfront remains a cornerstone of getting paid reliably online. Ensure this requirement is clearly stated in your contract and discussed with the client before any work commences.
Step 3: Leverage Safe and Integrated Payment Gateways to Build Trust
Once your terms are clear and you’ve secured a commitment fee, the next critical step is to make the actual payment process as smooth, professional, and secure as possible for your clients.
Think of a payment gateway as the digital equivalent of a point-of-sale terminal in a physical store. It’s the technology that securely authorizes and processes online payments, acting as a bridge between your website, your client’s bank, and your business bank account.
But it’s not just about functionality; the choice and integration of your payment gateway significantly impact client trust – you are, in essence, using it to “buy” their confidence.
Here’s why this step is essential:
Enhances Security and Professionalism
Reputable payment gateways employ advanced security measures like encryption and fraud detection. By using them, you signal to your clients that you prioritize the safety of their sensitive financial information.
A clunky or insecure payment process can be a major red flag for clients and lead to abandoned payments. A professional, integrated gateway reassures them that their transaction is protected.
Creates a Seamless User Experience
Ideally, your clients should be able to pay you directly on your website or through a secure, branded payment link without being redirected to an unfamiliar third-party site. Seamless integration of a payment gateway provides a smooth and consistent experience, reducing friction and increasing the likelihood of timely payment.
Offers Multiple Payment Options
Leading payment gateways support a variety of payment methods, including major credit cards, debit cards, and sometimes digital wallets or bank transfers. Offering your clients their preferred payment method adds convenience and further builds trust by accommodating their needs.
Automates and Streamlines the Process
Integrated payment gateways automate much of the payment process, from authorization to transfer, reducing manual effort and potential errors. This efficiency benefits both you and your client.
Builds Credibility
Associating your business with well-known and trusted payment gateway brands (like Pesapal, PayPal, Wise, Stripe, Square, etc.) lends credibility to your operation. Clients are often more comfortable paying through gateways they recognize and trust.
By carefully selecting and integrating a safe payment gateway, you’re not just setting up a mechanism to receive funds; you’re actively building a trustworthy and professional image that encourages clients to pay confidently and promptly.
Step 4: Exceed Expectations – Give it Your All and Deliver Exceptional Quality
While the previous steps focused on setting up clear terms and robust payment systems, this step hones in on the absolute cornerstone of consistent online income: the quality of your work.
No matter how well you’ve drafted your contract or how seamless your payment gateway is, consistently delivering high-quality results is paramount to getting paid without hassle and building a sustainable online business.
Think of the payment you receive as a direct reflection of the value you provide. When you “give it your all” and deliver exceptional quality, you not only fulfill the obligations outlined in your initial agreement (Step 1), but you also build significant goodwill and trust with your clients. This goes beyond simply meeting expectations; it’s about exceeding them whenever possible.
Here’s why delivering top-notch quality is so critical for getting paid:
Justifies Your Value and Price
High-quality work clearly demonstrates the value you bring to the client and justifies your fees. When clients are genuinely impressed with the results, they are far less likely to question the cost or delay payment. Your work becomes its own compelling argument for timely compensation.
Minimizes Disputes and Revisions
Poor quality or work that doesn’t align with the agreed-upon scope is the primary reason for client dissatisfaction and payment disputes. By focusing on excellence from the outset, you reduce the need for extensive revisions and the potential for disagreements over whether the work was delivered as promised.
Builds Trust and Credibility (Reinforcing Step 3)
Just as a secure payment gateway builds trust in the transaction process, delivering consistent quality builds trust in your abilities and reliability as a service provider or business. This reinforces the professional image you’ve worked to cultivate and makes clients more confident in continuing to do business with you and, crucially, paying you on time.
Generates Repeat Business and Referrals
Satisfied clients who are thrilled with the quality of your work are your best advocates. They are highly likely to become repeat customers and refer new business to you. This creates a virtuous cycle where your commitment to quality directly leads to more opportunities to get paid.
