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An entrepreneur’s guide to cover all the bases for starting a small business in Kuwait.
There has never been a better time to start a business in Kuwait.
The country, known for its robust economy and high purchasing power, has recently updated its legislation to better align with the international market.
This progressive move allows certain foreign companies to open overseas branches and establish a presence in the region without the need for a local agent. It also displays a desire to diversify the entrepreneurial landscape.
If you’re keen to learn more about how to start a small business in Kuwait, there are a few major challenges, including:
- How to make sense of the mountains of paperwork
- Which additional approvals you need to acquire
- Understanding how to hone your business ideas in Kuwait
- Considerations to finalize before starting the business registration process
- How to manage transactions
For years, the region has made its name in the oil and finance sector, but there are plenty more profitable business ideas that can get you ahead in Kuwait.
Among the many promising sectors, the confectionery and snacks market stands out, projected to reach a volume of US$3.00bn by 2024. This presents plenty of golden business opportunities in Kuwait for small cafes and restaurants not just to survive but to thrive.
Source: https://www.statista.com/outlook/cmo/food/kuwait#revenue
On top of that, with a growing acceptance of personal care, the Kuwaiti cosmetics and perfume sector is also expected to see an annual growth rate of 3.67%. These encouraging figures give us a good indication that sales may boom in the coming years.
Whether you're flirting with the idea of your own business or have already begun the process, it's crucial to be fully informed about all the factors involved in how to start a small business in Kuwait. This knowledge will ensure a smooth start and empower you to navigate the business setup landscape confidently.
In this article, we´ll cover all the necessary steps and everything in between:
- Are you eligible to start a business in Kuwait?
- Important factors when selecting a business partner in Kuwait
- Things to consider before opening a business in Kuwait
- Documents required to start a business in Kuwait
- How long does it take to register a new business in Kuwait?
- How much does it cost to register a business in Kuwait?
- Understanding tax obligations for businesses in Kuwait
- Power your new small business with Kem’s instant payments
[Need a hassle-free payment solution that adds value to your new business? Start making and receiving payments immediately by sharing your QR code with customers, family, and friends. Plus, transfer your cash to any bank account. Sign up now and download the Kem app for free on Google Play and Apple today]
Are you eligible to start a business in Kuwait?
Before we delve into the finer points and processes of how to start a small business in Kuwait, first things first, check that you are eligible to do so.
If you are explicitly wondering if, as a foreigner, you can start a business in Kuwait, the short answer is yes, but there are some caveats. The government has clear guidelines of their criteria for who can establish a business. This includes the following:
- A business must be made up of at least two people or more.
- All partners must be clear of any criminal records and have no convictions.
- Foreign partners must have a valid residence visa.
- Shares for non-Kuwaiti partners or foreigners must not exceed 49%.
- Managing partners cannot be government employees.
- Each partner must prove they are paid their share in the capital.
- A Limited Liability Company (LLC) may not be established between a husband and wife unless a third partner exists.
- The company manager must be Kuwaiti or from a GCC country.
While being a foreigner, may add to the complexity throughout the process, it´s definitely not impossible! Finding the right partner and understanding Kuwait’s business sector will pave the way for you to establish and register your small business fairly easily.
Important factors when selecting a business partner in Kuwait
Whether you are a foreigner interested in how to start a small business in Kuwait or a solo Kuwaiti entrepreneur, one of the first things on your to-do list will be defining the kind of business partner you´re looking for. After that, all you have to do is find them!
This will likely be one of the most important decisions you make early on in the company and is pivotal to getting your business off the ground.
Here are some things you should consider when weighing your options:
Networking
Speaking with fellow entrepreneurs is your best bet when seeking potential corporate partners. Not only can other business owners give you sound advice on your new business idea, but by simply chatting, you can better understand what you´re looking for in a co-owner.
Networking may even connect you with potential vendors to work with or future customers. Good entrepreneurship relies on staying connected, after all. Tarek Sakr, Founder and CEO of Kuwait-based e-commerce startup, 4Sale, shares the same sentiment ¨To run a business in Kuwait, your ears must be very close to the ground. You need to have a feeling for what people are doing and keep plugged into the social ecosystem,¨ he says.
Get involved in local business seminars, chamber of commerce events, business roadshows, and online forums to start meeting the right people of interest.
