Is an Attorney Necessary When Setting Up a Business in Kenya? Why You Need One

Talk to my lawyers, you hear this often when watching movies, business owners or celebs.

Have you ever got embroiled in a copyright battle between you and another business? What did you do?

Or have you ever been conned online and wondered what to do or how to seek help or who may help you or who covers online freelancers in Kenya?

A business lawyer is a negotiator that helps you incorporate your business without suffering headache and also helps you settles disputes like payments.

If you have your business registered as an LLC or Sole Proprietorship or a Partnership, it’s about time you run to a lawyer’s office.

For a sole proprietorship because your assets, in case of loan default, are on the line.

For a partnership, partners may get into debt without your knowledge, and how do you deal with such sneaky partners? Through a lawyer.

In this day and age, most business owners forget the fundamental thing that should be taken into account before starting a business.

We all talk about sales and marketing, business planning, branding etc., but all that has its time and place. 

Before you jump the gun and start off your business, you need to make sure you have a legitimate business.

It is the right foundation for you to even have a business in the first place.

This is why it is a good idea that you consult with an attorney when you are just starting a business.

The words attorney and lawyer are used interchangeably to mean the same thing.

If you are starting your business, hopefully, you are going to be forming an entity.

There are a number of business entities such as sole proprietorship, a partnership, corporations or limited liability companies.

All these have specific legal requirements that must be met before starting the business. 

What Legal Requirements Do You Need Before Starting a Business?

If you want to be a real entrepreneur or business owner, you have to do things the right way. 

You need to do the following things in order to start your business legally.

  1. Incorporate your business.

Start and form your business. Tell your government that you are going to start your business in a certain place. When do you want to start your business?

Who are the owners? Who are your customers?

You can do this application online. Once you are ready to register your business, fill out the type of business entity you want to form.

Forming an entity is important for tax purposes.

An accountant can help you to separate company tax and your personal tax.

An entity will also help to limit your personal liability as a result of the actions of your company.

The most common business entities are corporations or limited liability companies. 

2. Apply for your tax ID/ PIN.

Use the Kenya Revenue Authority (KRA) website online and get your identification number almost immediate. You can also use an accountant to help you choose the right tax structure for your business entity.

3. Make a business agreement with the owners of the company.

If you are the only owner in the company, you don’t have to stress out about that.

However, if there are multiple owners, you need to come up with an agreement amongst all of you as to how the company is going to run, how capital contributions are going to be made and how profits and losses are going to be allocated etc.

This will make sure there is no confusion about how you are going to be running the company and how the profits and losses are going to be shared.

4. Open a bank account with your business name.

You can use your registration and tax ID to open a PayPal, MPESA Paybill or any other kind of online payment.

You can have a separate account, one with your business name and the other with your personal name.

This separates your personal assets and personal funds from your business assets and business funds. 

5. Obtain the necessary business licenses.

A license will give you the leeway to start operating your business.

Licensing will depend on if you have a brick and mortar business or a virtual business.

If you have a physical location that customers can walk in to buy, you have to check with your local government or municipality and see what licenses you need.

Do your research and know where you have to start the process for obtaining a licence so that you won’t get cancelled because of needed clearance from other relevant authorities.

In order to have that type of business where you want it, you must get approval.

6. Secure your intellectual property.

Once you have started your business activities and you have any proprietary technology or any engineered product, you may want to consider getting a patent.

This may be a little time consuming and expensive, but worth it eventually.

Copyright your software. If you are concerned about your trademark or company name, secure it.

This will ensure that all of your things are protected from the start.

7. Formulate your business plan.

This should be a brief outline of what your business objectives are.

You can share this with your business partners so that they may have a rough idea of the business goals.

However, do not give this out to your investors.

This business plan is only meant to give you a blueprint of where you want your company to go. 

8. Create contract templates.

This will be important during interactions with third parties.

Your contract should have return policies, warranties, payment terms and what you are guaranteeing and not guaranteeing.

Since they are your contracts, they should be drawn up in your favour.

Document your terms so that if anything ever comes up with the third party, you will have proof.

Why Do You Need an Attorney as a Kenyan Business Owner?

Protection from lawsuits.

Lawsuits arise from a number of factors.

An employee may file a lawsuit when he feels harassed or discriminated against when there is a breach of contract or there are unplanned accidents.

Your attorney will give you ways on how you can avoid these lawsuits or give you a set process on how to navigate these lawsuits with minimal losses.

Lawsuits are part of business ventures and your attorney should inform you on how you can deal with them when they arise.

Establishing business contracts.

A contract repository gives the terms and conditions for participating in a given business. An attorney gives you the legally accepted terms of service and approves them.

An attorney also helps you to draw the business contract to be in your favour.

They also document and put in writing everything that has been agreed upon so that you stay protected.

Preparing paperwork.

Legal components have a lot of documents and require a lot of work and dedication.

Going into this alone, while not understanding the concepts can burn you out and you may miss out on important things altogether. An attorney helps you check all these things out with much ease and accuracy.

Disputes may arise from employees, customers or business managers.

An attorney comes in with the best approaches to settle these disputes.

They act as mitigators and can help you negotiate a deal on how to end a dispute. 

Establishing intellectual property.

Ever heard of the trademark and copyright war between Santa Maria and Santa Lucia?

A brand may say the logo and tagline were first theirs and there’s an established brand using the same logos, taglines and marketing strategies. What do you do if you don’t have a lawyer?

You need to hire one and put your house ready for war if you’re certain you didn’t steal ideas from another business.

A lawyer will help you see the risks involved in terms of losing your business assets or business.

Settling disputes.

An attorney will take you through the necessary paperwork to patent your product or idea.

