Making a little money on the side? This is a post for you
There is a version of hide-and-seek that little children play, where instead of hiding from you, they shut their eyes tightly, then cover them with their hands thinking that since they can not see you, you also cannot see them.
Sometimes as adults we play this game too, especially where the taxman is concerned. We hope that since we do not want to deal with our taxes, our tax obligations will not find us. This is especially the case when we are just hustling. Making kidogo money here and there. Sometimes in our own name, or that ka-side company whose returns we do not file, because si ati ni biashara, it is just the company name you use to invoice once in a while.
The truth though is, the fact that we are not dealing with our taxes does not mean that the taxman will not one day catch up with us. In my day job as a corporate finance consultant, I am often called in to advise businesses that became big without realising it and now need to get their finances in order. In almost all cases, I find tax problems, and also help the entrepreneurs realize that complying right from the start would actually have saved the business cash.
This is because being tax compliant does not mean always paying taxes. Often, especially for young businesses, you do not owe anything in taxes because you are not yet making profits, but you do need to file your returns to let the taxman know that you do not owe them anything.
How can you owe nothing in taxes yet you have been invoicing?
Because first, unlike employment income which is taxed before it hits your bank account, the taxman allows you to deduct certain business expenses to determine whether you made profits, against which you are supposed to pay tax. Secondly, if you provide services, your clients are supposed to deduct withholding tax, which is a prepayment of your taxes. Sometimes you will find that you have made a profit, you have some tax due, but you already paid a chunk of this, through your withholding tax.
But there is no way to know all this, without engaging with your taxes. This is why I would like to invite you to join the Ushuru.co.ke team this March the 7th, for their super educative tax masterclass. This class has a special focus on people who are in small businesses. You will learn how to:
- Make the right choice, between operating as a sole proprietor, versus registering a limited liability company.
- How to make use of the iTax platform, and to avoid signing up for obligations that do not apply to your business. Many people for example unknowingly sign up for VAT which brings them a whole lot of trouble.
- How to differentiate between allowable and unallowable expenses when it comes to doing your tax returns.
- How to compute tax that is due.
- What to do if you have messed up in the past, and you would like to clean up your taxes moving forward.
- How to sort out blocked PINs…
- …and so much more!
Ushuru will have tax consultants on-site, you can ask them any question you have ever wanted to ask a tax expert, all for KES 4,000. Email Ushuru on tax@ushuru.co.ke with the discount code “Rookie2020” to get a 30% discount on the ticket price.
