Starting a business in Kenya

Edited By: Daves Solomon

Want to Start a business in Kenya In days?  I know you are eager to start a business, let go through this together...

Procedure 1.
Obtain approval for the company name from the Registrar of Companies
Time to complete: 3 days
Comment: The company name reservation lasts 30 days but can be renewed for a similar period.

Procedure 2
Stamp the memorandum and articles and a statement of the nominal capital
Time to complete: 8 days
Cost to complete: 1% of nominal capital + KES 2,005, stamp duty on Memorandum and Articles of Association
Comment: Effective January 1, 2005, the Kenya Revenue Authority (KRA) took over stamp duty collection from the Ministry of Lands and Housing. As an administrative requirement, the KRA now requires the personal identification numbers (PINs) 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 has lengthened initially to about 2 weeks because the Stamp Duty Office waited to receive confirmation of bank payment after clearance of funds.
However, the time has reduced in 2008 as a result of better communication between the Ministry of Lands and housing and Kenya Revenue Authority (KRA) to 5-10 days. Bank handling charges of KES 100 for each transaction are also due.
(Kenya Revenue Authority)

Procedure 3
Pay stamp duty at bank
Time to complete: 1 day (included in the previous procedure)
Cost to complete: KES 100 bank commission

Procedure 4
Declaration of compliance (Form 208) is signed before a Commissioner of Oaths /notary public
Time to complete: 1 day
Cost to complete: KES 200
Comment: According to the Companies Act (Cap. 486), the promoter incorporating the company must sign Form 208, the declaration of compliance, which accompanies the registration documents to be submitted to the Registrar of Companies

Procedure 5
File deed and details with the Registrar of Companies at the Attorney General's Chambers in Nairobi
Time to complete: 7-14 Days
Cost to complete: see comments
Comment: The founder must file the incorporation deed and the required documents and forms (listed below) with the Registrar of Companies, which has automated this process:
Stamped memorandum and articles of association.
Statement of capital.
Form 201, Particulars of directors and secretary.
Form 203, Notice of proposed registered office.
Form 208, Declaration of compliance and the prescribed registration fees.
Copy of the company name approval
Fee schedule for registration:
For the first KES 100,000: KES 2,200.
For every KES 20,000 after the first KES 100,000: KES 120, subject to a maximum of KES 60,000.
Filing fee for three forms: KES 600.

Procedure 6
Register with the Tax Department for a PIN
Time to complete: 1 day
Cost to complete: no charge
Comment: Registration for a personal and a company identification number (PIN) is required to register for the VAT, the local service tax, and the pay-as-you-earn (PAYE) tax. The founder must file the certificate of registration and a copy of the memorandum and articles of association. Kenya Revenue Authority has introduced a portal for online registration of PIN and VAT.

Procedure 7
Register with the VAT office
Time to complete: 1 Day
Cost to complete: No Charge
Comment: The VAT office is in the Times Tower building.
Alternatively, you can visit the Kenya Revenue Authority Online Portal.

Procedure 8
Apply for a business permit
Time to complete: 1 Day
Cost to complete: See Comment
Comment: The fee to apply for a business permit varies by type of business, number of employees, and size of the company’s premises. The fee is payable to the local authority Licensing Department. The local Authority will issue a business permit.
Fee schedule for business permit:
Medium trader, shop, or retail service from 5 to 20 employees and/or premises 50–300 sq. m. (fair location): KES 5,000.
Mid-size business of 50 employees and premises 300 sq. m.: about KES 20,000 to KES 50,000, depending on the nature of the business.
The Licensing Laws (Repeals and Amendments) Act , 2006 (enacted in December of 2006 and came into effect on May, first, 2007), 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. Applicants having obtained a business permit to operate from one local authority will not be required to obtain another business permit in another local authority. In addition, business permit applicants will have an opportunity to elect whether to apply for a 1- or 2-year permit. The 2006 law also eliminated the requirement to obtain a trading license in addition to the permit.
(KRA Online Portal)

Procedure 9
Register with the National Social Security Fund (NSSF)
Time to complete: 1 Day
Cost to complete: No Charge
Comment: The National Social Security Fund provides the employee with a lump-sum retirement benefit.
Historically, the rate of return paid by the state is considerably less than that achieved by private schemes, but participation is mandatory. The employer pays 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. The precise amount of the contribution (where less than the maximum) is determined by reference to salary bands.
(National Social Security Fund)

Procedure 10
Register with the National Hospital Insurance Fund (NHIF)
Time to complete: 1 Day
Cost to complete: No Charge
Cost to complete: No Charge
Comment: The employee contributes a fixed sum to the National Hospital Insurance Fund (NHIF), which must be deducted by the employer from the employees’ salary. The maximum contribution is KES 320 per month. The contributions are used to offset the costs of medical treatment, but they only cover a fraction of actual costs. Hence, most companies provide employees with medical insurance.
(National Hospital Insurance Fund)

Procedure 11
Register for PAYE
Time to complete: 1 Day
Cost to complete: No charge
Comment: PAYE registration administration is handled by the Kenya Revenue Authority.
Procedure 12
Make a company seal after a certificate of incorporation has been issued
Time to complete: 2 Days
Cost to complete: Between KES 2500 and KES 350
Comment: You can get good quality company seals from Seal Honey Stationers in Nairobi.

NOTE: You can get the procedure for a kra pin number On this site.

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