Creates a Positive Reputation
In the online world, reputation is everything. Consistently delivering high-quality work builds a strong positive reputation, making you a sought-after professional. This can give you more leverage in setting your terms and attracting clients who value quality and are willing to pay for it.
Ultimately, while contracts and payment systems provide the framework, the actual exchange of value happens through the quality of your deliverables. By committing to excellence in every project, you not only honor your agreement but also proactively reduce potential payment friction and lay the foundation for long-term success and financial consistency in your online endeavors.
Step 5: Cultivate Social Proof – Don’t Let Happy Clients Leave Without a Review
You’ve set clear terms, secured an upfront payment, implemented a smooth payment gateway, and delivered exceptional quality (Steps 1-4). Now it’s time to leverage that positive experience to build a powerful tool for future payments: social proof.
This step is all about actively encouraging your happy clients to share their positive experiences through reviews and testimonials.
In the online world, trust is currency, and social proof is gold. Potential clients looking for freelance services or online businesses rely heavily on the experiences of others to make their decisions.
They want to know that you are reliable, deliver on your promises, and provide genuine value. Positive reviews act as powerful endorsements, validating your expertise and significantly influencing a potential client’s comfort level in hiring you and, crucially, in trusting you with their payment information.
Here’s why actively seeking reviews is essential for consistent online payments:
Builds Credibility and Authority
A collection of positive reviews across different platforms (your website, Google My Business, social media, industry-specific sites) immediately builds your credibility with new prospects. It shows that others have trusted you and had positive outcomes, making you a more attractive and less risky choice.
Increases Trust in the Payment Process
When potential clients see that others have successfully worked with you and were satisfied, it extends their trust to the entire interaction, including the payment process. Knowing that happy customers have navigated your payment system and received quality work reduces anxiety for new clients when it’s time to pay.
Acts as Powerful Marketing
Positive reviews are authentic, third-party endorsements that are often more persuasive than your own marketing copy. They highlight the real-world benefits of working with you and can attract clients who are a good fit and are likely to value your services – and thus pay for them willingly.
Provides Valuable Feedback (and Helps You Improve)
While the focus here is on getting paid, the reviews themselves also offer invaluable insights into what you’re doing well and areas where you could improve. This feedback loop helps you maintain and even enhance the quality of your services (Step 4), further reducing future payment issues.
Reduces Hesitation for New Clients
For someone considering hiring you for the first time, seeing positive testimonials from satisfied clients can be the final push they need to commit. This reduces their hesitation and makes the initial payment (like the commitment fee in Step 2) feel less like a gamble and more like a worthwhile investment.
How to Ask for Reviews Effectively
Timing is key. Ask for a review when the client is happiest – immediately after successfully delivering the final product or service, or after they’ve expressed genuine satisfaction. Make it easy for them by providing a direct link to where you’d like them to leave the review. Personalize your request, reminding them of the specific positive outcome you helped them achieve.
Where to Showcase Your Reviews
Strategically display testimonials on your website, particularly on your homepage, services pages, and a dedicated testimonials page. Share them on your social media channels and include snippets in your proposals or email signatures. The more visible your positive social proof is, the more it will work for you in building trust and encouraging timely payments from new clients.
By making the collection and showcasing of positive client feedback a standard part of your process, you leverage the power of social proof to attract better clients, build trust, and ultimately ensure you get paid online consistently and reliably.
Conclusion
Getting paid reliably online as a freelancer or business owner doesn’t have to be a source of stress. By implementing these five essential steps – from setting clear terms and securing upfront commitment to delivering exceptional quality and leveraging positive reviews – you build a robust system that minimizes risk and fosters trust. Follow this guide consistently, and you’ll pave the way for predictable income, stronger client relationships, and the sustainable growth of your online business.
Did I miss a step? Let me know in the comments section.
And if you need video production services, let me know here. Alternatively, you can visit our company website here.
We are living in the digital age. If you are starting a business today, customers will expect your businesses to be accessible online. An online presence is crucial for building genuine connections, fostering trust, and expanding your reach beyond a single location.
In this article, I will provide a comprehensive, step-by-step guide to establishing and growing an online business in 2025. Furthermore, I will draw a conclusion on my analysis of the projected financial investment required for startup and initial operational phases.
