How To Start Business In Nairobi – Kenya

Starting a business in Kenya may sound like a simple thing to venture into. However, it is not just about putting up an entity. Lean How To Start Business In Kenya as a foreigner.

What You Need To Know About Setting up a Business in Kenya

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As a potential business or company owner. You must have already done your research on which business you would like to start.

In a bid to leverage on one of the East Africa’s fastest growing economy, Kenya.

You may have also set aside the initial working capital. Established where you would like the business to be located.

And perhaps even already started to envision the profits that you are going to get from your business.

Great, right?

However, one of the most crucial things to do is to familiarize yourself with all the legal requirement that you are expected to satisfy.

In this post, we highlight the Legal Requirements that you require to successfully set up your business in Kenya.

Registering Your Business Name / Company In Kenya

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The first and most critical step while setting up your business in Kenya is to register your business name and to secure an identity/ domain name.

It is prudent to conduct a research to ensure that the name does not exist with another service provider.

While registering your business in Kenya. You also need to determine in what type of business structure it will take.

You can register your business in the following ways;

Legal Requirements For Starting A Business In Kenya

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1. Business Name or Company Registration.

There are two ways you can legally Register Your Business in Kenya Online through eCitizen. Process of starting a business in Kenya.

a). You can start by registering your business name, this is ideal if you have a small budget and cannot be able to register a company yet.

It’s a simple process, if you’re in Nairobi, first you go to Huduma Centre and do a name search (you give a list of 3 name options for your business) it’s Ksh. 100 per name, this takes three days.

After the check, you can register the name of your choice and it usually takes at least 5 days and costs about Ksh. 1,000.

b). You can register individually, as a Sole-Proprietor or if you are 2 or more people, as a partnership.

After you’re done, you will get a Certificate of Registration for your business and nobody will be legally able to use your business name.

c). Another way would be to register a Company if you have a higher budget of about Ksh. 20,000 to 35,000. How much does it cost to start a business in Nairobi – Kenya.

This process is done by a certified lawyer. Choose a good, reliable lawyer to handle the matter for you and it should be done in about 2 weeks.

After the lawyer is done, you should have a Certificate of Incorporation, and for an extra fee (about Kshs.2,500) you get a company seal.

The lawyer can also assist you in getting a Tax PIN certificate for your business.

Type of Businesses – How To Start Business In Nairobi – Kenya

a) Sole Proprietorship

This is where the business is owned by a single individual who also operates the business.

The sole proprietor is solely responsible for all liabilities accruing to the business.

The registration for this business is business name approval by the Registrar of Companies after which application for registration is made.

If there are no issues with the name, then a certificate of registration is issued within two weeks.

b) Partnership

A business that takes the form of a partnership involves two or more people who share ownership on prorated whereby each partner contributes to all aspects of the business.

Profits and losses are shared among the partners according to the formula agreed by both parties in the partnership deed and are governed by the Partnership Act.

The registration process is similar to that of the sole proprietorship with the main difference being that a partnership deed is provided.

c) Limited Liability Company

this is a distinct entity from its owners. Upon registration, an LLP acquires a separate legal entity personality from its partners such that any change in its partners does not affect the existence, rights or obligations of the limited liability partnership.

Further under section 7(2) of the LLP Act, it is a requirement for a limited liability partnership to maintain and use a common seal that bears its name to be utilized to execute all documents that are required by law to be sealed by it. The liability of all partners in a LLP is limited.

Therefore a partner is not personally liable, directly or indirectly, for the partnership’s obligations arising in a contract, tort or otherwise.

In addition, a partner in a LLP is not personally liable for the wrongful act or omission of another partner of the LLP.

The liabilities of a LLP are from the property of the LLP and from the personal assets of the partners.

d) Branch of a Foreign Company – How To Start Business In Kenya

This is for international companies seeking to set up a branch in the country. Starting a business in Kenya as a foreigner.

The branch is registered with the Registrar of Companies. This is a simple low cost formality and needs a maximum of two weeks for registration.

The requirements for setting up a branch of a foreign company in Kenya are provided for under Section 975 of the Companies Act, 2015. These include;

• Certified copy of a current certificate of the foreign company’s
  incorporation or registration in its place of origin, or a document of
  similar effect;
• A certified copy of its constitution;
• List containing the names of its directors and shareholders and their
  personal details;
• Notice of the address of its registered office under section 983. (A foreign
  company in Kenya is require to maintain a registered office where all
  communications maybe sent)

Afterwards, the Registrar issues a Certificate of Compliance signifying that the registration of the Foreign Company is complete.

