Social media and online marketplaces have made it easy to sell almost anything: a used laptop, children's clothes, furniture before a move, stock bought in bulk to resell. Most people never think about tax when they sell a few things. But there is a point where occasional selling turns into a business, and the tax rules change with it. Knowing where that point is keeps you on the right side of the line. This guide is general information; ask KRA or an adviser about your own case.

One-off sales of personal belongings

If you sell something you bought for your own use, such as a phone you have used for two years, the sale is generally not business income. You are not trading; you are disposing of a possession, and in most cases there is no income tax on it, especially if you sell for less than you paid. Selling a few personal items from time to time does not create a business.

When it becomes trading

The picture changes if you buy things in order to sell them for a profit, do it repeatedly and organise yourself to do it. Signs of trading include buying stock, selling regularly, advertising, keeping inventory, having regular customers and planning to continue. The profit is then business income, however small, and it is taxable. Tax obligations for online sellers and social media businesses describes the position for people who sell through social media.

Hobby or business?

There is no single test, but a few questions help. Is the intention to make a profit? How often do you sell? How much time and effort do you put in? Do you buy specifically to resell? The more your answers point to a regular, organised, profit-seeking activity, the more it looks like a business. Do not rely on calling it a hobby if the numbers say otherwise.

Which tax applies to a small seller

If you are trading, your income is part of your taxable income. Small businesses with annual sales within the limits may be able to pay turnover tax instead of tax on profit; the turnover tax calculator shows the amount, and turnover tax for small businesses explains the rules. If your sales exceed the VAT threshold, you must register for VAT; the VAT registration checker shows where you stand. If you also have a job, the income is added to your return; see side hustle income for employees.

Records to keep

Even a small seller should keep a simple record: what you bought, what you paid, what you sold it for and when. Photograph receipts and keep the M-Pesa messages. The simple income and expense log is enough for a start, and the simple cashbook is a step up. Keeping records with M-Pesa Business shows how to use your mobile money statement as part of the record.

Costs you can deduct

If you are trading, you can deduct costs of earning the income: the cost of the goods, delivery, packaging, advertising, platform fees and a fair share of airtime and data. You cannot deduct personal spending. Keep receipts for each cost. Expenses small businesses can deduct lists what qualifies.

Importing to resell

Some online sellers import goods for resale. Imported goods bring duty and VAT at the border, and the rules for personal and commercial imports differ; read importing for your own use versus for resale: what changes and importing for an online shop.

Selling valuable items and property

Selling high-value items such as vehicles, land or shares has its own rules. A vehicle may be subject to transfer requirements, and land attracts capital gains tax; see selling a property: capital gains tax steps. Do not assume that a large sale is outside tax just because it is a personal asset.

Keep personal and business apart

If you start trading, use a separate M-Pesa number or account for it, so your personal and business money are not mixed. Separating business and personal money explains why this matters for tax and for your own clarity. Register for a PIN and the right obligations if you have not already; starting a business: registration and tax steps shows what to set up.

A sensible approach

Sell your personal belongings freely, and keep the receipts that show what you paid. If you begin buying to resell, treat it as a business from the first sale, record everything and take advice when the income grows. That way you never have to reconstruct the past in a hurry.