PS:This guide is tailored specifically for launching an online business within Kenya. While the core principles of online entrepreneurship apply broadly, certain aspects, like payment gateways, legal requirements, and market dynamics, will differ significantly in other countries. Keep this in mind as you follow along
1. Get Started With Business Formation and Registration
a. Identify Your Business Name
Your business name is your first impression. Opt for something short, memorable, and easy to pronounce. Crucially, consider how it translates to a domain name – it should be just as clear and catchy online.
I have written a comprehensive guide on how to choose a business name here.
You will be required by the registrar of companies to submit at least 3 names for search when making your application to register. Only the ones that are not registered yet will be approved. If the names you pick are already in the registry, all will be rejected and you will need to resubmit them again.
One business name search cost Ksh. 100 or $0.9 so 3 will cost Ksh. 300. Once yours name approved, you will proceed to registration.
If you need help to register a business or company in Kenya, book a consultation here.
b. Registering A Business
Registration of business in Kenya is done by the Business Registration Services. You need to choose the appropriate legal structure. The most common business structures are Sole Proprietorship, Partnership, Private Company, Limited Liability company and Foreign company.
If you’re a Kenyan registering a business for the first time, I highly recommend opting for a Private Limited Company. This structure not only offers significant tax advantages but also gives you the flexibility to raise capital by selling shares to friends or investors.
For non-Kenyan, please find out with your government how to register a business or company.
The legal structure you choose for registering your business should align with the type of services you plan to offer. To make an informed decision, I recommend exploring the different business entities recognized in Kenya by visiting theBRS (Business Registration Service) portal. This will help you understand the requirements and benefits of each option before proceeding with registration.
So in summary business registration in Kenya include:
Name reservation: Choose a unique business name for easy approval by the registrar of companies.
Incorporation: Complete the incorporation process and submit necessary documents, such as identification, proof of address, and the company’s Memorandum and Articles of Association.
Certificate of Incorporation: After registering, you’ll receive a certificate that establishes your business as a legal entity in Kenya.
Registering a Private company will cost you Ksh. 10,650.
c. Apply For A Tax Pin on the iTax Portal
Once you’ve successfully registered your business, the next crucial step is applying for a Tax PIN on the iTax portal. A business Tax PIN is essential for complying with tax regulations in Kenya. Its required for various transactions, including opening a business bank account, applying for tenders, and filing tax returns.
Please check with your government how to apply for a Tax Pin for your business if you are not a Kenyan.
Understanding Tax Obligations
After obtaining your business Tax PIN, you must be aware of the key tax obligations that come with it:
Income Tax – This is a mandatory tax on the profits your business generates. It is filed annually, and businesses must ensure they declare their income and pay the appropriate tax to remain compliant.
Value Added Tax (VAT) – If your business expects an annual turnover of Ksh 5 million or more, you must register for VAT obligation. This means you will need to charge VAT on your goods and services and remit it to the Kenya Revenue Authority (KRA) every month. Note that if your turnover is below Ksh.5 Million and you charge your clients VAT, you are not exempted from this.
e. Sign Up for eTIMS
Once you receive your business Tax PIN, it is mandatory to sign up for eTIMS (Electronic Tax Invoice Management System). eTIMS is a digital invoicing system introduced by KRA to enhance tax compliance and streamline VAT reporting.
Why is eTIMS important for your business
✅ It enables you to generate valid tax invoices that comply with KRA regulations. ✅ It simplifies VAT and income tax return filing, ensuring accuracy and reducing errors. ✅ It helps your business stay compliant, avoiding penalties and fines from KRA.
By registering for eTIMS early, you set your business up for smooth tax operations and avoid last-minute compliance issues.
f. Open a Business Bank Account
With your business officially registered and your Tax PIN and eTIMS setup in place, the next important step is opening a business bank account. This is important. It will help you separate your personal finances from your business transactions, ensuring better financial management and credibility.
