Quick Answer
The main choices are a business name (sole proprietorship or partnership) and a limited company. A business name is cheap and simple but makes you personally liable; a limited company costs more but is a separate legal person that protects your personal assets.
Key facts
- A business name is simplest but offers no liability protection.
- A limited company is a separate legal entity with limited liability.
- Partnerships and LLPs suit two or more owners.
- Choice depends on liability, scale and investment plans.
Business name (sole proprietorship or partnership)
A business name is the simplest, cheapest registration. But it does not create a separate legal entity — you and the business are the same, so you are personally liable for its debts. It suits small traders, freelancers and consultants.
Limited company
A private limited company is a separate legal person: it can own property, sign contracts and be sued in its own name, and your liability is generally limited to what you invested. It costs more to set up and run, but protects personal assets and is preferred for raising investment or bidding for big contracts.
Partnerships and LLPs
Two or more owners can form a partnership (registered as a business name) or a Limited Liability Partnership (LLP) — common for professional firms — which combines partnership flexibility with limited liability.
Why this matters to you
The structure you choose decides whether your house is on the line for business debts, how much tax and admin you face, and how easily you can grow. Getting it right at the start avoids costly restructuring later.
Frequently asked questions
What is the simplest structure?
A business name (sole proprietorship) — but it carries unlimited personal liability.
What protects my personal assets?
A limited company, which is a separate legal entity with limited liability.
Can I change structure later?
Yes — you can deregister a business name and register a company, for example.
Sources & references
- Companies Act, 2015; Registration of Business Names Act — kenyalaw.org
- Business Registration Service — brs.go.ke