How to Register a Company in Kenya
How to Register a Company in Kenya
This article describes the registration of a company limited company in Kenya. A limited private or public company or partnership is an enterprise with a legal standing separate from the shareholder (owner). The assets, liabilities and financial affairs of such an entity are limited to the entity and do not extend to the owner beyond the value of the owner's shares in the company. Registering a company in Kenya entails several steps, including choosing a company name, preparing and uploading the required documents online, and submitting the application to the Business Registration Services. Registering a company is essential for a business that wants to operate legally, build a foundation and a brand and take advantage of many business opportunities available to a legally registered company.
Benefits of registering a company name
Registering a company name provides several benefits, including legal protection, credibility, and access to various business opportunities. Below are some key advantages:
1. Legal Protection
- Exclusive Rights: Once your company name is registered, you have exclusive rights to use that name in your industry. Registration prevents others from using a similar name, which could confuse your customers.
- Trademark Protection: Registration helps protect your brand identity and makes registering your company name as a trademark easier.
2. Credibility and Trust
- Professional Image: A registered company name enhances your business's credibility and professionalism, making it more attractive to potential clients, partners, and investors.
- Customer Confidence: Customers are more likely to trust and do business with a company that is officially registered.
3. Access to Business Opportunities
- Business Banking: Most banks require proof of registration to open a business bank account.
- Contracts and Agreements: Many companies and government agencies prefer to work with registered businesses, making entering into contracts and agreements easier.
- Funding and Investment: Registered businesses are more likely to attract funding from investors and qualify for loans or grants.
4. Perpetual Succession
- Continuity: A registered company has a separate legal identity from its owners, ensuring that the business can continue to operate independently of changes in ownership or management.
5. Limited Liability
- Personal Asset Protection: Limited liability companies (LLCs) or corporations are entities with 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. The limitation shields the owners' assets against the company's business debts and liabilities.
6. Compliance and Tax Benefits
- Regulatory Compliance: Registering your business ensures you comply with local laws and regulations, avoiding potential legal issues.
- Tax Registration: A registered business can obtain a tax identification number, making it eligible for tax benefits and incentives.
7. Brand Recognition and Marketing
- Brand Identity: Registration allows you to establish and promote a unique brand identity, which can be crucial for marketing and customer recognition.
- Online Presence: A registered company name is essential for securing a domain name and establishing an online presence.
8. Employee Recruitment
- Attracting Talent: A registered business can attract and retain qualified employees without a problem by offering formal employment contracts, benefits, and job security.
9. Intellectual Property Protection
- Protection of Innovations: Registering your business can help protect your intellectual property, such as patents, trademarks, and copyrights.
Company Registration Steps
The detailed steps include:
1. Name Search and Reservation
- Conduct a Name Search: Create an eCitizen account and log into the portal to submit at least three names in order of preference for approval. You need to pay a name search fee of Kes150 using payment methods provided on the eCitizen portal. 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. You should select a unique, creative, catchy, short, scalable, easy-to-spell, remember and pronounce name.
- Reserve the Name: If one of the names is available, reserve it. This reservation is usually valid for 30 days.
2. Prepare the Necessary Documents
- Memorandum and Articles of Association outline the company's structure, objectives, and internal regulations. The Memorandum of Association details your business's name, location, and business object, states the value of each company share, and specifies how many shareholders the company has and their shareholdings. The Article of Association states the company's rules and regulations. It contains each member's liability, the powers of the company directors, the rights of all company members, and directors' appointment and removal from their positions.
- Statement of Nominal Capital: This document states the company's share capital. The minimum capital is Kes100,000. However, it is advisable to register as much capital as the business may need in the future because the stamp duty on share capital on a company's first registration is tax-exempt.
- Particulars of Directors and Shareholders: Include the names, physical addresses, telephones, emails, identification numbers (ID), KRA PINs and other details of the company's directors and shareholders, including shareholding.
- Copy of Identification Documents: The documents include national identity cards or passports and KRA PINs for all directors and shareholders.
- Passport Photos: You need recent passport-sized photos of all directors and shareholders.
- Application for Registration: The application involves completing forms BN-2, CR1, CR2, CR8, BN-6 and BOF1 online. These forms capture the company's, shareholders' and directors' details.
3. Register with the Registrar of Companies
- Submit Documents: You scan and upload all the required documents onto the eCitizen platform. After completing form BN-2 with the required information and uploading the necessary documents, you download BN-2, print, sign, scan, upload to the platform and submit it.
- Pay the Registration Fee: The payable fee for a limited company is Kes10,750, which you pay using the payment methods provided on the portal.
4. Obtain the Certificate of Incorporation
- Processing Time: It takes about seven days to a few weeks to process the application.
- Receive Certificate: When the registration process is complete, you will receive an email alerting you to log into your eCitizen account to download your business registration certificate. The certificate signifies company registration under the name you provided. You can use the document in all the transactions your business undertakes.
5. Post-Registration Requirements
After company registration, you must complete the following process to operate as a business:
- KRA PIN: Apply for a Kenya Revenue Authority (KRA) PIN by visiting the i-tax portal. You need to provide the following documents:
- Copy of the company's certificate of incorporation
- Copy of CR12.
- Copy of Memorandum and Article of Association (optional).
- A copy of the PIN Certificate is necessary for one of the company's directors.
- Copy of Tax Compliance certificate of one of the company's directors.
- Copy of the company registration acknowledgement receipt.
- PAYE: Register for PAYE if your company has employees.
- VAT: Register for VAT if the turnover exceeds Kes5m per year.
- Turnover tax: Register for this tax if turnover (income) does not exceed Kes5 million during any income year.
- Trading permits: Obtain other sector-specific licenses. For example, if your business is a restaurant, you need a health permit from health regulation authorities.
- Records: Keep accurate and up-to-date business records to support the income you 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.
- File tax returns: You must send a self-assessment tax return at the end of every accounting year on or before the end of six months after the accounting year.
- Social Security and Health Insurance Registration: Register with the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF) for your employees.
Further Guidelines
- Involve an Expert: Company registration can be daunting, so it is advisable to engage a lawyer or company registration agent to help with the process.
- Regulatory Compliance: A company must comply with regulatory requirements annually, such as paying instalment income taxes and VAT and filing annual returns. Therefore, it is helpful to regularly engage experts to carry out a tax health check to ensure compliance, as non-compliance penalties can be hefty.
- Current guidelines: For up-to-date guidelines, please refer to the eCitizen portal, Registrar of Companies in Kenya, and the Companies Act No. 17 of 2015.
6. 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:
- 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.
- 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.
- Bank account: A bank account enhances credibility, creates independent financial records and facilitates inward and outward payments.
- Mobile Payment Facilities: M-Pesa till and Paybill numbers enhance credibility, facilitate online payments, and create independent financial records you can use to run the business and source funds from a lender.
- Branding: Branding aims to create a unique identity for the company beyond the name and connect that identity with the product's benefits in consumers' minds. The name, logo, and other trademarks establish the product's identity.
- 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.