What is legally required of you to start a Business in Kenya.
Starting your own small business is a fulfilling journey. However, before you start getting things off the ground, you need to make sure you are doing it right according to the Kenyan Government.
As an aspiring entrepreneur in Kenya, you need to do your due diligence. Make sure you acquaint yourself with what is legally required of you to start your small business. This includes registering your business, something many small business owners actually don’t do.
Many small businesses in Kenya operate without a business permit and the necessary licenses. You are on the wrong side of the law without a permit and required licenses and this is risking the business you are working hard for.
Registering your small business and acquiring your business permit is important but can easily be forgotten. With the excitement that comes with starting a business, you might forget important licenses required to operate your business.
Different types of businesses, for example, restaurants come with crucial licenses such as food or health licenses. You are not allowed to run a restaurant or a bakery business without these licenses. Knowing what is required to operate your type of business is an important step while planning your start-up.
Beginning Point – Getting Started
There are two ways to make your small business legal. You can do that through your county council office and online through eCitizen. You could do all your processes manually in your county offices or combine both manual and online.
Your beginning point is your county council website or offices to know the requirements and the documents necessary. You will even be advised on how to acquire these documents. For example, if you are planning to operate your business in Nairobi, visit the Nairobi City Council Website or visit Nairobi City Council offices.
For tax information and guidelines, you should visit the KRA website too. You will find information on the taxes you are required to pay depending on your business and when these taxes need to be paid.
The Legal Requirements
1.Register Your Small Business – KRA or eCitizen.
The first thing you need to do is a name search. You definitely have several business names in mind and don’t be surprised finding businesses with those names already.
You can do your name search at a Huduma Centre near you or the easy way through the eCitizen portal online.
If your business name of choice is open, you need to reserve it at a low fee of KSH 150 and the reservation is up to 30 days. While doing your name search, you are required to provide 3 business names. You can only search one name at a time with each name search costing you KSH 100.
You can either register your business as a company or using your business name. Registering your business name is very budget-friendly and highly preferred by small businesses with small budgets.
Registering a company is on the higher side and can cost you around KSH 20,000 and registration takes up to 2 weeks to complete. You would need a lawyer for company registration and that’s an additional cost.
On the other hand, business name registration takes 5 days to completion and will only cost you KSH 1000.
Your business structure is an important factor as you register your business. You can register your small business as an individual (sole-proprietor) or as partners if the business is owned by more than one person (partnership).
Once registered, you legally own your business name and no one else is legally allowed to use it.
2.Get a Permit or License to operate your small business.
You need authorization to operate your small business and you can get this from your city council office. The authorization is through a business permit or license that is renewed on annual basis.
There are different costs of business permits or business licenses in Kenya. “I pay KSH 5,000 annually for my small bakery business permit in Ruiru, Kiambu.” Joy Maina from My Small Cake House.
How much you pay for your small business permit will be determined by the size of your small business location. Also, the industry you are venturing into with your small business is a determinant.
Make sure you consult with the city council officers available and give the right details about your business. If you mix up your words or details, you might pay for a permit costing KSH 15,000 instead of the right permit that would cost you KSH 8,000.
Once you pay for your permit, you get a receipt and then you can get your actual physical permit certificate after a week or so.
Business permits in Kenya are only for businesses with physical locations of operations. So, if you are planning to do your business solely online without a physical shop, you don’t need a permit.
3.Acquire health related Permits.
Remember, the industry you are venturing into determines your legalizing process and the licenses you need to operate your business.
Food and health-related permits are for those in industries that call for health certification. For example, a restaurant, a barbershop, salon, bakery, etc.
“Before I opened my café for business, a health inspector visited my café and inspected my cooking area and food storage. After the inspetrion, I was certified and cand received my certificate about a week later.” Brian Makori, Whispering Bamboo.
4.Get a Fire Safety Certificate.
The government currently requires every business to have a fire safety certificate in Kenya.
“With the nature of a cafe business, fire accidents are prone to happen. My business had to prove preparedness and safety in case such happens. I needed to have a fire extinguisher, a fire blanket among other fire safety requirements in my cafe.” Brian Makori, Whispering Bamboo.
You need a fire safety inspector to inspect your business location and advise you on the various fire safety requirements you need specifically for your business. Once the fire inspector is done with inspection, you are certified and you get your Fire Safety Certificate.
5.Advertising Signage License.
If you have advertisement signage for your business, you need a license.
This however only covers signage that is 300mm by 60mm or less in size.
The Unified Business Permit.
As you register your business and acquire the necessary licenses in Nairobi, you will hear about the unified business permit.
If you are in Nairobi, the Unified Business Permit merges all the legal requirements for running your business in the County.
Once you have paid for your Unified Business Permit in Nairobi, you have paid inclusive of all the other requirements. You have in short paid for your single business permit, plus your health certification, fire safety certificate, and your advertisement signage at once.
So, if you are in Nairobi, consider the Unified Business Permit, it saves you all the trouble of going to the several institutions to acquire these licenses and time too.
Registering your business and acquiring a business permit is mandatory in Kenya. And, operating with a permit is important for your business and for you as a business owner.
Having a permit and the required licenses such as health certification prove the legality and credibility of your business. If you want to borrow small business loans from banks, SACCOs, micro-finance organizations among other financing institutions, your business permit comes in handy.