Starting a Business in Kenya: Step-by-Step Process
Starting a business in Kenya involves several legal and administrative procedures. Below is a step-by-step guide to help you navigate the process:
1. Choose a Business Structure
The first step is to decide on the legal structure of your business. Some common types include:
Sole Proprietorship: Suitable for small, owner-managed businesses.
Partnership: Owned by two or more individuals sharing profits and liabilities.
Private Limited Company (Ltd): Most popular, especially for medium to large businesses. Liability is limited to the shareholders’ contributions.
Public Limited Company (PLC): Larger businesses that wish to raise capital by selling shares to the public.
Non-Governmental Organizations (NGOs): For charitable or non-profit organizations.
2. Name Reservation
Visit the eCitizen portal and create an account if you don’t have one.
Use the Business Registration Service (BRS) section on eCitizen to check the availability of your desired business name.
If the name is available, reserve it for 30 days (at a fee of KES 150).
3. Register Your Company
To register your company through the eCitizen platform, follow these steps:
Login to your eCitizen account and navigate to the BRS section.
Fill out the CR1 form (application for company registration) with the required details:
Company name
Type of business structure
Directors and shareholders' details
Company objectives
Registered office address
Attach required documents, including copies of directors' identification (IDs or passports) and KRA PIN certificates.
Memorandum and Articles of Association: For limited companies, you'll need to draft and submit these documents, which outline the company’s objectives and the regulations governing its internal operations.
Pay the registration fee: The registration fee depends on the type and size of the company (around KES 10,000 for private limited companies).
Upon successful submission, you’ll receive a Certificate of Incorporation within 2–3 days.
4. Obtain a Company PIN
After registration, you will need to apply for a company PIN (Personal Identification Number) with the Kenya Revenue Authority (KRA). This PIN is essential for all tax-related activities such as filing returns, opening a bank account, and applying for licenses.
5. Open a Corporate Bank Account
With your Certificate of Incorporation and Company PIN, you can open a corporate bank account. This is required for managing business finances and transactions.
6. Obtain Necessary Licenses and Permits
Depending on the nature of your business, you may need specific permits and licenses:
Single Business Permit: Obtain this from your county government. It allows you to operate within the county and is mandatory for all businesses.
Sector-specific Licenses: Depending on your industry, you may need licenses from regulatory bodies (e.g., health permits, liquor licenses, or environmental impact assessments).
National Social Security Fund (NSSF) and National Hospital Insurance Fund (NHIF): If you plan to hire employees, you must register your business with these government agencies for employee benefits.
7. Register for Taxes
To comply with Kenyan tax laws, register your business for:
Value Added Tax (VAT): Required if your annual turnover exceeds KES 5 million. VAT registration is done through the KRA portal.
Corporate Income Tax: Businesses must pay corporate taxes, and the rate is 30% for resident companies.
PAYE (Pay As You Earn): If you have employees, you must register for PAYE to deduct income tax from their wages.
8. Obtain Other Compliance Certificates
Environmental Impact Assessment (EIA): Required for businesses that may impact the environment, such as manufacturing or construction.
Fire Safety Compliance Certificate: Issued by the fire department in the county, especially for businesses with physical premises.
9. Hire Employees and Comply with Labor Laws
Draft employment contracts that comply with Kenyan labor laws.
Ensure employees are registered with NSSF and NHIF.
Provide minimum wage, leave days, and other benefits as required by law.
10. Annual Filings and Compliance
Annual Returns: Submit annual returns to the Business Registration Service (BRS) to maintain your company’s status.
Tax Returns: File taxes on time (monthly for VAT and PAYE, and annually for income tax).
Renew Licenses: Business permits and licenses must be renewed yearly.
11. Additional Requirements for Foreign Investors
Foreign investors must have a minimum investment of KES 10 million to register a company in Kenya.
Obtain an Investment Certificate from the Kenya Investment Authority.
You may also need to apply for a work permit if you will be working in Kenya.
Approximate Costs
Name reservation: KES 150
Company registration: KES 10,000 (depending on company size)
Single business permit: Varies by county and business type, typically between KES 10,000 and KES 50,000
This process can take anywhere from a few days to several weeks, depending on the complexity of the business.
