Business entity types & details

When starting your business, you will need to choose the form the business will take depending on various factors like the nature of your business and ownership structure, among others. There are several forms of business in Kenya, namely: 

1. Sole Proprietorship

This business is run by an individual, with no distinction between the sole proprietor’s personal and business assets and liabilities. The owner registers the business and files individual taxes yearly. Profits and losses are reported as personal returns.

2. Partnerships

These involve two or more individuals coming together to run a business. They are similarly structured to sole proprietorships, as liabilities fall on the individual partners.

3. Limited Liability Partnerships

These companies are partnerships with limited liability, reducing the partners' exposure. Company assets are separate from the partners’ assets.

4. Limited Liability Companies (LLCs)

LLCs, also known as Private Limited Companies, are very common due to their ease of setting up and the limited liability structure, which protects the owners' assets. Kenyan citizens and foreigners can own LLCs.

5. Branch Companies in Kenya

Foreign businesses can register their branches in Kenya. They are recognized as foreign entities and are taxed more heavily on corporate income than other companies.

6. Public Companies

To register a public company, you will need a minimum of seven shareholders and two directors. The company can publicly sell shares and has no limit on the maximum number of shareholders.

7. Company Limited by Guarantee (CLG)

CLGs are mainly used for non-profit organizations that require a legal personality. These companies do not have share capital. The liability of its members is limited by the company’s articles to the amount undertaken by members, contributing towards the company's debts in the event of winding up the company. Profits are not distributed to shareholders but are reinvested.

Cost Of Registering a Business in Kenya

1. Registering a Business Name- Ksh.950
2. Private Limited Company- Ksh.10,650
3. Public Limited Company- Ksh.10,650
4. Unlimited Company- Ksh.20050
5. Company Limited by Guarantee- Ksh.10,000
6. Limited Liability Partnership- Ksh.25,000

The total fees of registering a business depend on the share capital and type of business. The government charges different fees depending on the type of entity you would like to register.

Additional costs you may incur: 

• Business Permit Fees- sh.15,000-sh.70,000, depending on the nature of the business
• Fire License
• Professional fees
• Industry-Specific License Fees

Business Registration Requirements

1. Form CR1- This lists the company directors
2. Form CR2- This shows the list of shareholders of the proposed company
3. Form CR8- Shows the addresses of the directors
4. Statement of Nominal Capital to declare the company’s share capital
5. Form BOF1- Used to show the beneficial owners of a company
6. Certificate of Incorporation
7. Tax Compliance certificate
8. Passport-size photos of all the shareholders and directors of the proposed company
9. Proposed office address of the business in Kenya

Citizens must obtain the above-listed documents to be eligible to register your business in Kenya successfully.

Steps of Registering a Business in Kenya.

The process of registering your business in Kenya is as easy as the steps highlighted below;

• Create an eCitizen account. The Government of Kenya conducts most of its official business through an online portal known as eCitizen. This service is free and easy to use to enhance citizens' accessibility.
• You will need a valid national ID, or you can use your foreigner certificate number if you are a foreigner.
• Upload a 5.5cm x 5.5cm passport photo taken within six months of registering your company.
• Navigate to the Business Registration Service home page on the eCitizen portal. The portal homepage has listed all available services. Select the Business Registration Service, and you will be automatically redirected. Note that you must create an account to access the service.
• Choose the type of business you wish to start in Kenya. Select the “Make Application” option and click “Business Name Application” on the next screen.
• Enter the desired business name in the indicated field (e.g., Sydney Seeds or Top Notch Gaming Supplies). It may be rejected if the name is too close to a registered business. The Registration Service typically takes about two business days to respond. If the name is accepted, the registrar will reserve it for 30 days, allowing you to complete the process.
• To file your name search, you must pay the registration fee, usually sh.150, which can be paid online or via credit card.
• You will need to fill out the company registration form CR1.
• Start by writing the company’s name and the location of the business office, as well as the names and personal information of shareholders and directors of the company, including those based abroad. Scan a copy of the ID cards and color passports of all stakeholders and company directors, including those abroad.
• Fill out the company’s directors’ information on form CR8.
• The official addresses of the directors, including those situated abroad, must be provided. Write down the legal names and addresses (not P.O. Boxes) for all company directors on the CR8.
• Declare the business’ nominal capital holdings on form BN6, as the Kenya Revenue Authority requires. Indicate the amount of capital your company has in shillings and state the amount of shares the company’s capital holdings are divided into.
• Pay the stamp duty depending on the amount of capital the company has. The KRA will contact you once your business has been registered and instruct you on paying the stamp duty. The amount due equals 1% of the nominal capital, but the minimum fee is sh. 2,140 based on the capital of sh. 2,000. An additional sh.100 is charged as part of the stamp duty for each document. The stamp takes between 5-10 days to process.
• Draft a Memorandum of Articles and Association before filing your final paperwork. An advocate usually drafts these, but an administrative assistant or the company’s director can also do it.
• You must file the completed forms and pay the fee at a Kenyan Registrar’s office to complete the process. The mandatory fee is sh. 10,650.

After 2 - 3 weeks, you can download the business certificate via the eCitizen portal, and your business is ready to start operations in Kenya.

