Starting a Business in Kenya – Procedure, Time and Cost
Starting a business in Kenya needs one finding the procedures and processes needed to start a business as these processes are hectic in any country. Don't forget con men, targeting you as opportunity to rip you off with exorbitant fees to help you with the company registration. Below are the procedures you'll be required to follow and complete for one to fully own a legally operating company in Kenya. The average costs one incurs during the whole process and the expected time of completion and provision of the required documentation from the relevant authorities.
Reservation of a Unique Company Name Using the eCitizen Portal.
Government Agency: Business Registration Service (eCitizen Portal)
Here, the name reservation is regulated by the Companies Act 2015 (Part V, Section 48). As of December 2016, the Business Registration Service has made it easier for applicants to reserve company names by making mandatory to use the online name reservation system on eCitizen. A unique name ensures when starting a business in Kenya, you are singly identifiable from several near-same names in exact same niche.
Applicants can search and reserve company names online. After an applicant submits the name search and reservation application, they make payment via mobile money and receive a confirmation of the name reservation within the same day.
The name is reserved for 30 days and can be extended to a maximum period of 60 days from the time of reservation. It takes about 2 days on average and costs about KShs. 100 (for name reservation and KShs. 50 (convenience fee).
Apply for Company Registration, PIN, NSSF and NHIF
Government Agency: Business Registration Service (eCitizen Portal)
An applicant is required to submit the application for registration of a company on the eCitizen platform by entering details of the required information in the fields provided. The Applicant has an option of adopting the model Articles of Association provided under the Companies Act 2015. S/he may also supplement or modify the model Articles of Association and provide these for purposes of registering the company.
Payment for the registration of the company is also made online using the stipulated payment methods that include mobile money payment, debit/credit/prepaid cards, local bank transfer and E-citizen agents. Once payment is made, the following forms are generated by the online system:
a. Details of the First Directors, Secretary and Authorized Signatory of the Company-This needs to be signed by all the first directors, secretary and authorized signatory of the company
b. Form CR 2 (Memorandum and Articles of Association)-To be signed by all the subscribers to the shares of the company
c. Form CR 8 (Notice of Residential Address/Change of Address of Director of a Company)-This form is to be signed by the applicant
d. Statement of Nominal Capital-This is to be signed by any of the first directors of the company.
The forms should be downloaded and signed as required and scans of the signed forms should be uploaded into the system.
The application for registration of a company shall be considered complete when all the above mentioned forms are scanned back into the system. The application shall then be reviewed by the Registry officials and if it is in order, a Certificate of Incorporation together with an Official Search shall be generated online.
According to the Official Gazette Notice Legal 61 published April 2016, there is a flat fee of KShs. 10,000 for registering a new company. The fee for using the online system is currently KShs. 50 and the fee for completing the check/search fee at the end of the incorporation process is KShs. 600. The whole process on average can take 14 working days.
Register for VAT and Pay As You Earn (PAYE) Income Tax
Government Agency: Kenya Revenue Authority (KRA)
Companies must register for VAT and the Pay As You Earn (PAYE) Income Tax.
Section 34 of the VAT Act 2013 requires that any person who in the course of a business has made or is expecting to make taxable supplies the value of which is KES 5,000,000 or more in any period of twelve months must be registered for VAT.
Registration is conducted online through KRA online services portal. Once the company is registered, they are required by the VAT Law to display the registration certificate in a clearly visible place within the business premises. Failure to do so will result in a default penalty of KShs. 20,000 and in addition the company shall be guilty of an offence and liable to a fine not exceeding KShs. 200,000 or imprisonment for a term not exceeding two years, or both.
Under the Income Tax Act Cap 470, where a person has employees, they are required to deduct tax due from any remuneration paid to their employees (PAYE tax) and remit this. All employers are thus required to register for PAYE once they have employees. The applications for VAT and PAYE can be both completed at the same time.
This process can take an average of two days and is FREE of charge.
Apply for a Unified Business Permit in Nairobi County
Government Agency: Nairobi City County
The Nairobi City County introduced a new unified business permit online in order to make it easier and simpler for applicants to obtain a business permit. The unified business permit consolidates 5 permits i.e., the single business permit, fire clearance certificate, advertising signage, health certificate and food hygiene into one permit. Applicants apply for a unified business permit online, with an option to make payments online.
An assessment of the payable fee for the trading licence can only be done at the agency (Nairobi County). Only after the assessment has been done can an invoice be generated and paid online. The applicant can also go in person to submit the application for the unified permit. The applicant then obtains the provisional unified business permit and can display it at their business premises.
The costs associated with the unified permit are: KShs. 15,000 single business permit fees (though it can be varied based on the size, type of business and number of employees), KShs. 200 application fee and KShs. 4,500 for the inter alia a Fire Clearance Certificate. Time needed is based on applicant’s zeal to meet all the set application requirements at an average of 5.
Register With the National Industrial Training Authority (NITA)
Government Agency: National Industrial Training Authority (NITA)
Through Legal Notice No. 113 of 2007, it became a mandatory requirement for all employers to register and contribute to the industrial training levy (charged at KShs. 50 per employee per month).
The applicant must complete the application form and attach the necessary documents. The supporting documents are as follows:
- Employer’s KRA PIN Certificate
- The Employer’s Certificate of Incorporation.
There is no application fee for registration with NITA. The application and supporting documents are submitted to NITA physically at the NITA headquarters in Nairobi. All documents submitted along with the application form shall be certified by NITA as true copies of originals.
Make A Company Seal
Agency: Find Your Own Sealer Maker
The requirement for companies to obtain a company seal has been made optional as a result of passing the Companies Act, 2015. However, in practice companies still get seals made. Seal makers request a copy of the certificate of incorporation in order to make a company seal.
The costs range between KShs. 2,500 and KShs. 3,500. It can take an average of 2 days; sometimes same day deliveries are possible.
Register the Workplace with the Directorate of Occupational Safety and Health Services
Government Agency: Directorate of Occupational Safety and Health Services (DOSHS)
The purpose of the Occupational Safety and Health Act 2007 is to provide a legal framework to promote, stimulate and encourage high standards of safety and health in the workplace. As such employers must:
• Prepare and, revise a written safety and health policy statement for the workplace giving consideration to the organisation and arrangements for carrying out that policy;
• Notify employees any revision of the policy statement;
• To establish a safety and health committee in the workplace where there are twenty or more persons employed in the workplace;
• not to penalize an employee who is a member of a work place safety and health committee for doing anything in pursuit of safety and health;
A company must obtain a Certificate of Registration of a Workplace from the Directorate of Occupational Health and Safety Services in respect of each of the premises used by the company as a workplace.
This process can get done within 1 day and the fees paid is KShs. 5,000.
With all the above documents, one can now be assured of starting a business in Kenya.
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