Why You Need a Business Bank Account
✅ Professionalism – Clients and suppliers take businesses with a corporate bank account more seriously. ✅ Easier Accounting & Tax Compliance – It simplifies bookkeeping, tax filing, and financial reporting. ✅ Access to Business Loans & Credit Facilities – Many banks offer financing options to businesses with active accounts. ✅ Smooth Payment Processing – You can receive payments via bank transfers, mobile money integrations, and online payment gateways.
Requirements for Opening a Business Bank Account
While the exact requirements vary by bank and country, most financial institutions will ask for the following:
Certificate of Incorporation / Business Registration Certificate (depending on your business structure).
KRA Tax PIN for the Business (obtained from the iTax portal).
Company CR12 form (for limited companies, showing the list of directors) issued by BRS on registration.
National IDs or Passports for the Business Owners/Directors.
Business Registration Documents, such as a partnership deed (if applicable).
Business Address & Contact Information.
Choosing the Right Bank
When selecting a bank, consider factors such as transaction fees, online banking features, mobile money integration (M-Pesa Paybill/till number options), and customer support.
Some banks also offer additional perks like free business advisory services or discounted loans for SMEs.
2. Build a Website for Your Business
At this point you have your business fully registered, tax-compliant with a bank account. The next essential step is creating a website. In today’s digital world, having a website is no longer optional—it’s a necessity for any business looking to grow and succeed.
Benefits of Having a Business Website
✅ 24/7 Online Presence – Customers can learn about your business and make inquiries at any time. ✅ Increased Credibility & Trust – A professional website reassures potential clients that your business is legitimate. ✅ Better Customer Engagement – You can showcase your products/services, add contact forms, and even integrate live chat for instant support. ✅ Marketing & SEO Advantages – A website helps your business rank on search engines, attracting more organic traffic. ✅ E-commerce & Payment Integration – If you plan to sell products or services online, a website allows seamless transactions.
The Rise of AI Website Builders
With advancements in Artificial Intelligence (AI), building a website has become easier than ever. AI-powered website builders like Wix ADI, Shopify Magic, and Hostinger AI Website Builder allow users to generate a fully functional website in minutes. These platforms are great for beginners but can be limiting in customization and scalability.
Why WordPress is the Best Choice for Your Business Website
WordPress stands out as the most powerful and flexible platform for building business websites. It powers over 40% of websites worldwide, and here’s why it’s the best choice:
✅ Scalability – Whether you’re a small startup or a growing enterprise, WordPress allows you to expand your website effortlessly. ✅ Customization with Themes & Plugins – Thousands of free and premium themes let you design a professional-looking website. Plugins add advanced functionalities such as SEO optimization, security, and e-commerce. ✅ SEO-Friendly – WordPress makes it easy to optimize your site for search engines, helping you attract more visitors. ✅ E-commerce Integration – With plugins like WooCommerce, you can turn your website into a full-fledged online store.
WordPress.com vs. WordPress.org: Understanding the Difference
Many beginners get confused between WordPress.com and WordPress.org, but they serve different purposes:
Businesses looking for advanced features and growth
If you’re serious about growing your business online, WordPress.org is the best choice as it gives you complete control over your website.
WordPress.com Features to Consider
If you decide to go with WordPress.com, here are some powerful features available on its premium plans:
🔹 Jetpack – A security and performance plugin offering backups, malware scanning, and website speed optimization. 🔹 WooCommerce – The ultimate e-commerce solution for selling products and services online. It includes payment integration, inventory management, and shipping options. 🔹 Pressable – A premium WordPress hosting service optimized for speed, security, and scalability. 🔹 DreamHost Hosting – One of the recommended hosting providers for WordPress, offering managed hosting with automatic updates, backups, and strong security features.
My take
Building a website is an investment that will drive growth, credibility, and sales for your business. WordPress remains the best option due to its scalability, customization options, and extensive plugin ecosystem. Whether you choose WordPress.com or WordPress.org, having a professional website will set your business apart in today’s competitive market.
3. Content Marketing: The Bulletproof Way to Grow Your Online Business
Now that your website is set up, the next step in building a successful online business is content marketing. A well-designed website alone is not enough—you need to attract visitors, engage them, and convert them into customers. This is where content marketing comes in.