Business Registration Requirements

1. Unique Business Name  
2. Business Structure   (e.g., Limited Liability Company, Branch Office)
3. Directors  - At least one Kenyan resident director (for foreign companies).
4. Shareholders  - Minimum of two shareholders (local or foreign).
5. Registered Office Address  
6. KRA PIN - Personal Identification Number from the Kenya Revenue Authority.
7. Business Permits and Licenses  
8. Investment Approval   (if applicable) - Approval from Kenya Investment Authority for significant investments.
9. Investment Certificate   (if applicable)
10. Bank Account - Local business bank account.
11. Compliance with Local Laws
12. Additional Documentation - Passport copies of directors and shareholders, proof of residence, and Memorandum and Articles of Association.

Steps

1. Decide on the Type of Business Entity

Choose the legal structure for your business. Common options include:

• Limited Liability Company (LLC): Most common for foreigners; limits personal liability.
• Branch Office: For a foreign company operating in Kenya.
• Sole Proprietorship: Less common for foreigners due to liability issues.
• Partnership: Requires at least one local partner.

2. Apply for Your Company’s Registration

Complete the business registration application through the Business Registration Service (BRS). Required Documents:
- Passport copies of directors and shareholders.
- Memorandum and Articles of Association.
- Details of the registered office address in Kenya.
- Name reservation certificate (obtained in the first step).
- Pay the applicable registration fees.

3. Obtain Company Registration Details

After registration, you will receive essential documents:

• Certificate of Incorporation: Official proof that your company is legally registered.
• Form CR 12: A document detailing the company’s directors and shareholding.
• Name Reservation Certificate: Proof of the business name you reserved earlier. 

4. Apply for the Director's PIN 

Each director of the company must obtain a Personal Identification Number (PIN) from the Kenya Revenue Authority (KRA).
This can be done online by filling out the necessary forms and submitting the required documents.

5. Apply for Investor Registration and Request PIN Facilitation 

Submit an application for investor registration with the Kenya Investment Authority (KenInvest).
Request facilitation for your PIN application, especially if your investment is significant (usually above KES 10 million). 

6. Obtain the Endorsement Letter 

After your investor registration, you may receive an endorsement letter from KenInvest, confirming your status as a foreign investor.
This letter may be required for various permits and registrations

7. Obtain the Director’s PIN

Once your application is processed, you will receive the director’s PIN, which is essential for tax purposes and compliance.

8. Apply for the Company PIN

Once the company is registered, you need to apply for a company PIN from KRA.
This involves completing an online application and submitting necessary documents, including the Certificate of Incorporation and CR 12.

9. Obtain the Company PIN

After processing, you will receive the company PIN, which is essential for all tax-related matters.

10. Receive a Business Permit for Your Company

Apply for a business permit from the relevant county government where your business is located. The requirements may vary depending on the type of business and local regulations.

11. Obtain the NSSF Employer Registration

Register with the National Social Security Fund (NSSF) for employee social security contributions.
You will need to provide the company PIN and other relevant details during registration.

12. Obtain the NHIF Employer’s Code

Register with the National Hospital Insurance Fund (NHIF) to provide health insurance for your employees.
This registration is mandatory for all employers in Kenya.

13. Apply for Licenses and Permits
Depending on the nature of your business, apply for any additional licenses and permits required by local laws or specific industry regulations.

Ensure compliance with immigration laws for foreign investors, which may include permits related to work and residency.
Additional Considerations

Consult with a local legal advisor or business consultant to navigate regulations and compliance requirements effectively.

Registration fees and processing times may vary; checking the latest guidelines from the BRS and KRA is advisable.

Annual filing documents & requirements

1. Filing of Annual Returns and updated information about the company’s shareholders and directors.
2. Filing of audited financial statements alongside auditor and director reports.
3. Changes in the Company’s Information and Documentation, e.g., the directors and secretaries, new allotment of shares, registered office, location, name, etc. 
4. Ultimate Beneficial Ownership (UBO) Information. It includes the full name of the beneficial owner, D.O.B., Nationality, Residential address, Ownership capacity (shares & voting rights), date of beneficial owner declaration, etc. 
5. Amendments or Changes made to the company’s Memorandum and Articles of Association
6. Filing Tax Return Records and Reports: 

• Annual Tax Returns
• Value Added Tax (VAT) Returns
• Pay As You Earn (PAYE) Returns
• Withholding Tax Returns
• Excise Duty Returns
• Declaration of Income (for Foreign Companies) 

Frequently asked questions

How long does it take to register a business in Kenya?

7 - 21 days. Several factors influence business registration in Kenya; however, the procedure normally takes 21 working days. 

How much is a business certificate in Kenya

A business certificate in Kenya costs between sh.950 and sh.10,650. The price depends on the nature of your business and the type of business you would like to register. We recommend consulting a specialist or involved organizations to get an accurate price for the company you want to launch. 

What happens if you still need to register a business in Kenya?

Failure to register your business may result in legal and financial repercussions for establishing and operating an illegal enterprise. Registering your business - whether you're a citizen or foreign investor is mandatory.