Accounting is typically the language of business. In Layman’s terms, it is numbers about money that are useful in decision making. Numbers do tell a story, and in this case, they give a deeper understanding on how individuals and companies are performing financially. Acquisition of accounting skills increases your financial intelligence, which is key in making the best investment decisions that are viable in ensuring the survival of the business. I for one barely had any accounting skills before I came to Vinestalk Kenya which is a financial services company. I was green in the area, and felt like an underdog in the company of financially literate minds. But I took it as a challenge and started learning, and I must admit, I have seen change in how I handle even my own finances. Every day of our lives, we are on the verge of making those slight changes that would make all the difference.

There are three major types, OR flavors as I call it, of accounting.

1. FINANCIAL ACCOUNTING

This is the process of recording financial transactions. It involves preparation of source documents for all transactions to build up to financial statements. Some of the main statements that can be deduced after recording of financial transactions include:-

• Income statement

• Statement of financial position

• Cash flow statement

Financial accounting must be performed according to the Generally Accepted Accounting Principles guidelines, and this is because, the main purpose of F.A is to prepare financial reports that provide information about an organizations performance to external parties such as investors, creditors, tax authorities among others. It is amazing how these 3 sheets of paper summarize the financial situation of a company. They give a snapshot insight of the performance and the potential of a business to its relevant stakeholders.

2. MANAGERIAL ACCOUNTING

This is well presented detailed financial information used internally by the company’s management and board of directors to aid in making well-informed business decisions. It includes:-

• Cost accounting

• Budgeting

• Internal audit

• Investment analysis by use of ratios

3. TAX ACCOUNTING

Taxation is a means of raising revenue by the government through collecting funds from citizens who are eligible to it. Tax accounting is the process of preparing tax returns and making the relevant payments to the Kenya Revenue Authority for businesses and individuals. There are various types of taxes in Kenya, as indicated below:-

a) Income Tax

Income tax is imposed on;

• Business income from any trade or profession

• Employment income

• Rent income

• Dividend and Interests

• Pension income

• Income from a Digital Marketplace

• Natural resource income among others

And the methods of collecting income tax include;

• Corporation tax

• Pay As you Earn (PAYE)

• Withholding tax (WHT)

• Advance tax

• Installment tax

b) Rental Income Tax

This is tax charged on rental income received from renting out property.

c) Value Added Tax (VAT)

VAT is charged on supply of taxable goods or services made or provided in Kenya and on importation of taxable goods or services into Kenya.

d) Excise duty

This is imposed on;

• Goods manufactured in Kenya

• Goods imported into Kenya and specified in the 1st schedule to excise duty act 2015

e) Capital Gains Tax (CGT)

This is chargeable on the whole of a gain which accrues to a company or an individual upon transfer of property situated in Kenya, no matter when the property was acquired.

f) Agency Revenue

This is a type of payment that KRA collects on behalf of various revenue collection agencies in Kenya. The two types of Agency revenue include;

• Stamp duty

• Betting and pool tax

Vinestalk Kenya is committed to educate companies on the recently released tax amendments and advise them accordingly, as well as performing the accountancy function on behalf of organizations. For more information and updates, follow our social media channels; @Vinestalkfintech on all platforms Or reach out to us directly on our email: info@vinestalk.co.ke

AUTHOR: David Muna DESIGNATION: Operations Lead