Many people today will tell you they have a brilliant business idea. If you ask them why they haven’t started it yet, most blame it on several things among them being lack of capital to start.
So, how much does it cost to start a business in Kenya? Let’s walk through this together on this blogpost.
At this point, I assume you already have an business idea and is looking to start a business in Kenya. Things have changed over the years. The process of starting a business that worked well 3-5 years ago no longer works right now.
This is owing to the digitization of most of the services and constitutional amendments on how businesses are being operated in Kenya. This in turn has resulted in business owners being asked to update their business information to match the current requirements or risk their businesses being ceased from operations.
In this blogpost, I will guide you step by step on how to start business today in Kenya. You can do nearly everything online.
Ease of Doing Business In Kenya
The World Bank Report, Doing Business 2020, indicates that Kenya has improved from position 61 to 56 globally in its attractiveness to investors. Doing Business report captures several important dimensions of the regulatory environment as it applies to local firms.
Among the quantitative indicators on regulation looked at in the report include
starting a business, dealing with construction permits, getting electricity, registering property, getting credit, paying taxes, trading across borders and more.
The report captures the complete changing environment in the way business is done in Kenya from now going forward.
Now, lets focus our attention on how to start a business in Kenya.
Step 1: Register a Business Name
This is a name that you will use in trading. The mode of operation varies with businesses.
Before you register a business in Kenya, you have to reserve a business name. Business registration in Kenya is undertaken by Business Registration Service on brs.go.ke. In order to access this service, you need to have a eCitizen account. This is an account you use to access all government services Kenya. Click here to create an account if you don’t have an account with them yet.
Once you have an eCitizen account, prepare 3 business names that you propose to register as it will be required for search. At the end, you will pick one from the approved names. A business name is a name or title under which a person or entity conducts business.
It’s important to note that you have a room to submit up to 5 names for search. 3 of the names you submit are mandatory. Enter all the required information and submit for search.
Please click here to download business registration guide from BRS to read the dos and don’ts when submitting a name for registration.
You will notified of the names that was approved and you can proceed to register one of them.
|Service Offered||Fees||Document Lodged||Document Issued||Time|
|Registration of Business name||Kshs 950||BN 2||Certificate of Incorporation||1 day|
|Limited Liability Partnership||Kshs 25000||New Registration LLP 1||Certificate of Incorporation||1 day|
|Private Limited Company||Kshs 10650||CR 1, CR 2, Cr 8, Statement of Nominal Capital||Certificate of Incorporation||3-5 days|
|Public Limited Company||Kshs 10650||CR 1, CR 2, CR8, CR 10, CR 12 and Statement of Nominal Capital||Certificate of Incorporation||3-5 days|
|Unlimited Companies||Kshs 20050||Cr 1, CR 4, Cr 8 Statement of Nominal Capital||Certificate of Incorporation||3-5 days|
|Company Limited by guarantee||kshs 10000||CR1, CR 3 and CR 8||Certificate of Incorporation||3 days upon receipt of vetting report from NIS|
Refer to BRS fee schedule here for more information on registration.
Once you have your business registered, you are now few steps to starting to do business Kenya.
Step 2: Set Up Your Business Contact Information And Online Presence
Its good to have separate contact details for your business. Once you have registered your business, setup official business contact information and update them with registrar of companies under your business.
The most important basic contact information for your business is a custom e-mail address. In this, I mean an e-mail with a business name e.g email@example.com. This will give you a professional impression in all your communications via e-mail.
I also recommend setting up a website or purchasing a domain related to your business at your early stages of business. A Kenyan domain of .co.ke costs only Ksh.500/yr. Basic starter website design will cost Ksh. 5,000 which is done by a local designer.
Online a good place to start your business. Having an online presence and later proceeding to setup a physical location for your business is the best path to follow especially when you don’t have capital to go out rent a space for your business immediately.
Step 3: Open a Business Bank Account
Its a recommendation for everyone who runs and operates their business in Kenya to open a local bank account. Again, this solely depends on the kind of business you run and your citizenship.
For example, a Kenyan sole proprietor business owner can get away doing business using their personal bank account.
