Sole Proprietorship vs Partnership vs Limited Company in Kenya 2026: Costs, Liability and Tax

Updated 21 October 2026

Quick answer: A sole proprietorship or partnership is registered at the Business Registration Service (BRS) as a business name for KSh 950 and is ready in about a day, but the business is not a separate legal person, so the owners are personally liable for its debts. A private limited company costs KSh 10,650 on the BRS fee schedule, takes 3 to 5 days, and is a separate legal entity, so shareholders’ liability is limited to their shares. A limited liability partnership (LLP) sits in between and costs KSh 25,000. Choose a business name to test an idea cheaply; choose a company when you need limited liability, investors, tenders or bank credit in the business’s own name.

Fees here are from the BRS Companies Registry fee schedule, read on 19 October 2026. The BRS FAQ steps quote KSh 10,750 for a private company, so pay the amount on your eCitizen invoice. This page is general information, not legal or tax advice.

In this guide

1. The Structures Side by Side
2. Sole Proprietorship: Fast and Cheap, but It's All on You
3. Partnership: Two or More Owners, Shared Risk
4. Limited Liability Partnership (LLP)
5. Private Limited Company: Limited Liability and Credibility
6. What It Costs in the First Year (BRS Fees Only)
7. Which Should You Choose?
8. Frequently Asked Questions

The Structures Side by Side

Item	Sole proprietorship	Partnership	LLP	Private limited company
BRS registration fee	KSh 950 (business name)	KSh 950 (business name)	KSh 25,000	KSh 10,650
BRS processing time	1 day	1 day	1 day	3 to 5 days
Document issued	Certificate of Registration	Certificate of Registration	Certificate of Incorporation	Certificate of Incorporation
Separate legal entity?	No	No	Yes	Yes
Owner liability	Unlimited, personal	Unlimited, shared by partners	Generally limited	Limited to unpaid share value
Owners	One person	Two or more partners	Two or more partners	Shareholders; one person can form one
Tax on profit	Owner’s personal income tax (or TOT)	Each partner’s share taxed personally (or TOT)	Partners taxed on their shares	Corporation tax on company profit (or TOT)
Official search (BRS)	KSh 250 (CR13)	KSh 250 (CR13)	Check eCitizen	KSh 650 (CR12)
Change of name (BRS)	KSh 800	KSh 800	KSh 2,000	KSh 4,000
Closing it (BRS)	Cessation KSh 800	Cessation KSh 800	Check eCitizen	Dissolution KSh 4,000, about 90 days

Source line: BRS Fee Schedule (Companies Registry), brs.go.ke, read 19 October 2026. Tax treatment follows KRA’s published income tax and turnover tax rules.

Sole Proprietorship: Fast and Cheap, but It’s All on You

A sole proprietor trading under a name other than their own registers that name with BRS. It costs KSh 950 on form BN 2 and BRS issues the certificate in about a day. Before applying, check and reserve a business name on eCitizen, or get ideas from our business name generator.

The trade-off is liability. A business name is not a legal entity, so the law treats the business and the owner as the same person. If the business owes a supplier or a bank, the creditor can pursue the owner’s personal assets. Profit is simply the owner’s income. It is taxed at the individual bands, or under turnover tax (TOT) at 1.5% of gross sales if sales are between KSh 1 million and KSh 25 million and the income qualifies.

Good for: freelancers, small shops, side businesses and anyone testing an idea before spending more.

Partnership: Two or More Owners, Shared Risk

A general partnership also registers as a business name for KSh 950. The partners share profits and, importantly, share responsibility for the firm’s debts, so one partner’s bad deal can land on all of them. Each partner pays tax on their share of the profit.

Before registering, write a partnership agreement covering each partner’s capital, profit share, decision making, what happens if someone leaves or dies, and how disputes are settled. BRS does not require it to register, but it prevents the most common fights.

Good for: family businesses and small professional or trading partnerships where partners trust each other.

Limited Liability Partnership (LLP)

An LLP keeps the partnership style of ownership but is a separate legal entity, so partners are generally not personally liable for the firm’s debts beyond what they put in. It costs KSh 25,000 to register on form LLP 1, and BRS lists one day for processing. BRS also allows a business name or a limited company to convert into an LLP, each for KSh 25,000.

Good for: professional firms (consultants, accountants, architects) that want partner-style management with limited liability.

Private Limited Company: Limited Liability and Credibility

A company is a legal person. It can own property, sign contracts, borrow and be sued in its own name, and shareholders risk only what they put in for their shares. The BRS fee is KSh 10,650, and you lodge forms CR 1, CR 2 and CR 8 with a statement of nominal capital. Every director and shareholder must already have a KRA PIN, and the company must declare its beneficial owners. Full steps are in our guide on how to register a limited company on BRS.

A company comes with more paperwork. It needs its own KRA PIN for a company, files annual returns with BRS, keeps its beneficial ownership register up to date and keeps proper accounts. Profit is taxed in the company, and owners then take money out as salary (taxed through PAYE) or dividends (subject to withholding tax). Our comparison of turnover tax vs income tax vs VAT explains how the main business taxes fit together.

Good for: businesses chasing tenders, bank loans or investors, businesses with significant risk (construction, transport, manufacturing) and anyone who wants to keep personal assets separate.

What It Costs in the First Year (BRS Fees Only)

Route	BRS fees	Total
Sole proprietor: registration plus one official search	KSh 950 + KSh 250	KSh 1,200
Private company: registration plus one CR12	KSh 10,650 + KSh 650	KSh 11,300
Start as a business name, convert to an LLP later	KSh 950 + KSh 25,000	KSh 25,950

These exclude county business permits, professional fees, and any lawyer or company secretary you hire. Add your own figures with our business registration cost calculator.

Which Should You Choose?

• Testing an idea or selling small volumes: register a business name. You can move to a company later; BRS has a cessation-to-convert process.
• Two or more owners who want limited liability: a company with each person as a shareholder, or an LLP for professional firms.
• Bidding for government or corporate tenders: many procuring entities ask for a CR12 and company documents, so a company is usually the practical choice.
• Raising investment: investors buy shares, which only a company can issue.
• Risky work or large contracts: a company or LLP protects your house and savings from business debts.

Whatever you choose, follow our checklist of legal requirements to start a business, from KRA PIN to county permit. If you need help with a website or marketing once you are registered, agencies such as Ananke Digital (anankedigital.co.ke) work with new businesses, and new staff can be found through JobinKenya.

Frequently Asked Questions

How much does it cost to register a sole proprietorship in Kenya?

KSh 950 for a business name on the BRS fee schedule, processed in about one day.

How much does it cost to register a limited company in Kenya?

KSh 10,650 on the BRS fee schedule (the BRS FAQ steps quote KSh 10,750). Your eCitizen invoice is final.

Is a business name a legal entity?

No. A business name registered by a sole proprietor or partnership is not a separate legal person, so the owners are personally responsible for its debts.

Can I convert my business name into a company?

Yes. On eCitizen, choose cessation to convert, upload the signed form and pay, then complete the new company’s details once the cessation is approved.

Do companies pay more tax than sole proprietors?

Not necessarily. A company pays corporation tax on its profit, while a sole proprietor pays personal income tax, and both can qualify for turnover tax if sales are between KSh 1 million and KSh 25 million. Compare your own numbers with a tax agent.

Last checked 19 October 2026 against the BRS Companies Registry fee schedule and BRS FAQs.