Business is the activity of making one’s living or making money by producing or buying and selling products (such as goods and services). Simply put, it is any activity or enterprise entered into for profit. It does not mean it is a company, a corporation, partnership, or have any such formal organization. Having a business name does not separate the business entity from the owner, which means that the owner of the business is responsible and liable for debts incurred by the business. If the business acquires debts, the creditors can go after the owner’s personal possessions.
A business structure does not allow for corporate tax rates. The proprietor is personally taxed on all income from the business. The term is also often used colloquially (but not by lawyers or by public officials) to refer to a company. A company, on the other hand, is a separate legal entity and provides for limited liability, as well as corporate tax rates. A company structure is more complicated and expensive to set up, but offers more protection and benefits for the owner. To register a company instead, follow this procedure.
Types of business in Kenya
Here are the types of businesses a person can register in Kenya.
- Sole proprietorship: Also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity. A sole trader does not necessarily work ‘alone’ – it is possible for the sole trader to employ other people. The sole trader receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s.
- Partnership: Is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach. A partnership may result in issuing and holding equity or may be only governed by a contract.
Requirements to register a business in Kenya
Here are the requirements for one to register a business in Kenya.
- Scanned copy of ID card/passport.
- Scanned copy of KRA PIN certificate.
- Recent colored passport photographs of sole proprietor or partners.
Prerequisites for business name search and reservation
The business name is the simplest business form under which one can operate a business. The business name is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. Before you perform a name search it is important to note the following:
- Business with the word “Enterprises” at the end cannot use initials e.g., J.K and Brian Enterprises.
- Names with the word “Foundation” must be registered as companies limited by guarantee.
- Names with “Groups”, “Projects” and “Holdings” must be limited, e.g., Ahadi Group Limited.
- Names with “Universities” must be limited, e.g., Ahadi university limited.
- Single words are not accepted, e.g., Ahadi.
- Offensive or abusive words are not allowed either. Offensive words in vernacular (mother tongue) are not allowed either.
- Political names, e.g Nairobi Youth Alliance, are not allowed.
- Numerics are not allowed not unless it’s the current year.
- Names starting with the word “Kenya” are only reserved for the government.
- Names with “Church” and “Ministry” or “Ministries” are not allowed.
- Names with “Trust”, “Foundation”, “Programmes” are not allowed.
- The Registrar of Names does not register clubs.
- Names with “Relief” are not allowed.
- Names with “Welfare”, “Organization”, “Association”, are not allowed.
Fees for registering a business in Kenya
To know how much you are required to pay in order to register a business in Kenya, check out this fee schedule.
Business registration in Kenya
Follow the procedure below to register a business in Kenya.
- Log in to your eCitizen account. If you don’t have an account already, click on the “Create an account” button which will guide you on the simple process, once done, the system will send you an email verification. Click on the link shared to activate your account.
- Once logged in, you will be able to see the various government agencies you can interact with on display.
- Click on the “Business Registration Service” button from the various options.
- You will then be redirected to a page that will prompt you to make an application.
- Click on “Make Application”.
- You will then be prompted to select the type of company you want to register, click on “Apply Now” under the “Business Name Registration” option.
- Fill the online form to search and reserve your business name and upload the required documents.
- Pay the stipulated fees and wait for feedback on your application.
