Choose your structure
The structure you choose decides who is personally liable, how you're taxed, and whether you can ever raise outside capital. Pick wrong and you'll pay to fix it later — sometimes in tax penalties, sometimes in lost investors.
What this step covers
- Compare sole proprietorship, partnership, LLP, and limited company across liability, tax, governance, and fundraising.
- Map the structure to your 3-year ambition, not just today's reality.
- Understand registration cost, ongoing compliance burden, and conversion options.
The detail
The four structures available to Kenyan founders
| Structure | Liability | Tax | Best for |
|---|---|---|---|
| Sole Proprietorship | Unlimited personal | Personal income tax + TOT (1.5%) under KES 25M | Solo trader, hawkers, freelancers, side hustles |
| Partnership / LLP | Joint & several (LLP limits it) | Pass-through to partners | 2–20 professionals (lawyers, accountants, consultants) |
| Private Limited Company (Ltd) | Limited to share capital | 30% corporation tax + 5% dividend WHT | Startups raising capital, scaling, holding assets |
| Public Limited (PLC) | Limited | Same as Ltd + listing rules | Businesses planning a Nairobi Securities Exchange listing |
Decide using the 3 questions that actually matter
- Am I willing to put my house and personal M-Pesa on the line for business debts? If no, you need a limited company.
- Will I bring partners or investors in the next 24 months? If yes, default to Ltd.
- Do clients (banks, NGOs, government) require a Certificate of Incorporation to do business with me? If yes, Ltd is the only option.
You can start as a sole prop and convert to a Ltd later — but conversion costs legal fees and triggers a fresh KRA registration. If you can see the future, register it correctly the first time.
Authorised share capital over KES 100,000 attracts 1% stamp duty. Keep the authorised capital lean at incorporation and only increase it when you actually need to issue more shares.
Frequently asked
Can a foreigner own 100% of a Kenyan limited company?+
Yes — Kenya allows full foreign ownership in most sectors, with limited exceptions (mining, telecoms, insurance, security, where local equity floors apply).
How is a Ltd taxed differently from a sole prop?+
A Ltd pays 30% corporation tax on profits, then a further 5% withholding tax on dividends to shareholders. A sole prop pays personal income tax at graduated rates (10%–35%) — often lower at small turnovers.
Do I need a lawyer to register a Ltd?+
Not strictly — eCitizen lets you do it yourself. But a 30-minute call with a lawyer or advisor on your articles, share split, and beneficial-owner declarations is cheap insurance.
The information in this guide is provided for general guidance only and is subject to change. Fees, timelines, and regulatory requirements in Kenya are updated regularly. Before acting, please confirm details with the relevant authority (KRA, eCitizen, BRS, county government, or other regulator) or speak with a qualified MyBiashara advisor. MyBiashara is not liable for decisions made solely on the basis of this content.