They can help you trademark your business and protect all your assets. Obtaining intellectual property rights through an attorney is less expensive and less time-consuming. 

Tax disputes.

An attorney informs you about the tax laws put in place by the government and helps you choose a tax structure that will be beneficial to your business.

They help you pay your taxes in term and follow every rule concerning taxation.

This will help you prevent heavy penalties as a result of tax evasion. 

Government compliance.

An attorney will explain to you why you need to comply with the law so that your business can start operating.

It is also a government-mandated policy to have a legal advisor for your business. 

What are the Best Qualities for a Business Lawyer in Kenya?

Honest

A lawyer should provide his or her legal counsel in a straightforward way using language that you understand.

Instead of hushing behind your back when they notice an anomaly in your contract, they must face you and tell you your chances of winning or losing or when settling a case is better than taking matters to court.

Bills You According to Their Worth Without Overcharging

Small business owners in Kenya don’t trust lawyers even when they’re sole proprietors risking losing all their assets.

Why? Because you’re overcharging them as small business owners.

You’re flexible in your billing. Look at the business run by your clients and how revenue they bring then decide to charge them accordingly.

Knows the Kenyan Business Law

Ever heard of quack lawyers? a criminal lawyer isn’t a corporate lawyer and cannot help you understand what legal documents you require as a business owner in Kenya.

Speaks to you in lay language

Can you imagine Patrice Lumumba advising you about your contract in law jargon? How would you feel?

A lawyer must ensure their client leaves the office attended with their questions or concerns answered.

You don’t want to go home and suffer a heart attack or stroke.

If you don’t understand those Latin terms some lawyers prefer to use, don’t get afraid to ask them to explain in a way you understand.

READ MORE: What to Look Out For Before Hiring a Business Lawyer in Kenya/Qualities of a Good Business Lawyer

FAQs on Why a Lawyer is Necessary For Your Startup in Kenya

Do you need a lawyer to start a business in Kenya?

Yes, you do. I was conned online for almost three years with no one to turn to. Every time I told myself, ‘It would be better, but it got worse.

I’d pick a writing gig cheerfully, do it suffer revisions but when it was time to get paid, I got ghosted.

The worst part I was in a rush to prove that online work works and one can get paid.

It was shameful to admit and for a while, I contemplated getting a lawyer. But how could I when at the KRA office I was told they don’t know what business I do?

These days I ask, was I too early in the online working game for KRA and for a lawyer?

The lawyer I approached told me something about contracts and from there I drew a contract for any employer.

The lawyer was in a hurry so he explained to me while on the steps of the Magistrate’s office in Nakuru.

I went home and wrote a whole 10-page document about how I wanted to receive my payments.

And I didn’t realise that a lot of Kenyan business owners, freelancers, parents don’t think they need a lawyer for their business or understand the documents they sign.

We want to rush in without understanding while that is good because we’re action-takers in Kenya, we need to know the long-term effects of a dragged out court case or the legal implications of signing the dotted line.

READ MORE: How to Write a Freelance Contract That Ensures You Get Paid as a Kenyan Freelance Writer

How much should an LLC cost in Kenya?

It depends on a number of factors, is your LLC an international one with offices in Kenya? Registering an LLC in Kenya may cost you from 25k and above.

Do I have to pay a lawyer up front?

Depends on the lawyer.

Some lawyers prefer for you to pay them a cut before winning a case, some want you to pay their fees in instalments depending on the length of the case (divorce lawyers, corporate lawyers).

Some lawyers are on your payroll if you own a corporation.

Can you negotiate lawyers fees?

Of course, you can negotiate lawyer’s fees.

What’s unethical for a lawyer?

Conflict of interest

Overbilling clients

Abandoning clients for the one with money.

Do lawyers cheat their clients?

Of course, yes, some lawyers cheat their clients and that’s why Kenyans don’t love hiring lawyers for their businesses.

What do you do when a lawyer rips you off?

Have evidence that the lawyer ripped you off, they’re already smart and know how to use the law in their favour.

Then, take the matter to someone higher like the Law Society of Kenya to have the lawyer disbanded.

You may think because you want to run your business from home, you don’t need a lawyer. It’s quite the opposite, you need one.

Why? If for example, you’re going to become a celebrity blogger and sometimes this job involves digging the dirt on celebs, you need to understand what laws to follow and the lawyer is the best advisor for this.

Also, if you’re going to sell things like fitness products or food or any kind of consumer products you need to know there are risks accompanying the use of any products.

As for services, it’s always at the customer’s risk, but still, it’s better to have a lawyer in case the tax people begin following you up.

You have seen how the taxman is ruthless these days. You may think that having a lawyer may require you to have a million-dollar a month as your salary, you don’t.

Searching for a lawyer means finding one that knows the ins and outs of running a business in Kenya and one that’s affordable for you.

A lawyer comes in handy when it’s time to make investments and you need to protect yourself from uncertainties. It’s about time business owners in Kenya small to corporations involve lawyers in their transactions.

A lawyer helps relieve a burden for you in case of seizure of property if you’re a sole proprietor or in case your partners run away with your money in case of partnership.

As you go through legal procedures, you have to be careful with your business attorney as well. Acquire knowledge about business laws beforehand.

Educate yourself and learn. Some business attorneys are rip-offs who are out on overdrive to steal your money. They impose false documentations and taxes you need to pay for.

Consult with other attorneys in case you do not trust the person you are working with.

Your instinct may be right.

That said, you still need a business attorney to help you set off your business on the right grounds with the law.

Do you have a lawyer as a sole proprietor?

Why don’t you?

Do you believe having a lawyer is a waste of resources or do you believe hiring one requires your business to make millions of shillings in revenue a month/year? . 

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Online Businesses / Work in Kenya