The Basics Of How To Register A Business In Kenya

Do you know that one of the essential steps in starting a business in Kenya is Business Registration? Yes, business registration is a legal requirements that enables you to start a business without legal implications.

This article provides you a concise information through our FAQs on the initial steps required to register your business.

Registering a business in Kenya involves several considerations, and all the processes are designed to protect and provide a solid foundation for your business growth. And whether you are a Kenyan citizen or an international investor, this article will equip you with the essential knowledge to navigate the basics of business registration.

How Do I Register A Business In Kenya?

The process of registering a business in Kenya can be done either online or physically at the Registrar of Companies. Online registration is a convenient option that allows you to complete the registration process from anywhere in the world. Here are the steps involved in registering a business in Kenya:

1. Choose A Business Name: The first step in registering a business in Kenya is choosing a unique business name. The name should not resemble any existing business name in Kenya. You can conduct a name search on the eCitizen platform to confirm the availability of the name.

2. Reserve The Business Name: Once you have settled on a unique business name, you need to reserve it with the Registrar of Companies. This process can be done online or physically at the Registrar of Companies.

3. Prepare The Memorandum And Articles of Association: The Memorandum and Articles of Association are legal documents that outline the company’s objectives and rules of operation. You can either prepare the documents yourself or seek the services of a lawyer.

4. Obtain A Business Registration Form: You can download the business registration form from the eCitizen platform or collect it physically from the Registrar of Companies.

5. Fill In The Business Registration Form: Fill in the business registration form accurately and attach the necessary documents, including the Memorandum and Articles of Association, a copy of the business name reservation certificate, and the prescribed fees.

6. Submit The Form And Pay The Prescribed Fees: Submit the form and pay the prescribed fees. You can pay online through the eCitizen platform or at any Kenya Revenue Authority (KRA) office.

7. Wait For The Business Registration Certificate: After submitting the registration form and paying the prescribed fees, the Registrar of Companies will review the application. If everything is in order, you will receive the business registration certificate.

What Are The Requirements For Registering A Business In Kenya?

To register a business in Kenya, you need to fulfill the following requirements:

• A unique business name
• Memorandum and Articles of Association
• A physical address for the business
• A minimum of one director
• A minimum of one shareholder
• A copy of the ID or passport of the directors and shareholders
• A copy of the PIN certificate of the directors and shareholders
• Payment of the prescribed fees

How Much Does It Cost To Register A Business In Kenya?

The cost of registering a business in Kenya depends on the type of business structure you choose. Here is a breakdown of the approximate costs:

1. Business Name Reservation: KES 100 (approximately)

2. Business Registration Fee:

Private Company: KES 10,000 to KES 15,000 (approximately)
Public Company: KES 15,000 to KES 20,000 (approximately)

3. Stamp Duty: 1% of the nominal share capital (for companies with a share capital)

4. Professional Fees: These may vary depending on whether you engage a lawyer or a business registration service provider.

It’s important to note that these costs are approximate and subject to change, so it is advisable to consult the Registrar of Companies in order to stay updated.

How Long Does It Take To Register A Business In Kenya?

The duration for business registration in Kenya can vary depending on various factors, including the workload at the Registrar of Companies and the completeness of your application materials. Generally, the registration process takes between 7 to 14 business days.

It is important to note that delays can occur if there are any discrepancies or issues with the application. To expedite the process, ensure that all required documents are accurately filled out and submitted promptly.

What Documents Do I Need?

You will need the following documents:

• Business name reservation certificate
• Memorandum and Articles of Association
• Copy of the ID or passport of the directors and shareholders
• Copy of the PIN certificate of the directors and shareholders
• Proof of physical address for the business
• Completed business registration form
• Payment receipt for the prescribed fees

These documents are essential for the registration process and help establish the legitimacy and ownership of the business.

What Are The Different Types Of Business Structures In Kenya?

The common types of business structures in Kenya are:

1. Sole Proprietorship: Is a business owned and operated by one individual. The owner has unlimited liability and assumes all responsibilities.

2. Partnership: Partnership is a business owned and operated by two or more individuals, who share the profits, losses, and liabilities based on a partnership agreement.