¨To run a business in Kuwait, your ears must be very close to the ground. You need to have a feeling for what people are doing and keep plugged into the social ecosystem¨ - Tarek Sakr, Founder and CEO of Kuwait-based e-commerce startup, 4Sale.
Business acumen
A business partner with a diverse skill set is, of course, a strategic choice. When weighing up a potential partner, it's essential to understand their skills and how they´ll add to your working relationship.
Look for a partner who has skills you may lack and a strong portfolio of notable achievements. Your new partner should also be able to share critical insights on how to start a small-scale business in Kuwait, sharing knowledge that only a local would know.
Cultural considerations
This is particularly significant for foreigners doing business in Kuwait. While language barriers are unlikely, given how common English is, cultural subtleties demand your attention. Understanding these nuances will ensure a strong working relationship and demonstrate your respect for Kuwaiti local customs.
For instance, if meetings coincide with prayer times, you may find yourself waiting. Additionally, many Kuwaiti locals travel abroad during July and August to escape the scorching heat, so business is more likely to unfold over Zoom during these periods. While you might find yourself negotiating in English, it´s important to note that b
Lastly, business cards are a norm, and proper honorifics are essential when addressing others.
Things to consider before opening a business in Kuwait
If you´ve already settled on your business plan and have found a local partner in Kuwait, then you´re off to a good start. But before you can start pushing the paperwork, there are a few more crucial factors to iron out.
Conduct market research
Start by thoroughly researching the Kuwaiti market to better understand the demands, competition, consumer behavior, and pricing practices. This step is crucial to ensure your business idea is viable and tailored to local needs. To conduct market research, you can combine primary research, including:
- Surveys
- Interviews
- Focus groups
With secondary research, for example:
- Existing market reports
- Competitor analysis
- News sources
Market research should be a continual practice, allowing you to stay on top of the latest trends in your industry. Many people are trying to better understand how to start a small business in Kuwait these days, which is why some companies offer market research services. These services provide relevant insights for understanding your target market.
However, there's also the creative approach to consider. Take inspiration from other brands in your category. Observe their strategies, successes, and failures. This can spark new ideas and approaches.
Choose a company type
Once you've decided on the type of business you want to operate, you´ll have to settle on the business structure.
Start filling out registration forms for your small business in Kuwait and you´ll quickly realize the license is tied to the venture type. When it comes to choosing the appropriate business form and structure, these are the most common types of companies:
- Limited Liability Company (LLC)
- Closed Joint-Stock Company (CJSC)
- Public Joint-Stock Company (PJSC)
- Branch of a Foreign Company
Choose a business name
Every company needs a name; now's the time to choose one to represent your brand! Before you begin the business registration process, you can reserve your company name with the Ministry of Commerce and Industry in Kuwait. This prevents others from using anything similar in the meantime.
There are, of course, guidelines for what is considered acceptable and what is not; for example, no company should be:
- Associated with national symbols or the words of God.
- Associated with government institutions.
- Linked to politicians or military factions.
- Use words that misled the reader, e.g. original, first, modern, old.
- Use names that are already associated with international organizations.
The Ministry of Commerce and Industry's website has a handy guide that contains a complete list of the guidelines.
¨We're no different to this statement: fortune favors the prepared. ¨ - Abdulaziz Al Loughani, Founder and CEO, Floward
Legal requirements for business registration in Kuwait
Set aside time to do detailed due diligence on legal requirements before launching your business in Kuwait. Depending on your business activity and if your business requires a commercial space, different legal conditions will apply.
As mentioned above, sources like the Ministry of Commerce and Industry provide the most current and comprehensive information on what laws will be relevant to you.
To start, here are three that apply to all businesses, big or small, in Kuwait:
Identify company officers and shareholders
The structures and roles within your business need to be clearly defined. For example, for Limited Liability Companies (LLC), Closed Joint-Stock Companies (CJSC), and Public Joint-Stock Companies (PJSC), you´ll need to identify at least one director or representative who is at least 18 years of age.
On the other hand, shareholders or partners can be either individuals or corporate entities, providing flexibility in how you wish to structure your business.
Capital requirements
Depending on the type of business you are registering, Kuwait has specific capital requirements for different kinds of companies. This will be important to secure before you can conduct business. Naturally, you´ll have to present proof of capital deposited in a local bank:
- Limited Liability Companies (LLC) require a minimum capital of KWD 1,000.
- Closed Joint-Stock Companies (CJSC) require KWD 100,000.
