With a population of 47.6 million people and an ever-growing economy, Kenya is the commercial, economic, and business center of East Africa. It boasts a growing middle class, an educated workforce, and an ever-increasing market for various goods and services. In other words, Kenya is getting increasingly good for business.
If you are entertaining the idea of starting your own business in Kenya and working with local and international clients, we have compiled the necessary information and requirements for future entrepreneurs.
Sole proprietorship in Kenya
As a beginner in the business world, the simplest way to run a business in Kenya is to establish a sole proprietorship. Unlike limited liability companies and corporations, sole proprietors have simple administration, taxation, and supervision. Being self-employed enables you to run your business the way you see fit and grow it over time.
As is the case with many other countries, laws in Kenya differentiate employees and independent contractors. Employees have contracts of service, while the self-employed work under contracts for service.
Kenyan sole proprietors own their businesses, enjoy all their profit, control the work, and make decisions autonomously. Sole proprietorships are not separate legal entities but are seen as a single person engaging in business in their own right.
Applying for a business name
One of the steps you are legally required to take when establishing a sole proprietor is registering your business name. The name of your business needs to be unique since the state authorities will check whether there is already a similar or identical one. You can present three options when submitting a business name reservation.
This portal is the place to search and apply to reserve a business name. Reservations of the names cost 100 KSH (Kenya Shilling) per name.
Registration with Kenyan Tax Authorities
Before the beginning of your business activity, you need to be registered with the Kenya Revenue Authority (KRA) since they are in charge of collecting taxes.
As a taxpayer, you need a personal identification number (PIN) certificate. Additionally, you need the Company Tax Identification Card to register for VAT, local service tax, turnover tax, and income tax.