3. Limited Liability Company (LLC): This is a separate legal entity with limited liability for its shareholders. LLCs can be private or public and must adhere to specific regulations.

4. Public Limited Company (PLC): PLC shares are publicly traded on a stock exchange. PLCs have more stringent regulatory requirements and are suitable for larger businesses seeking to raise capital from the public. This is a business establishment that is an extension of a foreign company in Kenya, conducting business on behalf of the parent company.

5. Co-operative Society: Co-operative society is an association of individuals or entities who come together voluntarily to pool resources for their mutual benefit. Co-operatives are formed to provide services or goods to their members, who also have a say in the management and decision-making process.

Each business structure has its own advantages, disadvantages, and legal obligations. Carefully consider your business goals, ownership preferences, liability concerns, and financial resources when choosing the most suitable structure.

What Taxes Do I Need To Pay?

Some of the key taxes include:

• Corporate Income Tax: All registered companies are required to pay corporate income tax on their profits. The current rate is 30%.

• Value Added Tax (VAT): Businesses with a taxable turnover of KES 5 million or more per year must register for VAT and charge it on eligible goods and services.

• Pay As You Earn (PAYE): If you have employees, you are obligated to deduct income tax from their salaries and remit it to the Kenya Revenue Authority (KRA).

• Withholding Tax: This tax is deducted at the source from payments made to non-resident individuals or companies.

• Excise Duty: Applicable to specific goods and services such as alcohol, tobacco, petroleum products, and luxury vehicles.

• Customs Duties: Levied on imported goods based on their classification and value.

• Capital Gains Tax: Applied to the gain realized from the disposal of certain assets, such as property or shares.

• Business Permit/License Fees: Depending on your business activities, you may be required to obtain specific permits or licenses, which may have associated fees.

How Can I Register A Business Online?

Kenya has embraced digital platforms to simplify the business registration process. You can register your business online through the eCitizen platform. Follow these steps to register your business online:

1. Create An eCitizen Account: Visit the eCitizen website (www.ecitizen.go.ke) and create an account by providing your details.
2. Business Registration Services: Once logged in, select the “Business Registration Services” option from the menu.
3. Choose The Business Structure: Select the appropriate business structure from the available options, such as sole proprietorship, partnership, or limited company.
4. Complete The Application: Fill in the required information, including your business details, directors’ information, shareholders’ details, and other relevant information.
5. Pay The Fees: Submit the necessary registration fees through the provided payment options.
6. Submit The Application: Review the information provided and submit your application electronically.
7. Obtain the Certificate of Incorporation: Upon approval, you will receive the Certificate of Incorporation electronically.

The online registration process provides convenience, speed, and transparency, enabling you to register your business efficiently from the comfort of your home or office.

How Do I Check The Status Of My Business Registration?

To check the status of your business registration in Kenya, you can use the eCitizen platform. Here’s how:

1. Log in to your eCitizen Account: Visit the eCitizen website (www.ecitizen.go.ke)and log in using your registered credentials.
2. Access Business Registration Services: From the menu, select the “Business Registration Services” option.
3. View Business Status: Under the “View Business Status” section, you can view the status of your business registration application.

Alternatively, you can as well contact the Registrar of Companies directly or visit their office to inquire about the status of your registration.

What Are The Benefits Of Registering A Business In Kenya?

Registering your business offers several benefits like:

1. Legal Recognition: Registration provides legal recognition and protection for your business entity, distinguishing it from personal assets.

2. Limited Liability: With certain business structures, such as limited liability companies, your personal assets are protected from business liabilities.

3. Access to Funding: Registered businesses are more likely to access financing options, including loans, grants, and investment opportunities.

4. Business Contracts And Partnerships: Registration facilitates entering into contracts, partnerships, and collaborations with other businesses or government entities.

5. Enhances Business Credibility: Registered businesses are seen as more credible, which can attract customers, investors, and business partners.

6. Tax Benefits: Registered businesses can take advantage of tax deductions, allowances, and incentives provided by the government.

