Steps towards setting up a business in Kenya
One must register with the Registrar General’s office and Kenya Revenue Authority to make the business a legal entity. Several bureaucratic and legal requirements must be met to incorporate and register a new firm, along with their associated time and set – up costs.
Business Name Registration
First and foremost, one has to gain approval for the preferred business name from the office of the Registrar General through application. The company name reservation lasts between seven and 30 days.
After name reservation, one has to pay for stamp duty at any Kenyan bank. A stamp duty is a tax levied on legal documents and without it, the document requiring the stamp will be deemed unsuitable. As an administrative requirement, KRA now requires the personal identiﬁcation numbers of all parties on whose behalf duty – stamped documents are submitted. Documents must be first assessed by the Stamp Duty Office before payment can be processed by the KRA – designated banks. The process takes ﬁve days and usually 1 percent of nominal plus Kshs 2, 020 stamp duty on memorandum and articles of association.
The third step is to tile incorporation documents and evidence of the stamp duty with the KRA, the process is followed by a declaration of compliance (form 208) signed before a commissioner of oaths or a notary public.
The notarisation usually costs about Kshs 200. The notarised form 208 will later be submitted to the Registrar General. The required incorporation documents include the memorandum and articles of association and the statement of nominal capital.
Each clause of the memorandum and articles of association describes elements of the business, such as whether it is limited liability or another company structure.
A skilled lawyer will ensure that the documents meet the Kenyan regulations. Other documents required at this stage include form 201, Notice of Situation of Registered Office; form 203, Particulars of Directors and Secretary In order to process the request, one has to provide the KRA with the Personal Identification Numbers of every individual involved in the creation of the business including all officers, directors and board members. PINS are obtained from the Tax Department at KRA. The entire process takes ﬁve to 10 days. You must submit the certiﬁcate of incorporation and receive log—in details from the KRA for the purpose of applying for PIN and VAT registration.
Fees vary by type of business, number of employees, and size of the premises. The fee is payable to the Nairobi City Council, Licensing Department, or county revenue departments.
For instance, medium trader, shop, or retail service from five to 20 employees and / or premises 50 to 300 square metres at a fair location),Kshs 5,000 is charged.
The Licensing Laws Act, 2006, amends the Local Government Act (Cap.265) by reducing the number of business permits required for a distributor of goods or provider of services to carry on its business activities. This is then followed by registration with the National Social Security Fund (NSSF. Afterwards registration for PAYE is followed and ﬁnally a company is free to make a company seal after a certiﬁcate of incorporation has been issued.
Finally, once approved, the Registrar General will issue a certiﬁcate of registration which allows the business to commence operations.
A foreign company wishing to open a branch office in Kenya can do so at the Registrar of Companies.
Legal requirements that registered businesses must acquire include VAT number, Personal Identiﬁcation Number (PIN), National Social Security Fund (NSSF) number, and the National Hospital Insurance Fund (NHIF) number. Other requirements are specific to business type.
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