Business registration in Kenya is a simple process. The government through the Registrar of Companies developed an online platform; eCitizen, for any Kenyan to easily register a business or company.
Before, one had to visit government offices and persevere a long and tedious process to get their business registered. Today all this can be done online at the comfort of your home and that’s what we’ll go through today.
But just before we get there, do you know that 90% of businesses collapse within the first few years of operation? In most cases, people fail to do due diligence before launching their businesses.
Starting a business or company is a great thing but that’s the simplest task in owning one. When it comes to running a business, only those with thick skin, a learning spirit and a great team can manoeuvre the murky waters.
So before you begin the process of registering your business, make sure you have done enough research, gathered the right team and have the resources to shoot for the sky. Seek advice from mentors and have a business plan.
Types of businesses.
There are 4 main types of businesses
- A sole-proprietorship is the simplest form of business which involves one person running the business. The owner and the business are regarded as one entity. The owner thus assumes liability to all risks and his or her assets are put at risk.
- Partnership business is where two or more people come together to form a business. Each member contributes their share of expertise, assets and funds. Every partner is liable for any debts taken by the business or other partners.
- A Limited Liability Private Company brings the concept of separate entities. It’s a business which is registered for tax as a separate entity from the owners. It has its rights, obligations and life separate from the founders
- Limited Liability Public Company is a business in which the public can participate in buying and selling of shares. The company is also separate from the owners and assumes rights, and responsibilities separately.
Besides these 4, several other unique business types are provided by the Kenyan government
- Company Limited by Guarantee is a separate legal entity from its owners and is responsible for its debts. The personal finances of the company’s guarantors are protected. They will only be responsible for paying company debts up to the amount of their guarantees.
- A Foreign Company is allowed to register as a branch in the country to do business.
- Unlimited Company is the opposite of a limited company, there is no limit to the losses that the owners or investors have to bear.
- A statutory company is a company created by a Special Act of the Parliament and it provides services of value to the public. This is beyond the scope of a common citizen.
With that in mind, this article will focus on the general procedure of business registration and if need be, details of extra requirements for the various types of businesses will be included.
All business registrations in the country must be conducted through the eCitizen portal. This comes after the government abolished manual registration. Hence if you don’t have an account yet, go to www.ecitizen.go.ke and create an account. All you need is an Email address, phone number and ID number. Follow the instructions to activate your account.
Business Name Search
The second step which is very crucial in before you register a business is to conduct a business name search. Originally, there was a button on eCitizen labelled Name Search and Reservation which would be used to conduct a business name search.
However, this feature was removed, and instead, you are given five sections to include alternative names for your business while registering. Three of these sections must be filled. These names will be considered by the Registrar of Companies and the most unique according to priority is selected.
The removal of the name search feature presented the challenge of choosing a unique business name. From experience, almost every name has been used to register a business in Kenya and it might be hard to find a unique company name without access to the names database.
However, with some creativity and multiple options, you can settle on a unique business name which gets approved easily. Just make sure to input the most preferred name in the first slot and the rest based on priority.
Now let’s go straight at it.
How to register a business in Kenya
- Log into your eCitizen account: www.ecitizen.go.ke
- Click on business registration service.
- Log in once again using the same details.
- Click on Make Application
- Select Business Name Registration
- Enter your preferred business names in at least 3 of the 5 slots provided, click Save and Continue
- Type in your details and Nature of business
- Enter office addresses, location, Phone number and Email address of the company. Save and Continue
- Click on Add Proprietor. Add your details to register as a Sole Proprietor. For Partnerships, add proprietor item for each partner. Save and Continue
- Download the BN-2 Form which contains the Statement of Particulars. You will have to a magistrate or commissioner of Oaths to sign the document after which you can upload and continue with business registration
- Once you upload the signed document, click on Submit and Review
- Tick the declaration at the bottom before clicking on Finish
- Select the method of Payment, preferably through MPesa and follow the instructions to submit your payment. It costs Ksh 950 for Business Name registration.
- Upon successful payment, the eCitizen portal should reflect the payment.
- Now, wait for a response from the Registrar of Companies.
Your application for business registration will be reviewed within 2 days. Your business names suggestions will be considered and the most applicable used to register your business. Hence there is no need to reserve names as it was the case before.
The Registrar of Companies probably got tired of numerous name reservations without consequent business registrations and combined the two processes. In case a name for your business cannot be picked from your choices, your application will be unsuccessful.
Business Registration Fees
The various types of businesses provided by the government through the eCitizen portal have unique fees for registration. Here is the breakdown
- Reservation and Registration of Business Name: Ksh 950
- Limited Liability Partnership: Ksh 25,000
- Private Limited Company: Ksh 10,650
- Public Limited Company: Ksh 10,650
- Unlimited Companies: Ksh 20,050
- Company Limited by Guarantee: Ksh 3,000 (1-25 members), Ksh 7,500 (26-100 members), Ksh 15,000 (Over 100 members) + additional Ksh 2000 for each additional 50 members.
Finally, you will be awarded a certificate of incorporation or business registration certificate which you can download from the eCitizen Portal.
As you can see, to register a business in Kenya especially as a sole proprietor or a small number of partners isn’t as hard as it seems.
As long as you have all the required documentation and registration fee, you can proceed to register a company online at the comfort of your bed. All these processes should take less than 1 week according to the companies’ registry website.