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Records

Small business record keeping in Kenya, and what KRA expects

What records to keep and for how long, what KRA expects on turnover tax and eTIMS in 2026, a daily and monthly routine, and keeping business money separate.

9 min read

Records feel like paperwork until the day you need them. KRA sends an assessment, a staff member's totals don't match the M-Pesa statement, or you can't tell whether last month made any money. By then the till slips have faded and the notebook is missing pages.

Here is what to keep, for how long, what KRA expects as of November 2026, and a routine that takes minutes a day.

This is general information, not tax advice. Rules change and every business is different, so confirm what applies to you with KRA or an accountant.

What records to keep

Keep anything that shows money coming in, money going out, or what the business owns and owes:

  • Sales: a daily record of cash, M-Pesa and credit (deni) sales, your staff's reports from the WhatsApp group, and the eTIMS invoices you issue.
  • Statements: M-Pesa statements for your Till, Paybill or Pochi la Biashara, and bank statements, every month.
  • Purchases: supplier invoices, eTIMS invoices and delivery notes for stock.
  • Running costs: receipts and M-Pesa messages for rent, wages, transport, airtime, electricity and repairs.
  • Staff: what you paid each person and when, advances, contracts, and payslips if anyone is on payroll.
  • Stock and debts: stock counts, who owes you, and what you owe suppliers.
  • Big items: receipts for things that last, such as a fridge, shelves or a motorbike.
  • Tax and licences: your KRA PIN certificate, county business permit, returns, payment slips and any letters from KRA.
  • Agreements: the lease, loan papers and supplier contracts.

How long to keep them

Section 23 of the Tax Procedures Act (as at 1 September 2026) says to keep tax records for five years from the end of the period they relate to. Keep them longer if KRA has amended an assessment or a dispute started within those five years. Records must be in English or Kiswahili; if they are not, KRA can require a translation at your cost.

The simple, safe rule: keep each year's records until five full years after that year ends. Records from 2026 stay until at least the end of 2031.

Paper fades and gets wet. Photograph each receipt the day you get it, keep the originals in one envelope per month, and back the photos up somewhere other than your phone.

What KRA expects in 2026

Turnover tax (TOT)

As of November 2026, KRA's turnover tax page says:

  • TOT is for resident businesses with gross sales of more than Ksh 1 million and not more than Ksh 25 million a year.
  • The rate is 1.5% of gross sales. No expenses are deducted.
  • You file and pay through iTax by the 20th of the following month.
  • It does not cover rental income, management, professional or training fees, or income already taxed through final withholding tax.
  • You can write to KRA to be taxed under normal income tax instead.
  • TOT payers must keep daily records of gross sales and of purchases.
  • Filing late costs Ksh 1,000 a month. Paying late adds 5% of the tax due. Interest on unpaid tax is 1% a month, under section 38 of the Tax Procedures Act.

The same page says a business selling goods or services that carry VAT must also register for VAT when its turnover is Ksh 5 million or more.

Example (made-up numbers): a hardware store in Eldoret, registered for TOT, sells Ksh 150,000 in October. Its TOT is 1.5% × 150,000 = Ksh 2,250, due by 20 November. The tax is on sales, not profit, so a month with little profit still owes the full Ksh 2,250.

Behind on tax? KRA's Finance Act 2026 page describes an amnesty on penalties, interest and fines for tax due up to 31 December 2025, as long as the tax itself is paid by 31 December 2026.

eTIMS electronic invoices

eTIMS is KRA's system for electronic tax invoices. KRA's eTIMS FAQ says "all persons engaged in business are required to on-board eTIMS and issue electronic tax invoices", whether or not they are registered for VAT. That includes businesses on TOT.

It is free. KRA's options for small businesses include eTIMS Lite on the web through eCitizen, a USSD menu on *222# for individuals and sole proprietors, and a phone app.

  • Your business customers need it. Without your eTIMS invoice, they can't claim what they paid you as an expense.
  • KRA now checks. From 1 January 2026, KRA began checking the income and expenses in income tax returns, starting with returns for 2025, against eTIMS and other records. Expenses need a valid electronic invoice, with some exceptions set out in law (KRA notice, 10 November 2025).
  • If you pay normal income tax, ask suppliers for an eTIMS invoice with your KRA PIN on it, which KRA says is needed where applicable (The Star).
  • Buying from a farmer or an informal trader who can't issue one? KRA's buyer-initiated invoicing lets you raise the invoice on eCitizen for the seller to approve.
  • A notice comes before a penalty. Under the Finance Act 2026, if a business fails to issue an electronic invoice, KRA issues a notice and considers its explanation before applying a penalty.

Why your own records matter more now

  • The Finance Act 2026 lets KRA send pre-filled returns built from information it already holds. You confirm or amend them, and your records are how you check them.
  • In a dispute, KRA's assessment is treated as correct until you prove otherwise with documents. Oraro & Company Advocates point to a 2026 Tax Appeals Tribunal decision that says so (Oraro, April 2026).

A simple daily routine

At closing, ten minutes:

  1. Write down the day's sales: cash counted, M-Pesa received, and credit given with the customer's name.
  2. Check the staff's WhatsApp report against the cash and the M-Pesa messages. Ask about any gap the same day, while people remember.
  3. Record every payment made today, with a photo of the receipt or the M-Pesa message.
  4. Write down anything you took for yourself: cash, airtime or stock.
  5. Issue eTIMS invoices as you sell, not in a rush at month end.

If typing is what stops you, Risiti reads receipt photos and forwarded M-Pesa messages, and keeps personal spending apart from business costs (receipts and expenses).

A monthly routine

In the first week of the month, about an hour:

  1. Download last month's M-Pesa and bank statements and tick each line against your daily records.
  2. Count your stock at buying price.
  3. Work out what's left: sales, minus the cost of the stock you sold, minus running costs. Our guide to working out your shop's real profit shows how.
  4. If you are on TOT, file and pay by the 20th, and keep the payment slip.
  5. Follow up any deni older than a month.
  6. Mark the month's envelope with the month and year, and back up the photos.

Risiti shows what's left (sales minus costs) every day, week and month, with a PDF report and spreadsheets you can download for your accountant (profit).

Keep personal and business money apart

When home and shop money share one pocket, you can't see what the business makes, and money your brother sent looks exactly like a sale. That matters: when records are thin, KRA can work out tax from what went through your bank account, and a 2026 High Court decision upheld this method (Oraro).

  • Take business payments on a Till or Pochi la Biashara, not your personal number. Safaricom says Pochi lets owners separate their business funds and personal funds.
  • Pay yourself a fixed amount each week or month, and record it as drawings.
  • Don't pay school fees or home shopping straight from the till. If you must, write it down as drawings the same day.
  • Count stock you take home as drawings, at buying price.
  • When personal savings or a loan go into the business, write down where they came from, so no one mistakes them for sales.

What to do today

  1. Start a daily sales record tonight, in a notebook, a spreadsheet or an app.
  2. Get one envelope for November's receipts, and photograph the ones already in your wallet.
  3. If you are not on eTIMS yet, register. KRA's free options include *222# and eCitizen.
  4. Check whether your sales put you on turnover tax. If you owe tax from 2025 or earlier, ask KRA about the amnesty before 31 December 2026.
  5. Set your own weekly pay, and stop paying home costs from the till.
  6. Confirm with KRA or an accountant what applies to your business.

Sources

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