One of the first decisions any entrepreneur makes is how to structure the business. The choice affects your personal liability, your tax position, how easily you can raise money and how much paperwork you will face each year. This guide compares the main options in Kenya and explains how registration works.
The main options
Business name (sole proprietorship or partnership)
You trade under a registered business name, such as “Wanjiku Designs”. Registration is quick and inexpensive. However, the business is not a separate legal person. You, the owner, are personally liable for all of its debts, and creditors can pursue your personal assets.
Partnership
Two or more people carry on business together with a view to profit, under the Partnerships Act, 2012. In a general partnership, each partner can be personally liable for the firm’s debts. A written partnership deed is essential.
Limited liability partnership (LLP)
An LLP, under the Limited Liability Partnerships Act, 2011, is a separate legal entity. Partners’ liability is limited, while the business keeps the flexibility of a partnership. LLPs are popular with professional firms.
Private limited company
A company registered under the Companies Act, 2015 is a separate legal person. It owns its own assets, enters into contracts in its own name and is responsible for its own debts. A shareholder’s liability is generally limited to any amount unpaid on their shares. A private company can be formed by a single person, who can be both the only shareholder and the only director.
How to choose
Consider:
- Risk. If the business will take on debts, sign significant contracts or face potential claims, limited liability matters.
- Investors and partners. Companies make it easier to bring in co-owners and investors through shares.
- Credibility. Banks, large clients and many tenders prefer, and sometimes require, a limited company.
- Cost and compliance. A business name is simpler to maintain. A company has more filing obligations.
- Tax. Sole proprietors are taxed as individuals on business profits, while companies pay corporation tax. Take tax advice on which suits your circumstances.
How registration works
Registration is handled by the Business Registration Service (BRS) through the eCitizen portal.
Registering a business name
- Search for and reserve the proposed name.
- Complete the registration application with the owner’s or partners’ details, including identification and KRA PIN.
- Pay the fee and download the certificate of registration.
Incorporating a company
- Search for and reserve the company name.
- Provide the details of each director and shareholder, including identification, KRA PIN, contact details and residential address.
- State the share capital and how the shares are allocated.
- Provide the registered office address.
- Adopt articles of association. Model articles are available, or you can adopt bespoke articles.
- Lodge the details of the company’s beneficial owners, meaning the individuals who ultimately own or control it.
- Pay the fees and download the certificate of incorporation.
Government fees are paid through eCitizen and change from time to time, so check the current fees on the BRS portal before you apply.
After registration
- Tax. A company needs its own KRA PIN. Register for the taxes that apply to you, such as income or corporation tax, PAYE once you employ staff, and VAT once your taxable turnover reaches the registration threshold. Most businesses must also issue electronic tax invoices through KRA’s eTIMS system.
- County business permit. Obtain a business permit from the county government where you operate.
- Employer registrations. If you employ staff, register with the National Social Security Fund (NSSF) and the Social Health Authority, and account for the Affordable Housing Levy.
- Sector licences. Some activities need additional licences, for example food businesses, financial services, transport and professional services.
- Bank account. Banks will ask for the certificate of registration or incorporation, the KRA PIN and, for companies, a board resolution and details of the directors and shareholders.
Keeping a company compliant
- Annual returns must be filed with the Registrar each year.
- Changes to directors, shareholders, the registered office or beneficial owners must be notified to the Registrar.
- Registers of members, directors and beneficial owners must be kept up to date.
- Company secretary. A private company must appoint a qualified company secretary once its share capital reaches KSh 5 million.
- Accounts and tax returns must be prepared and filed on time.
A shareholders’ agreement
If you are starting a company with others, a shareholders’ agreement is as important as registration itself. It should deal with who contributes what, how decisions are made, what happens if the founders disagree, how shares can be sold and what happens if a founder leaves.
Frequently asked questions
Can a foreigner own a company in Kenya?
Yes. Foreign nationals can be shareholders and directors of Kenyan companies. Some sectors, however, have local ownership requirements, so check the rules for your industry.
Can I convert my business name into a company later?
Not automatically. You incorporate a new company and transfer the business, its assets and its contracts to it. Plan the transfer carefully, especially if the business has employees, leases or loans.
Do I need a lawyer to register a business?
Not to register. Legal advice is most valuable on choosing the structure, drafting the articles and the shareholders’ agreement, and setting up the business correctly from the start.
How we can help
We advise entrepreneurs and businesses on choosing a structure, incorporation, shareholders’ agreements, governance and ongoing compliance. Contact Odek Law Advocates to start your business on a sound legal footing.
This article provides general information on Kenyan law as at October 2026 and is not legal advice. Please seek advice on your specific situation.