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Licences and permits

Simple Alliance, Kenya Limited


For any business to operate and without hitches and interference from the authorities you as the business owner must comply with the rules set for the specific business type whether by the central government or by the local authority. In Kenya there is a range of trade licenses and business permits that an entrepreneur is expected to have for them to be considered to be running a legitimate business.

We shall list a detailed summary of the legal compliances an entrepreneur must work on in order to incorporate and register a new business, along with their associated time and set-up costs. 

Business name registration

As an entrepreneur the first thing you will need to register is the business name and this is done under state registration of legal entity, statistical, and tax registration. This is done at the Centre for Public Registration and involves a process of company name reservation which lasts 30 days but can be renewed for a similar period. Doing this should take about 3 days and would cost you KES 100 per name reservation

Stamp the memorandum and articles and a statement of the nominal capital

This process is handled by the Kenya Revenue Authority and as an administrative requirement; the KRA requires the personal identification numbers (PINs) of all parties on whose behalf duty-stamped documents are submitted. Documents must be first assessed by the Stamp Duty Office before payment can be processed by the KRA-designated banks. This process takes a period of between 5-10 days to complete. Bank handling charges of KES 100 for each transaction are also due and also requires 1% of nominal capital and KES 2,020, stamp duty on Memorandum and Articles of Association

Before clearing with the Kenya Revenue Authority you will need to pay stamp duty at bank which takes not more than one day and requires a KES 100 bank commission

Declaration of compliance

Depending on the type of business you would like to operate, you may be required to sign a declaration of compliance (Form 208) before a Commissioner of Oaths /notary public. According to the Companies Act (Cap. 486), an advocate engaged in the formation of the company or a director or company secretary named in the Articles must sign Form 208, the declaration of compliance, which accompanies the registration documents to be submitted to the Registrar of Companies. This process applies for companies and can be done simultaneous with the stamping of the memoranda. It takes approximately 1 day at a cost of KES 200

 

Filing of the incorporation deed

Again depending on the type of business idea and especially if a company you will need to file the incorporation deed and details with the Registrar of Companies at the Attorney General's Chambers in Nairobi. This is done by the founder alongside other required documents and forms. These required documents include:

-          Stamped memorandum and articles of association.

-          Statement of capital.

-          Form 201, Notice of Situation of Registered Office.

-          Form 203, Particulars of Directors and Secretary.

-          Form 208, Declaration of compliance with the Companies Act.

-          Copy of the company name approval

There are various fees schedule for this registration as outlined below:

-          For the first KES 100,000: KES 2,800.

-          For every KES 20,000 after the first KES 100,000: KES 120, subject to a maximum of KES 60,000.

-          Filing fee for three forms: KES 600.

The above process takes a period of between 7- 14 days.

PIN and VAT registration

As earlier seen in step two above, you will need to register with the Tax Department for a PIN and VAT online. For the PIN you need to apply for a personal one if not in possession of one already and another one for the business. This PIN is a necessity when registering for the VAT (PIN certificates of at least two directors or 2 shareholders or a director and the secretary are required in the case of a company), the local service tax, and the pay-as-you-earn (PAYE) tax. The founder must file the certificate of registration and a copy of the memorandum and articles of association. With advancement in technology and the new online reforms, the application for a PIN and VAT registration can now be done concurrently on-line. Unless the KRA has already received confirmation of incorporation of the company from the Companies Registry, one must still submit the Certificate of Incorporation and receive log-in details from the KRA for the purpose of applying for a PIN and VAT registration. This takes a total of 1 - 2 days to complete and is done at no charge

You will then need to apply for a business permit with the relevant local authority. The fee to apply for a business permit varies by type of business, number of employees, and size of the company’s premises. The fee is payable to the local authorities, Licensing Department, which will then issue a business permit.

Fee schedule for business permit in Nairobi are as outlined:

-          Medium trader, shop, or retail service from 5 to 20 employees and/or premises 50–300 sq. m. (fair location): KES 5,000.

-          -Mid-size business of 50 employees and premises 300 sq. m.: about KES 20,000 to KES 50,000, depending on the nature of the business.

The process of obtaining a business permit takes a period of 5 days.

NSSF and NHIF registration for employees

You need to also register with the National Social Security Fund (NSSF) for the benefit of those you will employ. The National Social Security Fund provides the employee with a lump-sum retirement benefit. Historically, the rate of return paid by the state is considerably less than that achieved by private schemes, but participation is mandatory. The employer pays a standard contribution of about 1% of salary, subject to a maximum of KES 400 per month. Half the contribution is deductible from the employee’s salary. The precise amount of the contribution (where less than the maximum) is determined by reference to salary bands. This registration takes 1 day and is done at no charge.

You also need to register with the National Hospital Insurance Fund (NHIF).The employee contributes a fixed sum to the National Hospital Insurance Fund (NHIF), which must be deducted by the employer from the employees’ salary. The maximum contribution is KES 320 per month. This like the NSSF registration takes 1 day and at no charge

You will also need to register for PAYE which takes 1 day at no charge

Company seal

You need to make a company seal after a certificate of incorporation has been issued. Seals are made by private entities that require sight of a copy of the certificate of incorporation. This will take approximately 2 days            and costs between KES 2,500 and KES 3,500.

It is important to note that most of these business licences and permits vary depending on size of business and number of employees. More information can be found in Doing Business (Measuring Business Regulations). For specific licences for different types of business owners can conduct a search on Republic of Kenya, Business Licensing Portal

Copyright (C) 2016, Simple Alliance Kenya Limited

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