What is Content Marketing?
Content marketing is the process of creating and sharing valuable content to attract and retain your target audience. Unlike traditional advertising, content marketing focuses on educating, entertaining, and engaging potential customers, building trust, and driving sales over time.
Key Content Marketing Strategies for Business Growth
1️⃣ Blog Posts & Articles – Writing high-quality blog posts related to your industry helps establish your expertise and improves your website’s SEO. Optimizing these posts with the right keywords ensures they rank on Google, driving organic traffic.
2️⃣ Video Content – Videos are highly engaging and can be shared across multiple platforms (YouTube, Instagram, TikTok, and Facebook). Tutorials, product demos, customer testimonials, and behind-the-scenes content help connect with your audience.
3️⃣ Graphics & Infographics – High-quality visuals like posters, infographics, and carousels make your content more shareable on social media. Tools like Canva and Adobe Express can help you create professional designs.
4️⃣ Social Media Marketing – Sharing your blog posts, videos, and graphics on social platforms (Facebook, Instagram, LinkedIn, Twitter, TikTok) increases exposure and drives traffic back to your website. Consistent posting and engaging with your audience build brand awareness.
5️⃣ Email Marketing – Collecting emails and sending valuable content, promotions, and newsletters help nurture leads and convert them into loyal customers.
6️⃣ SEO Optimization – Every piece of content you create should be optimized for search engines. Using the right keywords, meta descriptions, and backlinks improves your website’s ranking, making it easier for customers to find your business.
✔️ Understand your brand deeply and create content that aligns with your business goals. ✔️ Monitor performance metrics and adjust strategies over time. ✔️ Ensure brand consistency across all platforms.
My take
Content marketing is the bulletproof way to grow an online business. By consistently creating valuable content, optimizing for SEO, and leveraging social media, you can attract more customers and build a strong brand presence.
If you need any of the content marketing services, feel free to contact me. I together with my team will be happy to help you out with everything that pertains content marketing.
Conclusion
Starting and growing a successful business requires a step-by-step approach, from business registration to content marketing and beyond. By following the key stages we’ve covered—registering your business, obtaining a tax PIN, setting up eTIMS, opening a business bank account, building a website, and leveraging content marketing—you lay a solid foundation for long-term success.
However, business growth is a continuous journey. As your operations expand, you will encounter other important aspects such as financial accounting, labor laws, business permits, and compliance regulations. These elements become essential as you scale, hire employees, and navigate legal requirements.
The key to thriving in business is consistency, adaptability, and strategic planning. Whether it’s staying compliant with tax laws, refining your digital marketing efforts, or ensuring proper financial management, each step plays a role in your long-term success.
By investing in content marketing, optimizing your online presence, and working with experts when needed, you position your business for sustainable growth in today’s competitive marketplace. Stay focused, keep learning, and watch your business thrive! 🚀
Are you a business owner or consultant in Kenya looking for new opportunities? Finding and applying for tenders and consultancy projects can be a game-changer for your growth. In this video, I’ll walk you through the process of how to effectively search and find these opportunities online in Kenya. I’ll cover the best websites, search strategies, and tips to help you identify the right projects for your business.
Share your thoughts and feedback on the comments section below here. For all enquiries reach out to us on the contacts page here.
For full video production services, request for services here.
Ensuring business compliance in Kenya requires entrepreneurs to adhere to essential legal and regulatory practices.
In this blog post, I will discuss five critical measures that startups and established businesses must implement to maintain compliance.
1. Register Your Business Properly
Registering your business with the Registrar of Companies is the first and most important step. You need to choose the appropriate legal structure (e.g., sole proprietorship, partnership, limited liability company) and ensure the company is officially recognized by the government.
This process involves:
Name reservation: Ensure your business name is unique and approved by the registrar.
Incorporation: Complete the incorporation process and submit necessary documents, such as identification, proof of address, and the company’s Memorandum and Articles of Association.
