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April 21, 2021

6 reasons why you should register your business

Most entrepreneurs in Kenya forgo the opportunity to register their business during the initial set-up phases due to various reasons such as the complicated and costly processes involved in registering a business in Kenya. 

As they continue with their business operations, they realize that they are unable to get loans from banks since financial institutions require a registration certificate before lending to start-ups. Customers who frequently shop online, request their business registration number to confirm their legitimacy. Failure to share proof of registration means loss of customers. 

In some severe instances, an entrepreneur can find that another well-established business is using a similar business name and he/she faces legal action for trademark violation. After tedious and frustrating communication with the established entity, he/she has no choice but to change the business name, meaning that customers & vendors will be more confused about the brand, affecting trust and credibility. These scenarios would have been easily avoided if the business was registered from the beginning. 

Registering or incorporating a business is a smart, strategic move for you as an entrepreneur for a number of reasons.

Brand credibility

Registering your company/business helps boost your credibility among customers and potential investors. The positive effect is that this will improve your business dealings as many customers and investors would rather engage with registered companies especially with the rise in the number of unscrupulous illegitimate businesses. 

Limit your personal liability

As a sole entrepreneur you are legally responsible for all aspects of your business. In case your business fails or you run into legal issues, your personal assets can be confiscated. By registering your company as a legal entity, you protect your personal assets from your business assets. Any legal matters will be kept separately from your personal affairs. 

Legal protection

Most entrepreneurs have already set up their businesses. However, nothing stops other people from using your brand name if you did not register it in the first place. Once your business is registered, your business name is protected. No one else can use the same name. You get to protect your corporate brand from unauthorized use. 

Access to financing

Banks and other financial institutions will want to see proof of your business registration as a condition to qualify for any loans. Registering your business gives you the ability to qualify for this loans and use them to scale-up your business. It also opens opportunities for you to engage in more business transactions with larger corporates.

Grow your empire

When your business grows, you may need to hire full-time employees, and to do so you will need to have a registered business. You will be able to deduct (PAYE) taxes on the employee’s behalf only if your business is registered.

Continuity

A registered company is a separate legal entity unaffected by the death or departure of any member. No matter what changes; staff, shareholders, leaders etc, nothing will affect the existence of the company, once incorporated, meaning that it can operate forever. 

As highlighted above, it is very important to register your business. Failure to do so can result in severe legal consequences and you can miss out on great opportunities. Consultancies such as Directella have experienced lawyers who can offer advice on the forms of business ownership and help you register your sole proprietorship, partnership, Non-profit organization or you’re your public/private limited liability company whilst providing legal support on an ongoing basis

Reach out to the team via email info@directella.co.ke and get your business registered as soon as possible.

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