7. Business Continuity: Registration ensures the continuity of your business beyond the lifespan of its founders.

Can Foreigners Register A Business In Kenya?

Yes, foreigners can register a business in Kenya. Kenya is a country that encourages foreign investment and provides a conducive environment for international entrepreneurs. As a foreigner, you have the option to register various types of business structures, including limited liability companies, sole proprietorships, and partnerships.

However, it’s important to note that certain restrictions and requirements may apply to specific sectors, such as banking, insurance, telecommunications, and energy. In some cases, obtaining special licenses or permits may be necessary.

What Is The Process For Registering A Foreign Company?

If you are looking to register a foreign company in Kenya, you will need to follow these general steps:

• Reserve The Company Name: Reserve the proposed name of your foreign company with the Registrar of Companies. The name must comply with the naming regulations and be distinguishable from existing businesses.

• Prepare The Required Documents: Gather the necessary documents, which typically include:

1. Certified copies of the company’s constitutional documents (e.g., Memorandum and Articles of Association or equivalent)
2. A duly completed Form CR1 (Application for Registration by a Foreign Company)
3. A certified copy of the company’s certificate of incorporation or registration in its home country
4. A power of attorney appointing an authorized representative in Kenya

• Submit The Application: Submit the completed application forms and supporting documents to the Registrar of Companies along with the prescribed registration fees.

• Obtain The Certificate Of Registration: Upon approval, you will receive a Certificate of Registration, indicating the legal existence of your foreign company in Kenya.

Do I Need A Lawyer To Register My Business?

While it is not mandatory to hire a lawyer for business registration in Kenya, seeking legal assistance can be beneficial, especially if you are unfamiliar with the local laws and regulations. A lawyer can provide expert guidance, ensure compliance with all legal requirements, assist in drafting and reviewing contracts and agreements, and help protect your business interests.

Although engaging a lawyer may incur additional costs, their expertise can save you time, prevent potential legal issues, and provide peace of mind. However, if you choose not to hire a lawyer, you can still register your business by following the prescribed registration process and seeking guidance from the Registrar of Companies or business registration service providers.

What Are The Consequences Of Not Registering A Business?

Operating a business without proper registration can have serious consequences. Some potential repercussions of not registering your business include:

1. Legal Penalties: Operating an unregistered business is a violation of the law. The Registrar of Companies and other relevant authorities have the power to impose fines, penalties, or legal action against unregistered businesses.

2. Lack Of Legal Protection: Without registration, your business does not have the legal protections and benefits available to registered entities. This includes limited liability, intellectual property protection, and access to legal remedies in case of disputes.

3. Inability To Access Financing: Unregistered businesses may face challenges in accessing financial support from banks, investors, or government programs. Registration is often a prerequisite for obtaining business loans, grants, or investment capital.

4. Limited Business Opportunities: Many government tenders, contracts, and business opportunities require proof of business registration. Operating without proper registration can exclude you from such opportunities.

5. Difficulty In Building Trust: Customers, suppliers, and business partners often prefer to work with registered entities for reasons of credibility and trustworthiness. Operating as an unregistered business may raise doubts about your legitimacy and professionalism, potentially affecting your ability to attract customers and establish business relationships.

6. Limited Legal Recourse: Without proper registration, your business may face challenges in pursuing legal remedies in case of disputes, fraud, or infringement of rights. Registered businesses have legal standing and can avail themselves of the judicial system to protect their interests.

7. Tax Compliance Issues: Operating an unregistered business may lead to non-compliance with tax regulations. This can result in penalties, fines, or legal consequences imposed by the tax authorities.

8. Restricted Growth Opportunities: Lack of registration may hinder your business’s growth potential. It may limit your ability to expand, attract investors, enter into partnerships, or engage in certain business activities that require compliance with legal and regulatory frameworks.

What Is A Business Permit, And Do I Need One To Operate In Kenya?

In Kenya, a business permit is a document issued by the county government that grants permission to engage in specific business activities within a particular jurisdiction. Business permits are typically required for activities such as operating a shop, restaurant, bar, clinic, or any business that involves physical premises.

We hope this article helped you learn how to register a business in Kenya.