What types of entities can I register to run a business in Kenya?

Common options include the registration of a private limited company which is registered under the Companies Act; limited liability partnerships (LLPs) registered under the Limited Liability Partnerships Act.

Another option is to register a business name; although this is not considered a separate entity from the individual, as it is in the case of a company or an LLP.

Seek legal advice depending on the nature and type of business in order to determine the appropriate business registration entity.

What is the Difference between an LLP and a private limited company?

• A company limited by shares is led by directors while an LLP is led by managing partners;
• An LLP’s capital is given by partners who obtain a percentage stake in how profits are split while a company capital is divided into shares and shareholders receive dividends out of income distributed by the company.

What are the advantages of an LLP over a private limited company?

A company is taxed at the corporate income tax level as well as taxing of dividends paid to shareholders while an LLP under the existing tax laws is not taxed corporation income tax; profits distributed to the partners are taxed income tax at the individual partner level.

What is the Advantage of a Private Limited Company over an LLP?

• A company requires a minimum of 1 shareholder and director to register while a limited liability partnership requires a minimum of 2 partners.
• A company may be the straightforward type of entity to set up certain regulated businesses.

What is the difference between a private limited company and sole proprietorship?

A private limited company is a legal person under law separate from its directors and shareholders. A sole proprietorship registered as a business name is not separate from the owner, thus the rights and liabilities of the business name are those of the sole proprietor.

What is the advantage of an LLP and a private limited company versus a sole proprietorship registered as a business name?

Liability of an entity (such as an LLP and a private limited company) is limited as the entity is a legal person separate from the owners capable of bearing its own liability. Limited liability protects the owners. A sole proprietorship registered as a business name is not a separate entity from the owner, hence liabilities in business are attributed to the individual owner.

How to change from a sole proprietorship business name to a private limited company?

This can be done by filing the appropriate cession of business form and registering the business name as a company. The requirements for company registration are in this Article Link.

What is the advantage of a sole proprietorship registered as a business name versus registering an entity?

There is no corporate income tax chargeable on a sole proprietorship and a sole proprietorship has fewer annual filings to comply with e.g. company registry filings.

What are the documents required for entity business registration in Kenya?

• Passport photo of directors, shareholders and beneficial owners.
• Notarised business registration certificate of holding company where shareholder is foreign entity.
• Contact details of directors, shareholders and ultimate beneficial owners (email, postal address, phone number and residential address).
• Description of occupations of directors, shareholders and ultimate beneficial owners.
• Copies of national ID and KRA Pin for Kenyan director’s shareholders and ultimate beneficial owners.
• Passport copies of foreign directors, shareholders and ultimate beneficial owners.

What are the Documents required for bank account set up for the business?

Different banks may have their own further requirements, nevertheless most will ask for those listed below:

• Passport photo of directors, shareholders and beneficial owners.
• Notarised business registration certificate of holding company where shareholder is foreign entity.
• Contact details of directors, shareholders and ultimate beneficial owners (email, postal address, phone number and residential address).
• Description of occupations of directors, shareholders and ultimate beneficial owners.
• Copies of national ID and KRA Pin for Kenyan director’s shareholders and ultimate beneficial owners.
• Passport copies of foreign directors, shareholders and ultimate beneficial owners.
• Foreign shareholders, directors and ultimate beneficial owners may have extra requirements depending on the country you are from e.g. forms pertaining to FATCA for shareholders/director and ultimate beneficial owners from USA

What is the Information required for taxpayer registration?

• Kenya Revenue Authority PIN of local directors and foreign directors
• Contact details of the company (email, postal address, phone number and residential address
• Physical address of the entity that is seeking the income tax registration.