1. Choose a Business Structure
The first step is to decide on the legal structure of your business. Some common types include:
Sole Proprietorship: Suitable for small, owner-managed businesses.
Partnership: Owned by two or more individuals sharing profits and liabilities.
Private Limited Company (Ltd): Most popular, especially for medium to large businesses. Liability is limited to the shareholders’ contributions.
Public Limited Company (PLC): Larger businesses that wish to raise capital by selling shares to the public.
Non-Governmental Organizations (NGOs): For charitable or non-profit organizations.
2. Name Reservation
Visit the eCitizen portal and create an account if you don’t have one.
Use the Business Registration Service (BRS) section on eCitizen to check the availability of your desired business name.
If the name is available, reserve it for 30 days (at a fee of KES 150).
3. Register Your Company
To register your company through the eCitizen platform, follow these steps:
Login to your eCitizen account and navigate to the BRS section.
Fill out the CR1 form (application for company registration) with the required details:
Company name
Type of business structure
Directors and shareholders' details
Company objectives
Registered office address
Attach required documents, including copies of directors' identification (IDs or passports) and KRA PIN certificates.
Memorandum and Articles of Association: For limited companies, you'll need to draft and submit these documents, which outline the company’s objectives and the regulations governing its internal operations.
Pay the registration fee: The registration fee depends on the type and size of the company (around KES 10,000 for private limited companies).
Upon successful submission, you’ll receive a Certificate of Incorporation within 2–3 days.
4. Obtain a Company PIN
After registration, you will need to apply for a company PIN (Personal Identification Number) with the Kenya Revenue Authority (KRA). This PIN is essential for all tax-related activities such as filing returns, opening a bank account, and applying for licenses.
5. Open a Corporate Bank Account
With your Certificate of Incorporation and Company PIN, you can open a corporate bank account. This is required for managing business finances and transactions.
6. Obtain Necessary Licenses and Permits
Depending on the nature of your business, you may need specific permits and licenses:
Single Business Permit: Obtain this from your county government. It allows you to operate within the county and is mandatory for all businesses.
Sector-specific Licenses: Depending on your industry, you may need licenses from regulatory bodies (e.g., health permits, liquor licenses, or environmental impact assessments).
National Social Security Fund (NSSF) and National Hospital Insurance Fund (NHIF): If you plan to hire employees, you must register your business with these government agencies for employee benefits.
7. Register for Taxes
To comply with Kenyan tax laws, register your business for:
Value Added Tax (VAT): Required if your annual turnover exceeds KES 5 million. VAT registration is done through the KRA portal.
Corporate Income Tax: Businesses must pay corporate taxes, and the rate is 30% for resident companies.
PAYE (Pay As You Earn): If you have employees, you must register for PAYE to deduct income tax from their wages.
8. Obtain Other Compliance Certificates
Environmental Impact Assessment (EIA): Required for businesses that may impact the environment, such as manufacturing or construction.
Fire Safety Compliance Certificate: Issued by the fire department in the county, especially for businesses with physical premises.
9. Hire Employees and Comply with Labor Laws
Draft employment contracts that comply with Kenyan labor laws.
Ensure employees are registered with NSSF and NHIF.
Provide minimum wage, leave days, and other benefits as required by law.
10. Annual Filings and Compliance
Annual Returns: Submit annual returns to the Business Registration Service (BRS) to maintain your company’s status.
Tax Returns: File taxes on time (monthly for VAT and PAYE, and annually for income tax).
Renew Licenses: Business permits and licenses must be renewed yearly.
11. Additional Requirements for Foreign Investors
Foreign investors must have a minimum investment of KES 10 million to register a company in Kenya.
Obtain an Investment Certificate from the Kenya Investment Authority.
You may also need to apply for a work permit if you will be working in Kenya.
Approximate Costs
Name reservation: KES 150
Company registration: KES 10,000 (depending on company size)
Single business permit: Varies by county and business type, typically between KES 10,000 and KES 50,000
This process can take anywhere from a few days to several weeks, depending on the complexity of the business.