Accounting records the Companies Act requires
What Kenya's Companies Act says a company's accounting records must contain, where they are kept, how long they last, and how tax law adds to it.
By Achekam · · 5 min read · For Running a business businesses in Kenya
Most Kenyan directors think about record keeping in tax terms: what KRA might ask for, and for how long. The Companies Act has its own, separate requirement, and it applies whether or not the company owes any tax. It says what the accounting records must contain, where they are kept, who may look at them and how long they must survive.
The two sets of rules overlap but do not match. A company that keeps records only to the tax standard can still fall short of the Companies Act, and the other way round. This article sets out what each one says, and what a practical set of records looks like.
Day-to-day entries of money in and out
Section 628 of the Companies Act, 2015, in the consolidated version dated 27 December 2024 on Kenya Law, requires every company to keep proper accounting records. At their core, those records must contain day-to-day entries of the money the company receives and spends.
"Day-to-day" is the important word. A shoebox of receipts summarised once a year by the accountant is not a set of day-to-day entries. The law expects the records to show each receipt and each payment as it happened, with enough detail to know what it was for.
Assets, liabilities and stock
The same section requires a record of the company's assets and liabilities. That means knowing, at any time, what the company owns and what it owes: equipment, vehicles, money owed by customers, loans, amounts owed to suppliers and to KRA.
Companies that deal in goods have an extra duty. Section 628 requires them to keep statements of stock held at the end of each financial year and the stocktaking records those statements are based on. A retailer, wholesaler or manufacturer needs the count sheets, not just the final stock figure in the accounts. For how eTIMS adds its own stock-in and stock-out rules, see eTIMS stock records.
Failing to keep proper accounting records is an offence under section 629, with fines of up to two million shillings for a company.
Where the records live and who can inspect them
Section 630 requires a company to keep its accounting records at its registered office, open to inspection by the company's officers, and to preserve them for not less than seven years from the date they were created.
Two practical points follow. First, directors and other officers are entitled to see the records, so a bookkeeper or outside accountant should not be the only person who can reach them. Second, if your records are kept electronically, ask your adviser how the registered-office requirement applies to your set-up, and make sure officers can get to them on request.
You can read sections 628 to 630 in the Companies Act, 2015 on Kenya Law, which holds the consolidated text of the Act.
How tax law adds to it
The Tax Procedures Act, as published on Kenya Law in its consolidated version dated 1 September 2026, has a separate rule in section 23. Every person must keep the documents a tax law requires, in an official language and in a way that lets their tax liability be readily worked out, for five years from the end of the reporting period they relate to, with amounts in Kenya shillings. Documents relating to an amended assessment or to proceedings started within those five years must be kept longer.
Under section 82, failing without reasonable cause to keep them attracts a penalty of the higher of ten per cent of the tax payable for the period or, where no tax is payable, one hundred thousand shillings.
So the Companies Act asks for seven years from creation, and the tax rule for five years from the end of the period, with longer where a dispute is open. The longer of the two is the safe working rule for a company. For the tax side in detail, see keeping tax records for five years.
Achekam's ledger, trial balance and period locks
In Achekam, each business has its own double-entry ledger with a standard chart of accounts set up when the books first open. Accounts can be added, renamed or switched off, so the chart can follow the business rather than the other way round.
The general ledger lists every posted line, which is the day-to-day record the Act describes. The trial balance shows each account for all time, for a period or at a chosen date, and says whether debits equal credits, giving a quick view of assets and liabilities at any point.
Months can be soft-closed, hard-closed and locked. A closed month refuses postings from every source, and reopening a hard close needs a second approver. That matters for records that must be preserved: once a year's figures have gone into the financial statements, nobody can quietly change them.
For stock, the Warehousing add-on keeps stock locations with the quantity on hand at each, and a stock count sets a location's quantity to what was counted and records the difference as an adjustment. Be aware that stock counts do not post to the general ledger; only till sales and till returns move the inventory account. The year-end stock figure in the accounts still needs a journal.
Two more limits to know. Achekam's ledger screens show every amount in rand, and the chart of accounts is stored in ZAR, even for a Kenyan business, so check how amounts are labelled on anything you print for KRA. And Achekam keeps Kenyan till records for South Africa's 7-year retention period until a Kenyan retention policy exists in the product.
A records checklist for directors
- A ledger with every receipt and payment entered as it happens, not in a year-end batch.
- A list of assets and liabilities that ties to the trial balance.
- For trading companies, year-end stock statements and the count sheets behind them.
- Supplier invoices, customer invoices, bank statements and contracts filed so they can be found by date and party.
- Closed and locked periods once the accounts for a year are final.
- Officers able to inspect the records on request.
- A retention rule of at least seven years, longer where a tax dispute is open.
For which documents to keep and for how long, our retention schedule for Kenyan businesses sets the periods side by side.
Pick one month this quarter and test it: could an officer see every receipt and payment for that month, and match it to the bank? If not, that is where to start.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