Certificate of Incorporation: After registering, you’ll receive a certificate that establishes your business as a legal entity in Kenya.
2. Comply with Tax Obligations
It is crucial to register with the Kenya Revenue Authority (KRA) for tax purposes and ensure you meet all tax obligations. Failure to do so can result in penalties or legal action.
These steps should be followed:
Taxpayer Identification Number (PIN): Obtain a PIN from KRA for tax purposes.
Value Added Tax (VAT): If your business turnover exceeds KSh 5 million per year, you must register for VAT. You can register for this obligation if your business charges its clients VAT.
Pay As You Earn (PAYE): If you employ staff, you must withhold PAYE from employee salaries and remit it to KRA.
File Tax Returns: Submit regular returns such as monthly VAT returns and annual income tax returns (self-assessment) to avoid non-compliance.
3. Adhere to Labor Laws
Compliance with Kenyan labor laws is essential to avoid disputes with employees and ensure their rights are protected.
Key labor regulations include:
Employment Contracts: Provide written employment contracts to all employees, outlining terms and conditions of employment.
Minimum Wage Compliance: Ensure that wages meet or exceed the minimum wage requirements set by the government for your industry. For instance, the minimum wage for House managers & Cooks is now set at Kes 9,129 per month, unskilled workers set at Kes 7,997 per month and drivers is set at Kes 11,719 per month.
Certain businesses in Kenya require specific licenses and permits depending on the nature of the business. Failure to acquire these licenses can lead to fines or closure.
Some common licenses include:
Business Permit: A local county business permit, issued by the relevant county government, is required to operate within a specific region.
Sector-Specific Licenses: Depending on your industry (e.g., health, food, tourism, education), you may need additional licenses such as the Health License, Food Safety Certification, or Tourism License.
Environmental Compliance: Businesses that impact the environment may need an environmental impact assessment (EIA) report approved by the National Environment Management Authority (NEMA).
5. Maintain Accurate Financial Records
Proper accounting and financial reporting are vital for tax compliance and business growth. Regular bookkeeping helps businesses meet legal requirements and makes it easier to file tax returns accurately. To remain compliant, ensure that:
Proper Accounting System: Set up and maintain a sound accounting system for tracking income, expenses, and assets.
Audit Reports: Depending on the size of the business, you may be required to have an audit of financial statements annually.
Retain Business Records: Keep business records for at least seven years, including receipts, invoices, tax returns, and any other financial documents.
6. File Annual Returns with the Business Registration Service (BRS)
In Kenya, it’s mandatory for companies to file annual returns with the Business Registration Service (BRS) to maintain their status as an active entity. Filing these returns is a legal requirement and helps keep your company records up to date with the government. Failing to file annual returns on time can result in penalties or even the striking off of the company from the register.
This process involves:
Updating Company Information: Ensure all details about the company, such as directors, shareholders, and registered address, are current.
Timely Submission: Submit the returns before the deadline (usually within 18 months after incorporation and annually thereafter).
Payment of Fees: A nominal fee is required for filing the returns.
Conclusion
Ensuring business compliance in Kenya is crucial for the long-term success and sustainability of startups. By registering your business properly, meeting tax obligations, adhering to labor laws, acquiring necessary licenses, maintaining accurate financial records, and filing annual returns with the Business Registration Service (BRS), you can avoid legal pitfalls and build a strong foundation for growth.
Compliance not only helps you stay on the right side of the law but also enhances your business’s credibility, attracts investment, and fosters trust with customers and partners. Stay compliant to safeguard your business and thrive in a competitive market.
And if you are looking for a sustainable way to market your business online through video, I can help you out. Contact me here or through my company Techtube Video Studio. I am professional video producer with over 10 years of experience in digital video production.
When it comes to taxes in Kenya, individual consultants and freelancers are subject to the same regulations. This is because they have multiple sources of income. Their income is determined by their productivity.
In this article, I will shed a light on the kind of tax obligations that consultants and freelancers needs be enrolled in.
