Types of Companies to register in Kenya

For entrepreneurs looking to break into the Kenyan business landscape, there are plenty of things to consider. Even so, perhaps the most significant factor to mull over is the type of enterprises a prospective business owner can establish in the country. The future of your venture is directly affected by the nature in which you choose to register it. 

Registering your company under an inadequate category can breed detrimental consequences for your business' finances. For this reason, it's of utmost importance that every entrepreneur should understand the types of companies they can open in Kenya. 

Although the process of Company Registration In Kenya can be an uphill task, the government has stepped in to ease the arduous process. Nowadays, registering a company in Kenya is a breeze thanks to its integration with the internet. With the burden of listing your company out of the way, you can focus on other relevant issues. 

In this article, we explore the various types of companies you can register in Kenya. With this information, greenhorn investors and foreign business owners can make informed decisions when enlisting their companies in the country. 

Limited and Unlimited Companies

In Kenya, companies can generally fall under two categories, limited and unlimited companies. Here are the differences between these two types of companies. 

Unlimited Companies

With unlimited companies, there are no limitations on the liability of shareholders to pay off debts. Therefore, this means that members of the enterprise are jointly and individually responsible for the debts. In case the firm needs more money to pay off debts when winding up, the stakeholders will be responsible for coming up with it. 

There are several advantages and shortcomings to opening an unlimited company. However, to help you decide whether this is the type of company you want to register, here are a few appropriate instances for opening an unlimited company. 

Unlimited companies are an appropriate choice when there is little risk of bankruptcy. They are also suitable when the owners of a company don't want to display financial information publicly. 

Limited Companies

On the other hand, in limited companies, shareholders keep their assets separate from the enterprise. In this case, members' liabilities are limited to the amount of capital they had invested. Therefore, stakeholders of a company are only liable for the amount of money they invested. In most cases, this is a suitable company setup since entrepreneurs don't risk personal wealth when they get involved in a business. 

These companies can either be limited by guarantee or by shares. In the former structure, shareholders pledge to pay a sum of money to pay off debts if the company winds up. In contrast, in a company that is limited by shares, the liability of its members is limited by the number of unpaid shares held by them.

Types of Limited Companies

There are several kinds of limited companies that business owners can register in Kenya. Here is a brief look at some of the main types of limited companies. 

Sole Proprietorships

In sole proprietorships, the business owner assumes all risks of the company. The business and the owner are considered one.

Partnerships

There are three main types of limited partnerships. They include limited liability partnerships (LLP), general partnerships, and limited partnerships.

Limited Liability Private Companies

For these firms, the owners and the firm are two different entities that are taxed separately. 

Limited Liability Public Companies

In limited liability public companies, the public can buy and sell company shares. People can make trades on the company's shares on the Nairobi Securities Exchange. 

Final Thoughts

There are several types of enterprises that entrepreneurs can register in Kenya. It's paramount that all prospective business owners should comprehend how these companies are formed and operated. 

Share on Google Plus