Introduction
Starting a business in Kenya is now faster than ever, thanks to the eCitizen portal and the Companies Act 2015. But the type of business structure you choose will affect your liability, taxation, and governance for years to come. Here is a plain-language guide to the two most popular structures.
Private Limited Company (Ltd)
A Private Limited Company is a separate legal entity from its owners (shareholders). Key characteristics include: limited liability — shareholders are only liable up to the amount of their shares; minimum of one director and one shareholder; share capital (no minimum requirement); subject to Corporation Tax at 30%; annual returns must be filed with the Business Registration Service.
Limited Liability Partnership (LLP)
An LLP combines the flexibility of a partnership with the limited liability of a company. Partners are not personally liable for the debts of the LLP beyond their agreed contribution. There must be at least two partners. LLPs are taxed as partnerships — partners pay income tax on their share of profits.
Which Should You Choose?
Choose a Limited Company if you plan to have investors, issue shares, or need the credibility of a corporate structure for tenders and contracts. Choose an LLP if you are a professional practice (lawyers, accountants, architects) or a small group of partners who want flexible internal management with limited liability.
Registration Process on eCitizen
Both structures are registered via the eCitizen portal (ecitizen.go.ke → Business Registration Service). The process involves name reservation, filing of constitutional documents (Memorandum & Articles of Association for a company, LLP Agreement for an LLP), payment of the registration fee, and receipt of the Certificate of Incorporation.
Get It Right from the Start
The documents you file at registration will govern your business for years. Engage an advocate to draft your Articles of Association or LLP Agreement properly — especially provisions on dispute resolution, share transfers, and exit of partners.