Leaving a job to work for yourself can be liberating, and also full of unfamiliar responsibilities. As an employee, your employer deducted tax, paid contributions and gave you a payslip. As a self-employed person, you do all of it, and the first year often holds surprises. A little planning before you resign removes most of them. This guide gives a practical checklist. It is general information; confirm details with KRA or an adviser.

Do the numbers first

Work out what you need to earn. List your living costs, add the contributions and taxes you will now pay yourself, and divide by the number of paying hours you can realistically sell. Self-employed people do not bill every hour; a lot of time goes on finding clients, admin and unpaid gaps. Use the net to gross salary calculator to see what gross pay your current take-home represents, then test what you need to charge. How to price your products and services in Kenya helps you set rates.

Build a cash cushion

Income will be irregular, especially at first. Aim to save at least three to six months of living costs before you leave, and more if clients pay slowly. How to build an emergency fund on a Kenyan salary shows a method. Also expect delays between doing the work and being paid.

Understand your new tax position

Your income is no longer taxed through PAYE. You declare your business income in your annual return and may pay instalment tax during the year. If your turnover is small, you may qualify for turnover tax. Compare with the freelancer tax calculator and the turnover tax calculator, and read tax for freelancers and content creators in Kenya. Update your KRA profile with the right obligations; how to check and correct your iTax profile shows how.

Register your business properly

Decide whether you will operate as a sole trader or form a company, and register accordingly. Starting a business: registration and tax steps lists the steps, and sole trader or limited company helps you choose. Get any licences you need; see business licences and permits in Kenya.

Plan your contributions

As an employee, NSSF and SHIF were deducted for you. As a self-employed person, you may need to register and pay them yourself. Check the rules and amounts for each, using NSSF contributions explained, SHIF contributions explained and the SHIF calculator. Do not leave a gap in your health cover. Consider private pension saving too, since you no longer have an employer contribution.

Separate business and personal money

Open a separate account or M-Pesa line for the business, and pay yourself a regular amount. Separating business and personal money explains why this makes both tax and life easier. Set aside a share of every payment for tax so it is there when it falls due.

Keep records from day one

Record every invoice, receipt and payment. A simple cashbook is enough at first; the simple cashbook and how to keep business records for KRA show how. Issue proper invoices and chase payments. Invoicing and getting paid on time covers the habits that protect your cash.

Handle your exit from employment

Before you resign, read your contract for the notice period and any restrictions on working for competitors or clients. Collect your documents and final dues, as described in what to do when you change jobs and what you are owed when you resign. If you can, arrange a first client or two before you leave.

Protect yourself

Think about insurance: health, income protection if available and cover for tools and equipment. Draft simple contracts with clients that cover scope, price, payment dates and ownership of work. Do not rely on goodwill alone.

Review after three months

After the first quarter, compare your income and costs with your plan. Adjust prices, services and habits. The first year is a learning period, and most people refine their pricing and client mix several times. Keep your tax obligations and records in good order from the start, and the switch will bring freedom without the nasty surprises.

A first-year calendar

Put the main dates in your calendar from day one: the monthly or quarterly tax payments that apply to you, the annual return deadline, the dates when contributions are due and a quarterly review of your income and costs. Self-employed people no longer have an employer who reminds them, so a written calendar replaces that reminder. Set aside a fixed share of each payment for tax so the money is there when the date arrives.