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Legal Business Requirements in Kenya

by Victor Matara

These are the legal business requirements in Kenya. Entrepreneurial aspirations among youngsters are rising along with the growing middle class in Kenya. Technology has opened up numerous business opportunities and made starting and managing a business easier. Therefore, it is more rewarding than any other time to start a business in Kenya. In this article, we look at the legal requirements you must meet before starting a business in Kenya

1. Reserve a unique company name at the Huduma Center

The procedure begins by making a payment for name reservation at the cashier’s desk of one of the Nairobi Huduma Centers. Then a payment slip, together with an application for reservation of a company name (Form CR14) are submitted to the counter service provided by the Nairobi Huduma Centers. The name is reserved for 30 days and can be extended to a maximum period of 60 days from the time of reservation.

In addition to the Hudumas Center, the name reservation can also be done through a text-messaging system or online through the ecitizen portal.

Costs: 100 per name reservation.

Here is How to Register a Company in Kenya 

2. Apply for company registration

This takes 12 days on average at a cost of KES 10,000.

3. Register for taxes at the Kenya Revenue Authority

The personal tax identification number (PIN) of directors and the company tax identification number are required to register for VAT, local service tax, and the Pay-As-You-Earn (PAYE) tax.
The PIN certificates of at least two signatories (2 directors or 2 shareholders or a director and the secretary) of the company are required. The directors must apply for personal PIN numbers online at https://itax.kra.go.ke/KRA-Portal

4. Apply for a single business permit

A Single business permit is required for the smooth operation of any business in Nairobi and other towns in Kenya. The permit is important in ensuring that a business complies with the established rules for that specific type of a business. The procedure for obtaining a business permit is the same but the cost might vary depending on the size, type, and location of the business.

Application fee – Kshs. 200

Permit fees

Large trader (21-50 employees) – KShs. 20,000

Medium Trader (5-20 employees) – Kshs. 10,000

The permit is valid for 1 year. Here is the procedure on how to apply a single business permit. 

5. Register with the National Social Security Fund (NSSF)

The National Social Security Fund will provide your employees with a lump sum retirement benefit. You ( employer) will provide a  standard contribution of about 1% of salary, subject to a maximum of KES 400 per month. Half the contribution is deductible from the employee’s salary.

6. Register with the National Hospital Insurance Fund (NHIF)

This can be done at the National Hospital Insurance Fund offices or at their website..The monthly contributions to NHIF help to offset the costs of medical treatment of your employees. This takes a day with no charges.

7. Make a company seal

This is optional according to the Companies Act of 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. This costs between KES 2,500 and KES 3,500.

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