Starting and running a small business in Kenya can be exciting and challenging. Beyond securing capital, marketing, and managing operations, legal compliance is critical to ensuring your business thrives without unexpected legal hurdles. Here are the top five legal tips every small business owner in Kenya should keep in mind: 1) Register Your Business Properly Whether you're a sole proprietor, a partnership, or a limited liability company, formal business registration is crucial. Under the Business Registration Service (BRS) governed by the Companies Act, 2015, you can register your business online via the eCitizen portal. Proper registration not only legitimizes your business but also helps in accessing government tenders, and business loans, and building customer trust. 2) Understand and Comply with Tax Obligations Navigating tax laws can be daunting, but non-compliance can lead to hefty fines. Register for a Personal Identification Number (PIN) with the Kenya Revenue Authority (KRA) and understand your tax obligations, including VAT (if applicable), PAYE for employees, and corporate income tax. Regularly file your tax returns to avoid penalties under the Tax Procedures Act, 2015. 3) Draft Clear Contracts and Agreements Avoid handshake deals. Whether it's with suppliers, employees, or clients, having written contracts protects your interests. Contracts should clearly outline the terms of service, payment schedules, dispute resolution mechanisms, and termination clauses. Refer to the Law of Contract Act (Cap 23) to ensure your agreements are legally binding. 4) Protect Your Intellectual Property (IP) Your brand name, logo, unique products, or creative content are valuable assets. Register trademarks, patents, and copyrights with the Kenya Industrial Property Institute (KIPI) to secure your IP rights. This protection can prevent others from exploiting your creations without permission, as governed by the Industrial Property Act and the Copyright Act, both of 2001. 5) Stay Compliant with Employment Laws If you have employees, it's essential to adhere to the Employment Act, of 2007. This includes providing written contracts, fair remuneration, safe working conditions, and statutory benefits like NSSF and SHIF contributions. Non-compliance can lead to legal disputes and penalties from the Ministry of Labour. Final Thoughts Legal compliance isn't just about avoiding trouble; it's building a sustainable, trustworthy business. If you're unsure about any legal requirement, consult with us, your legal professionals to ensure your business is on the right track. At Murugu Rigoro and Company Advocates, we're here to support your business journey with sound legal advice tailored to your needs.
Written by Patrick Okoth
Published on Feb 2, 2024