- Public Joint-Stock Companies (PJSC) require KWD 1,000,000.
- Foreign company branches are exempt from minimum capital requirements.
Create a memorandum and article of association
This document outlines your company's internal regulations. It should include important information surrounding the business's ownership, management structure, and profit distribution.
As this is a legal document, it is highly advised to have a lawyer draft it for you. This ensures nothing important is accidentally left out.
Documents required to start a business in Kuwait
If you're wondering how to start a small business in Kuwait, a large portion of setting up your entity will involve tackling documentation and permits. While it can feel like there are many hoops to jump through, the process is made smoother with careful planning and preparation.
Here's a step-by-step guide on what you must consider and apply for.
Get necessary approvals
You may need additional approvals before submitting any other documentation, depending on your intended business plan and activities.
Say, for example, you´re opening a coffee shop. That will involve registering and conducting a safety review with the Health Department. A graphic design business, in comparison, would not be subjected to such rules.
Understanding these specific requirements will help you avoid delays down the road. Best put by Abdulaziz Al Loughani, Founder and CEO, Floward, "we're no different to this statement: fortune favors the prepared.”
Consult the Kuwait Business Center page to learn what industries are exempt and if you need to get approval first.
Key documents
When applying for your business license, it's essential to be well-versed in the key documents that must be submitted. These documents vary based on the type of venture.
All of the necessary documents can be found and should all be submitted to the Ministry of Commerce and Industry.
The most important documents include:
- Memorandum and Article of Association - Specifically applies to Limited Liability Companies (LLC), Closed Joint-Stock Companies (CJSC) and Public Joint-Stock Companies (PJSC)
- Articles of Association - Specifically applies to Limited Liability Companies (LLC), Closed Joint-Stock Companies (CJSC) and Public Joint-Stock Companies (PJSC)
- Application for Company Registration - This applies to all companies that wish to be registered. This often includes a copy of the company's lease agreement and the necessary approvals from relevant authorities.
Along with this, you'll have to submit:
- A photocopy of your passport
- A photocopy of your resident's permit
- Proof of capital in a local bank
Obtaining your commercial registration certificate
Once you've received the green light and all your papers are approved, the government will issue you a Commercial Registration Certificate. This official document demonstrates your company's legal operation in Kuwait.
How long does it take to register a new business in Kuwait?
Simply put, timelines vary on a case-by-case basis.
Once you have your paperwork in order, the process of submitting your application and documentation begins. The timing can vary from as little as 15 days to several months. It all hinges on several factors, including the size of your company, the industry, and how your business is structured.
Be prepared, as you may find you'll have to submit additional information along the way.
How much does it cost to register a business in Kuwait?
Initial government set-up fees start at approximately 500 KD. This covers processing all the paperwork and finalizing your commercial registration certificate. However, the final fee may vary depending on any additional documentation you need to process. Beyond that, there are other wider business costs to consider down the road, for example:
- Social Security payments for employees
- Permits for a location
- Cost of hosting a website
- Rent, electricity and water bills
Understanding tax obligations for businesses in Kuwait
Completing your tax registration is the final step in the process of how to start a small-scale business in Kuwait. Along with your other business expenditures, the last piece of the puzzle is registering for taxes with the Ministry of Finance. This is to ensure you comply with all the local tax laws and maintain financial transparency with the government. You'll need to register in person at your local MOF office.
With that, you've completed the process, and you can start operating your business!
Power your new small business with Kem’s instant payments
If you're wondering what the next best move to make is, one way to ensure your business thrives is to better understand the six types of payment solutions primed for small businesses.
Not only will managing your finances be a day-to-day task, but getting it right in from the get-go will prevent headaches and financial hiccups in the future.
In this day and age, customers demand a frictionless experience, whether they're making a purchase online or in person. Gone are the days of fumbling for loose change. It´s the age of tap and go.
Take Kem, for example; you can send and receive money instantly using just a QR code, along with added tools to track your business finances. That means your customers can pay for your goods and services in an instant. Receipts? We did away with those too. It lives all in the Kem app!
Kem was built to simplify payment for start-ups and small businesses. With no minimum account balance or hidden transaction fees, you can have your payment gateway ready to go in under a day. On top of that, you can freely transfer your revenue to any bank account you have. It´s never been simpler.
Get started for free - download the Kem app for free on Google Play and Apple today!
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