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Limited company or LLP? Business structures in Kenya
Sole proprietorship, partnership, LLP or private company — how they compare on liability, tax and paperwork.
By Wakili Link Editorial
Choosing a structure affects your personal liability, tax and how easily you can raise money.
Sole proprietorship
Registered under the Business Names Act. Simple and cheap, but the owner is personally liable for all debts. Profits are taxed as the owner’s income.
General partnership
Two or more people carrying on business together. Partners are jointly liable for partnership debts. Put a written partnership deed in place.
Limited liability partnership (LLP)
Created under the Limited Liability Partnerships Act, 2011. The LLP is a separate legal entity, and partners are generally not personally liable for its obligations. Popular with professional firms. It requires at least two partners and a manager.
Private limited company
Incorporated under the Companies Act, 2015. A separate legal entity; shareholders’ liability is limited to their unpaid share capital. A single person can be the sole shareholder and director. Best suited to raising equity investment.
Comparing the options
| Liability | Separate entity | Raising equity | |
|---|---|---|---|
| Sole proprietor | Unlimited | No | Hard |
| Partnership | Unlimited | No | Hard |
| LLP | Limited | Yes | Moderate |
| Private company | Limited | Yes | Easiest |
All registrations are done on the Business Registration Service portal.
This article is general information, not legal advice on your situation.
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