Income Tax
This is compulsory tax for all people with a Tax PIN. Income tax is filled annually by the taxpayer on iTax portal. This is the direct tax on income and is charged for each year of income on all the income of a person, with resident or non resident that is accrued in or was derived from Kenya.
As of July 2023, tax rates now vary depending on the amount of income you earn per year. Here is table.
Watch Video – Understanding Tax Obligations as a freelancer or consultant
Every individual tax payer is entitled to get a Personal Relief of Kshs. 28,800 per annum (Kshs. 2,400 per month). This only applies to resident tax payers. Non residentials are expected to pay their taxes at the rates indicated above with no relieve.
Most consultancy clients will withhold 5% of the total cost of services and remit the amount to Kenya Revenue Authority. This amount reflects in your account and deducted from tax payable at the end of the year. E.g if your tax payable at the end of the year is Ksh. 50,000 and your total withholding tax credit amount is Ksh. 20,000, then you will pay Ksh. 30,000 as tax payable.
Penalties – If you don’t file your income tax returns 6 months after your annual accounting year has ended, you will be penalized Ksh. 20,000.
VAT Tax
VAT tax is an indirect tax that is paid by person who consumes taxable goods and services supplied and consumed in Kenya. This is another tax obligation that a freelancer or a consultant needs to voluntarily enroll in order to benefit. Its not mandatory but necessary if you are charging VAT on your services or your client is withholding VAT tax on the services that you have rendered.
Additionally, it benefits you as all the VAT tax on purchases on your PIN will be credited into your tax account via ETIMS. This is accounted for when you file your return at the end of the month.
Unless otherwise, VAT tax rate for freelancers and consultants is 16% of the total cost of goods or services.
Once you are enrolled for VAT tax, you will be required to file return before the 20th date of every month. As of November 2024, most of the purchases and sales tax are prepopulated into the downloadable return excel sheet to simplify the process.
How To Claim VAT Tax
In order to claim VAT tax on all your purchases, you need to first enroll for VAT tax via iTax portal. Once the VAT obligation is added to your PIN, you can start claiming VAT on all your purchases while filling your monthly returns.
When making purchases, ask your seller for VAT tax receipt. They will request that you give them your PIN number. This way your purchase will qualify as it will be registered on ETIMS.
Keep all receipts with claimable VAT in your file for easy reference.
File your VAT returns before 20th day of the following month for previous months return. e.g. You file January VAT returns before 20th Feb.
You will be penalized Ksh.10,000 if you file your returns later than 20th day of the month.
Digital Marketplace Supplies Registration
If you’re a non-resident freelancer or consultant selling goods or services in Kenya over the internet, an electronic network, or a digital marketplace, you must register for Value Added Tax (VAT). This applies even if your sales are less than the usual KES 5 million annual turnover threshold.
Paying Your Taxes
You can pay your tax online on iTax portal. You can pay via Mpesa or Bank. You will first need to generate a payment slip on iTax portal then use the payment slip No. for the payment to be processed. If you have any problem, its advisable to contact KRA support for assistance.
Conclusion
Understanding your tax obligations makes navigating the tax system straightforward. Paying taxes is essential for the growth and expansion of your freelance or consultancy business. Don’t be misled into avoiding your tax responsibilities.
Tax-compliant freelancers and consultants are often the preferred choice for businesses and individuals seeking services. Adhering to tax regulations also opens doors to higher-value contracts, as many organizations require proof of tax compliance before awarding significant projects.
And that is it from me here. I hope you have found this article helpful. Let me know your thoughts in the comments section below. And if you need help to create content, you can reach out to me here.
Sarah Guantai, the founder and CEO of Kijani Curlcare and Skincare shares her story on building and launching a Kenyan beauty Brand out of her hair and skin struggles.
We visited her at an exhibition stand at KICC Nairobi for an exclusive interview. Sarah and her Co-Founder and Husband Rodgers Egesa shared their journey from a passionate entrepreneur to a beauty brand owners.
Join us as we delve into the secrets behind building a successful Kenyan brand.
Do you have an inspiring story that you would like to share? let me know here.
If you need video production services, you can reach out to by clicking here or visit our video production consultancy website here.