But in order to track and evaluate the performance of your business, make opening a business account your priority. It’s important to note that one of the requirement by the many Kenyan procuring entities when submitting a tender quotation is to furnish them with your business bank account details.
Requirement to open a bank account varies with many Kenyan banking institutions. However, they have common requirements that they need you to provide in order for them to open an account for your business.
For a sole proprietor account, you will need to provide them with a copy of the registration certificate, National ID, Kenya Revenue Authority PIN No, details of your business address (you can use your home as address) with a proof of Utility bill, Lease agreement e.t.c.
After you have provided these documents, you will pay a bank search fee starting from Ksh. 250 or more depending on the bank that you pick.
Once the search is confirmed, your bank account will be opened. This usually takes a maximum of 1 day.
For a limited company, requirements are more of the same except that you will be required to provide CR12 showing names of the company directors and company Tax PIN. This takes me the next mandatory requirement for limited companies, company Tax Pin.
Step4: Apply For Company Tax PIN
Unlike in the past, having a company Tax PIN is mandatory. It separates you as the director and the company itself. In this case, the company will be responsible for all its liabilities.
To apply for Tax Pin for your company, go to www.itax.kra.go.ke and click on new PIN registration. Follow the screen prompts for guide and complete the process. Once you have the PIN, go ahead and open a bank account with your preferred banking institution.
Step 5: Physical Location
While you can start your business operations from your home location, some businesses can’t be operated from home especially if you are supplying goods. There many ways that you can find a suitable business location within your nearest town centre by employing services of real estate agents that you choose.
What’s important here is obtaining a business operation permit. This is issued by the county council. Please find out where their offices are located in your town and then pay a visit to them and find out the process and cost of obtaining one.
If you are in Nairobi, you can apply and pay for it online via the Nairobi services portal. This is one of the important licenses you need in order to avoid being harased in your business premises by the county council inspection officials.
Also, it’s important to note that when you make an application, the officials from the county council will visit your business premise to inspect and ensure that you have adhered to all their regulations before they issue you with the license.
Step 6: Other Regulatory Bodies Registration
There are other certificates issued by different regulatory bodies depending on your profession. This includes film, health, accounting, tourism, media, building and construction, Youth and people with disabilities e.t.c. Based on the kind of business that you run, I recommend you check with your respective regulatory body for certification and approval.
Here is a summary of the minimum estimated cost you will need to start a business in Kenya.
|Name of The Service||Estimated Cost||Frequency|
|Business Name search||Ksh. 450 or $4 (once)||Once|
|Business Name Registration||Ksh. 950 or $9||Once|
|Business Contact Information/Online Presence||Ksh.5000 or $45||Annual|
|Open Business bank account||Ksh. 1000 or $9||Once|
|Rent a Business space||From Ksh.5000 or $45||Monthly|
|Register with Regulatory bodies||From Ksh. 1000 or $9||Annually|
|Business Operation Permit||From Ksh.5000 or $45||Annual|
|Sign up for Tax Pin with KRA||Free||Annual Income Tax returns needed|
|TOTAL ESTIMATED COST||Ksh.18,400 or $166|
This is the basic cost of starting a business. Its important to note that it varies depending on individuals capability and location. For example, a business premise for rent in Nairobi central business district is different from the same size of business premise in the Nairobi outskirts.
With all these steps completed successfully, you are now a business owner. Congratulations!
As you can see, it doesn’t cost much to start a business in Kenya. This confirms that people don’t necessarily lack the capital they claim to need, but they lack the motivation to believe that they can startup a business with what they have today.
If you are still here, its means you are very serious in starting your business and running it the right manner . Keep up with the good spirit.
With all the above documents, you are all set to do business in the Kenyan market place. Often, entrepreneurs fail because they look for businesses in the wrong markets. Be very deliberate on who your target market.
At your early stages, commit yourself to do one task a day and in the end, you will find out that you have cumulatively achieved more.
Did I miss out on anything that one requires in order to start a business in Kenya? Please let me know in the comments section below here.
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And until next time, bye bye and take care.
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