Aggrey Jonathan K Bett

Jul 12, 2024 by Aggrey Jonathan K Bett, in Starting and Operating a Business

This article describes the registration of a business name for unlimited enterprises. Registration of a name for a limited enterprise is a separate process with its requirements. A limited private or public company or partnership is an enterprise with a legal standing separate from the shareholder (owner). The assets and liabilities of such an entity are limited to the entity and do not extend to the owner. An unlimited enterprise is a business whose assets, liabilities and operations are inseparable from the owner's personal affairs. The enterprise has no separate legal standing from the owner. Typical unlimited businesses are sole proprietorships and unlimited partnerships. You can register a business name in Kenya as a sole proprietorship or unlimited partnership. A sole proprietorship is a business by one individual, while a partnership involves at least two people. However, the registration process for a sole proprietorship and unlimited partnership are similar except for partnership details. Sole proprietorships and partnerships are suitable for freelancers, consultancies, creatives, retailers, wholesalers and anyone who wants to try business in a small way before starting a company. You can run a sole proprietorship or a partnership without registration, but registering it has the following advantages:
 

1. Legal Protection: In a sole proprietorship and unlimited partnership, there is no legal separation between the business's assets, liabilities, and operations and the owner's financial affairs. Nevertheless, once you register a business name, no one else can register and use it.
2. Trustworthiness: An enterprise with a registered name has more credibility and trust in customers' eyes. Clients are comfortable dealing with a registered business because they believe a formal business has a vetted authenticity, can find the business somewhere, and have recourse in case of issues with the entity. A registered business has an identity that customers can recognize, and the enterprise can apply for tenders and transact using the name.
3. Bank Account: You require a name and a registration certificate to open a bank account for your business. A bank account adds credibility to a business as clients trust a company with a bank account. A bank account makes it easy to receive payments from people doing business with your enterprise and pay your suppliers. A bank account creates independent records that you can use to prepare financial statements and file tax returns.
4. Borrowing Power: When you have a registered name and a bank account, you have a financial track record that can bolster your clout to borrow money from the bank where you bank. With a banking record, banks find assessing your creditworthiness easier and extending credit to your company. Lenders tend to offer favourable interest rates to a registered business.
5. Other Identities: A registered business can acquire identification numbers and payment facilities like Kenya Revenue Authority (KRA) PIN, M-Pesa payment Till, PayBill number and credit card. Such identities and payment systems facilitate transactions and payments, improving the business's liquidity and cash flow.
6. Registration Certificate: Registering a business provides a registration certificate, which is required in many transactions, including KRA PIN, M-Pesa Tills, tenders, and bids.  

Business Name Registration Process

Business name registration in Kenya is more straightforward and affordable than many assume, and the process is accessible to anyone. You can use your smartphone to register at eCitizen or visit any Huduma centre anywhere in Kenya. The registration process involves the following steps:

 

Step 1: Requirements

You need to assemble the following requirements:

1. At least three proposed business names
2. eCitizen account
3. National Identity Cards (ID) of the business proprietor or partners
4. KRA PIN Certificates of the business proprietor or partners
5. Passport-size photographs of the proprietor or partners
6. Names, physical and email addresses of the proprietor or partners
7. Name, physical, mailing and email addresses of the business
8. College certificate for one of the partners in the partnership
9. Partnership deed or agreement for a partnership
10. Proposed commencement date of the business, which must not be in the future
11. Proposed accounting year-end month
12. Written proposed main activities of the business
13. BN-2 form
14. Name search and reservation fees-Kes150
15. Registration fees- Kes950

 

Step 2: Select at least three business names

 

A unique name is necessary to identify and distinguish your business from others and enjoy the abovementioned advantages. Name registration starts with an application for name search and reservation. You must submit three names in order of preference to the Business Registration Services not only because this is a requirement but also to improve your chances of finding a name that is available for registration. The name search and reservation process can be done at any Huduma Centre countrywide, online using the eCitizen platform and on a Safaricom mobile phone by dialling *271#. Name search and reserve costs Kes150, which you can pay using the payment methods available on the platform. Once you receive confirmation that one of your proposed names is available, you have 30 days to apply and register the name. After that, the reservation lapses, and you have to restart search and reservation.

 

It would be best to choose an appropriate name for your business format. You can use a version of your name, but using a creative name is better. When considering a name, you should search the internet, domain registrations, social media, trademark registrations and other countries to ensure that the proposed name is not similar to another name registered elsewhere. The following are the characteristics of a good name.

