Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff.

When should you consider outsourcing accounting and bookkeeping services?

• Cases of a small business which doesn’t require a full-time bookkeeper but needs a person with more skills than the office manager, or receptionist

• Cases where a company of any size cannot find a full-time employee with suitable abilities at affordable costs
• Cases where temporary services are needed, e.g., extra help with end of the year reports or if a full-time employee is going on holiday, maternity leave, etc.
• Cases of automation

WHAT FACTORS DO YOU CONSIDER BEFORE YOU DECIDE TO OUTSOURCE SUCH SERVICES?

• Cost factors
• Availability of such service providers ( outsourcing companies)
• The specific services that you need
• Data security

What are the advantages of outsourcing accounting services?

• More Cost Effective- It saves cost of recruiting and hiring accounting staff
• Access to finance and accounting expertise
• Avoid turnover and time-off issues
• It allows you to plan your budget efficiently
• It helps you to ensure the compliance of your business
• It increases efficiency
• It allows you to plan your budget efficiently

What types of business and financial tasks can you outsource?

• Bookkeeping and reconciliation

• Payroll processing services

• Accounts payable management

• Accounst receivables management

• Tax returns filing and remittance

• Statutory deductions filing and remittance

In conclusion,when outsourcing accounting services it is important to make sure that you do your research.

Working with experts in the field assures you that your finances and being taken care of appropriately.

When used properly, outsourcing is an effective strategy to reduce cost.

A statutory deduction is a mandatory deduction the employer has to take out of the employees paychecks.

In Kenya statutory deductions are a legal requirement where every employer must on behalf of the relevant bodies deduct from the employees salaries and remit the same to the Government through those bodies.

Basic statutory deductions in Kenya:

• P.A.Y.E TAX

It is a tax collected from gainful employment.

Gains or Profits includes: wages, casual wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, or subsistence, travelling, entertainment or other allowance received in respect of employment or services rendered.

PAYE is chargeable to persons of employment income of Kshs. 24,000 and above per month.

It should be filed and remitted on or before 9th of the following month failure to which

For late filing you get a 25% of the tax due or Kshs. 10,000. whichever is higher

For late payment: you are subject to a 5% of the tax due and a late payment of 1% per month on the unpaid tax until the tax is paid in full.

N.B – P.A.Y.E tax is only deducted by Companies and not Business Names

• N.H.I.F

This is a deduction made by the employer which caters for the employees medical matters.

It amount deductible is dependent on the prevailing rates.

It should be filed and remitted on or before 9th of every calendar month.

• N.S.S.F

Normally, the employer pays half and the employee pays the other half of the amount remitted.

Currently most of the employers are still using the old rates of Ksh.200 for both employer and employee.

It should be filed and remitted before 15th of every month.

Engage our team for management of the statutory deductions for your business.

We are here to keep you as compliant as possible.

WHAT IS MONTHLY RENTAL INCOME?

This is income derived from renting out residential properties for use or occupation

WHAT IS MONTHLY RENTAL INCOME TAX?

This is a tax on gross residential rental income between 288,000 (ksh. 24,000 per month) and 15,000,000 per annum and the tax is 10% on gross rent payable monthly on rent received.

The Finance Act 2015 introduced a new Section 6A in the Income Tax Act Cap 470 Laws of Kenya, which provided for a simplified tax regime on rental income and was introduced in January 2016.

What are the benefits of being in the Monthly Rental Income tax?

-Monthly Rental Income is a final tax and thus you do not need to file the annual income tax returns.

-It is taxed at a flat rate of 10% and thus you are certain of the tax payable.

-No much record keeping required by the landlord in terms of the expenses incurred as the rent received is the only compulsory record to maintain.

Remember to file and remit your Monthly Rental Income Tax by 20th of every month