Startup Kenya

While consulting for our online company registration service, Incorporator I find myself answering the question "What is the difference between a sole-proprietorship and a company?" Anybody who is considering starting a business must consider what type of business structure is needed for his or her particular situation. In Kenya there are three types of structures that one can use to start their business. 1. An LLC, or Limited Liability Company 2. A sole proprietorship 3. A Partnership A Sole-proprietorship and a Partnership are registered through the same manner (Form BN/2) with the exception that a partnership has more than one owner and although not necessary, entrepreneurs are advised to register a partnership deed as well. In this article all references to sole-proprietorship also include partnership. Understanding the advantages and disadvantages of each structure is important when deciding which one you want to use for your company.

In the January of 2002 a young man found himself battling against frustration and despair as he saw his barely four month old company go up in smoke. It was his first real business venture and he had sunk all of his meagre savings into it, only to find himself unable to convert his enthusiasm into sales. Four months without a single sale he only had well worn shoes to show for his effort. When he started the business, he thought he had it figured all out. He had bought a mobile phone and a decent second-hand computer and sublet a small office in town. He listed down 500 prospects, wrote an introduction letter, and proceeded to call and visit the prospects. Four months and several disappointing calls and visits later, he had only managed to see a handful of prospects and none were yet to give him any business. Meanwhile his landlord was on his back asking for rent and he had run out of money to make telephone calls. He had no option but to close down his fledgling busine