In the case of setting up a company, you do require professional services for instance of a lawyer to help you acquire the certificate of incorporation, company seal and a Tax PIN certificate for your business.

The basic requirements that are needed in order to fill in the Business Name Registration application (BN/2Form). This includes details of the following:

• The Business Name
• The Nature of Business
• Land reference Number/Plot No
• Postal Address
• Town Name
• Street Name
• Full Names of the owner as shown on your ID or Passport
• Nationality

Requirements For Starting Business In Kenya

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Key statutory requirements that you need to register are;

2. KRA Pin – Requirement on How To Start Business In Kenya

The Tax Procedure Act 2015. (11), (12) and (13) have made Tax payer PIN mandatory when:

• Setting up a new business,
• Opening bank accounts for the business in addition to Filing of KRA Returns etc.

A PIN is a Personal Identification Number used while doing business with Kenya Revenue Authority, other Government agencies and service providers.

Getting registered for your PIN is an online process that is done on iTax and this is acquired.

3. National Social Security Fund

National Social Security Fund (NSSF) is the statutory retirement benefits scheme and operates as a public trust.

Its mandate is to offer social security protection to workers in the formal and informal sectors by providing retirement benefits to members.

Application for employer registration is done via the funds website and or at the NSSF offices.

4. National Hospital Insurance Fund (NHIF)

National Hospital Insurance Fund (NHIF) is a statutory retirement benefit scheme. Which provides limited in-patient medical insurance cover. At accredited health facilities to eligible members from both the formal and informal sectors.

Registration of NHIF is done online in Kenya or Visit Huduma Centre. To register as an employer or, you are required to fill in and submit the Employers Form.

5. Business Permit

Business permits are a mandatory requirements for one to be able to conduct your business legally and with ease both in the capital city and in other towns.

To obtain these you are required to have a duly filled BR-1 form which is submitted to the officials who may pay you a visit to determine the type of business, location and number of employees that you will have.

Visit the ward office to obtain a BR-1 form which you will fill in with the details from the last permit.

and Once this is approved, a fee is charged and the permit is stamped by the Registry for collection. Licenses and permits needed to start a business in Kenya.

6. Registration with the National Industrial Training Authority (NITA)

It is a requirement for all employers to register with NITA.

Registration as an employer is a legal requirement as per Sec 5B of the Act and the Levy order.

NITA is a state corporation. Whose mandate is to promote highest standards in the quality and efficiency of Industrial Training in Kenya. And ensure adequate supply of properly trained manpower at all levels in industry.

Other industry requirements include;

Fire Safety Certificate

Currently, all businesses are required to be Fire safety certified.

This requires you to have at least a fire extinguisher and any other fire safety requirements a Fire safety inspector will advise you on, based on your business.

After the inspection, you will be certified and get a Fire Safety Certificate.

A fire safety inspector usually advises you on the fire safety requirements crucial for your business and thereafter offer you a Fire Safety Certificate should you meet all the safety requirements.

Food/ Health Related Permits

Health permits are a necessary legal requirement for anyone looking to start a business in an industry that requires health certification such as food, bakery, beverage, salon etc.

As per regulation, a Health Inspector will visit your place of business and after they have inspected your location, you will be certified.

When you pay you receive a receipt and about a week later you get a certificate.

This permits are applicable to anyone whose business is in the food beverages, tourism industries etc.

A Health Inspector will usually visit your place of business to inspect whether you have met all of the health standards.

Thereafter, you will get a certificate.

New Regulations – On How To Start Business In Kenya

 Just recently, the Nairobi City County announced the launch of the Unified Business Permit which consolidates all the requirements for running a business within the County.

This is a one-stop source whereby, after acquiring your Unified Business Permit, you will have paid for a Single business permit, fire Clearance Certificate, Advertising Signage (300 mm by 600 mm or less), Health Certificate, and Food Hygiene.

Hopefully the above tips will help you understand the legal requirements needed for starting a business in Kenya and set you on the right path as an entrepreneur.

Which Is The Most Profitable Business To Start In Kenya?

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Many firms rely on Kenya’s favorable economic and technological conditions.

Because of Kenya’s excellent road infrastructure, security, and devolution, you may conduct business nearly everywhere in the country.

But then again, the country is a vibrant and strategic business hub for the entire East African region.

It attracts both residents and foreigners in equal measure making businesses thrive.

And the icing on the cake? You can start with a modest Ksh500k for lucrative businesses like:

• Hardware
• Home Bakery
• Mobile Money Agency
• LPG Gas Refill Business

Now you have it, tips on How To Start Business In Kenya. How to start a business in Kenya with small capital.