The 6 steps to starting a business

Starting a business
Starting a business can enable you to achieve financial freedom. PHOTO/FILE
Starting a business can be quite challenging especially for first-timers. The 6 steps below will teach you how to start a business in Kenya, guiding you through the important stages.

1.) Register your business name. Go to the office of the Registrar General at Sheria House in Nairobi and apply for the approval of your preferred business name. Business name registration fee is Sh800.

2.) Stamp the Memorandum and Articles of Association and a statement of the nominal capital. Pay for stamp duty at any commercial bank. The documents must be first assessed by the Stamp Duty Office before payment can be processed by Kenya Revenue Authority (KRA)-designated banks. Inform the bank that a stamp duty (tax levied on legal documents) is required to submit the documents to KRA. This will cost you 1% of your business’s nominal capital + Sh 2,005 (for memorandum and articles) and an additional Sh 100 as bank commission. You will be issued with a document confirming payment.

3.) Sign declaration of compliance (Form 208) before a Commissioner of Oaths /Notary public. A lawyer engaged in the formation of the business, a director or company secretary named in the Articles must sign Form 208. This is done in the presence of a Commissioner of Oaths or a Notary Public. This will cost you Sh 200, after which the form will be submitted to the Registrar of Companies.

READ: Start a business for under Sh100,000

4.) Register the company with the Registrar of Companies. To do so, you will be required to submit the following documents: Stamped memorandum and articles of association, stamped statement of capital, notice of situation of registered office (Form 201), particulars of directors and secretary (Form 203), declaration of compliance with the Companies Act (Form 208) and a copy of the company name approval.

Associated costs include Sh2,800 for the first Sh 100,000, Sh 120 for every 20,000 after the first 100,000 (subject to a maximum of Sh 60,000). Filing for the three forms will cost Sh 600.

Once approved, the Registrar of Companies will issue a certificate of registration which allows the business to begin operations.(Time to complete: 7-14 days).

5.) Register with the Tax Department for a PIN and VAT. Registration for personal and company identification number is needed to register for VAT, local service tax and the pay-as-you-earn (PAYE) tax. VAT registration requires PIN certificates of at least two shareholders/directors or a director and company secretary.

READ: How to write winning a business plan

The business owner is required to file the certificate of registration and a copy of the memorandum and articles of association. This process is free of charge.

6.) Apply for business permit. The applicable fee depends on the nature of business, size of the company premises and number of employees. The fee schedule for business permits vary depending on the size and nature of business.