1. A name should project the product's promises, qualities, benefits and the job it will do for the customer. When a business name is said, read, or thought about, it should bring to mind all the positive impressions, experiences, and guarantees the company provides through its products. The positive impressions come from connecting the name with the benefits or the job the product will do for the customer during marketing.
2. For a name to be successful, it should be creative and catchy and project a degree of seriousness and class.
3. It should also fit the company's products or service lines.
4. A business name is used every day in print and conversation. Therefore, the name should be memorable, unique, short, and easy to spell, remember, and pronounce, such as Google or Jambojet, which is easy to say, write, and brand.
5. It should be extendable and scalable. Remember, you may need to tweak the name to fit a web domain URL at one point. You should be able to expand your business without being constrained by the name you registered.
6. It should be available and capable of registration and legal protection.
7. It should suggest a product or service category- for example, Daily News or Newsweek.

 

Step 3: Create an eCitizen account

 

You must create an eCitizen account by visiting the eCitizen portal and following the prompts on the screen. To complete the form, you need your full name per your ID, ID number, email address, telephone number, and password for the new eCitizen account. You can proceed to the next stage if you already have an account.

 

Step 4: Log into the eCitizen Portal and complete the forms

 

In this stage, you log into the eCitizen portal and select Business Registration Services, the business format you want to register, complete the BN-2 form and provide the required information. This stage entails populating form BN-2 with the required information and uploading the documents as listed in Stage 1 above. After uploading the listed documents and completing form BN-2 with the required information, you download the form, print, sign, scan, upload to the platform and submit it.

 

Stage 5: Pay the prescribed fees

 

Following the prompts, you can make the necessary payment using the methods provided on the eCitizen business registration portal, including M-Pesa. You will get a receipt for the payment in your email.

 

Stage 6: Download the registration certificate

 

When the registration process is complete, you will receive a notification in your email alerting you to log into your eCitizen account to download your business registration certificate. The certificate signifies that your business is registered under the name you provided. You can use the document in all the transactions your business undertakes.

 

Regulatory and Compliance requirements

 

After name registration, you must complete the following process to operate as a business:

1. Apply for a Kenya Revenue Authority (KRA) PIN by visiting the i-tax portal. For a sole proprietorship, you must provide your PIN and link it to the business name in KRA records. KRA does not issue a separate PIN for a sole proprietorship. For unlimited partnership, you provide the PINs of all the partners and the formula in the partnership deed for sharing the profits accruing from the partnership. Partners' PINs are necessary because KRA taxes the partners on the profit they earn from the partnership, not the partnership.
2. Register for VAT if the turnover is more than Kes5m per year.
3. Obtain other sector-specific permits. For example, if your business is a restaurant, you need a health permit from health regulation authorities.
4. Obtain a trading permit from the relevant county office.
5. Keep accurate and up-to-date business records to support the income you must declare to KRA. Here, you need an accounting system to track assets, liabilities, income, expenses, sales, and stocks and issue quotations, invoices, and receipts. You also need data for information and decision-making. You should enlist expert services to guide you on the right accounting system for your enterprise.
6. You must send a self-assessment tax return every year at the end of June and pay the necessary taxes on the business's profit.

 

Marketing the business

 

To have a thriving and profitable business, you must make and execute a marketing plan to make customers aware of your business and products and differentiate your enterprise and products from competitors. The other aim of marketing is to inform, attract and retain customers. Marketing channels and activities include the following:

 

1. A Domain name: A domain name is an online address of your business. It is the name that customers type on the browser to find you. It works with a website and another name for this URL, which looks like aboutbusinessandinvesting.com. It is unique; no one can use it once you buy and register it. A website is an online platform where you describe your business and its products. You can also engage in other marketing activities, conduct sales transactions, and receive payments on the website. A domain name is the address that directs customers to the website. You can design and register a domain name at Kenyaweb Experts, Godaddy, or Bluehost, which will register and host the name and can also host your website once you create it.
2. Social media accounts:  You need social media accounts like Facebook, X, Instagram, LinkedIn, Titok, etc. These are channels for reaching customers or drawing them to you.
3. Bank account: A bank account enhances credibility, creates independent financial records and facilitates inward and outward payments.
4. Mobile Payment Facilities: M-Pesa till and Paybill numbers enhance credibility, facilitate online payments, and create independent financial records that can be used to run the business and source funds from a lender.
5. Branding: Branding aims to create a unique identity for the business beyond the name and connect that identity and the product's benefits in consumers' minds. Name, logos, and other trademarks establish the identity of the product.
6. A Marketing plan: A marketing plan should define how to use and execute all the above sales and marketing channels you use to inform, attract and retain customers.  

 

Prev Next