Business Legal Requirements

Written by on August 29, 2019

Both the national and county governments exercise control over businesses to protect the interests of customers. They do so through issuing licences and permits and enforcing various business laws of the land. Below are some of the legal requirements for business operations.

  • Licences and Permits
  • Taxation
  • Employees Welfare
  • Other Business Laws

LICENCES AND PERMITS

For small business start-ups, the main legal requirement is an Annual Single Permit obtainable at a fee from the county government offices. This permit, which should be displayed on a visible place inside the business premises, allows the business to operate in the respective county. It is advisable to obtain one before opening the doors of the business to the public. Failure to do so will expose one to the ruthless county inspectors who have legal powers to arrest one on the spot.

TAXATION

KRA PIN NUMBER

Businesses are expected to acquire a KRA Pin Number which would be used for filing annual business income tax returns. It is mandatory to make the returns with advice from a qualified accountant. Do not wait until KRA officials find out that you don’t file the returns. If they do, their estimates of tax due and payable may hurt one’s finances. It is better to pay tax when due than doing so in arrears.

VAT

Another KRA tax that businesses pay is the Value Added Tax (VAT). The tax is payable for particular good and services at the point of their sale. Businesses are expected to buy ETR machines that capture the tax due when a sale is made. VAT returns and payment is made on a monthly basis.

EMPLOYEES WELFARE

The two statutory deductions that should be made from employees’ monthly salaries are:

  • NSSF
  • NHIF
NSSF

When you hire full-time employees for your business, you will be required to register your business as an employer with the National Social Security Fund (NSSF). On a monthly basis, you will deduct NSSF money from employees’ salaries and add a similar amount from the business for remittance to NSSF. The amount shall be available as a pension to employees on the attainment of retirement age. It is an offence if the business does not remit the amount by the 7th of every month.

NHIF

As a business owner, one should register the business as an employer with the National Hospital Insurance Fund (NHIF). This fund which employees should contribute towards gives them medical cover for various services. The amount due should be deducted from employees’ salaries and remitted to NHIF by the 7th of every month.

OTHER BUSINESS LAWS

Businesses are expected to adhere to a number of laws depending on the goods or services they provide. For example, the Public Health Act requires food handling businesses to maintain a clean working environment. Depending on the nature of your side hustle, it is advisable to find out specific legal requirements with relevant authorities. Ignorance of the law is not an excuse for its violation.

TOMORROW, Friday expect the post on Business Operation Assets, as part of the Side Hustle Series.

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