Susan Maina is a Corporate Compliance Writer and Legal Researcher at M&A Registrars, a leading company secretarial and legal advisory firm. She specializes in developing clear, insightful content on Company Law, Corporate Governance, Regulatory Compliance, and Business Registration Services.
LinkedIn >>If you’re running a sole proprietorship in Kenya, you may have started small, testing your business idea.
But now, maybe you’re thinking: “How do I grow, protect my assets, and make my business more credible?” That’s where converting a sole proprietorship into a private limited company in Kenya comes in.
In this guide by M&A Registrars, we’ll break everything down step by step. Even if you know nothing about the process of company registration in Kenya, by the end, you’ll know exactly what to do.
Let’s dive right in!
Table of Contents
A sole proprietorship is the simplest way to run a business in Kenya.
In a sole proprietorship, you are the business – meaning:
Legally, there’s no separation between you and your business. So, if your business owes money, you are personally responsible.
Some common examples of sole proprietorships in Kenya:
Sole proprietorships are popular because they’re cheap and easy to set up.
You simply register your business name (which costs about KES 950) and get your business license where applicable – and you’re ready to go!
But as your business grows, you may want more protection and credibility.
That’s why many Kenyan entrepreneurs choose to convert their sole proprietorship into a private limited company in Kenya.
To learn more about sole proprietorships in Kenya , check out our simplified guide: [Sole Proprietorship in Kenya].
M&A Registrars can guide you through the steps to make your conversion smooth, simple, and fully compliant.
Book a Free Consultation with M&A Registrars TodayThink of a private limited company (LTD) as a business with its own legal identity—separate from you, the owner.
In other words, the company can own assets, take loans, and enter into contracts all on its own.
Why does this matter to you as a business owner?
For example,
In short, if a sole proprietorship is like running your business on your own, a private limited company is like giving your business a legal backbone that can support growth, partnerships, and new opportunities.
Not sure whether to convert your sole proprietorship to a private limited company? Here’s a simple comparison to help you understand the key differences:
| Feature | Sole Proprietorship | Private Limited Company (LTD) |
|---|---|---|
|
Ownership
|
– Owned by one person |
– Can have one or more shareholders
|
|
Liability
|
– Unlimited – you’re personally responsible for business debts
|
– Limited – your personal assets are protected; liability is limited to your share capital
|
|
Legal Entity
|
– Not separate – you and your business are the same
|
– Separate legal entity – the company can own assets, enter contracts, and take loans independently
|
|
Credibility
|
– Lower – banks and investors may be cautious
|
– Higher – companies are seen as more professional and trustworthy
|
|
Taxation
|
– Personal income tax
|
– Corporate tax, with dividends taxed separately
|
In short, while a sole proprietorship is simple and easy to run, a private limited company gives you protection, credibility, and the ability to grow your business more securely.
Read more about a private limited company in our simplified guide: [Registering a Private Limited Company in Kenya]
If you’re running a sole proprietorship, you might be wondering whether it’s time to take the next step.
Converting a sole proprietorship into a private limited company in Kenya can bring several important benefits:
M&A Registrars can guide you step by step to make the process simple, smooth, and fully compliant.
Book a Free Consultation with M&A Registrars TodayIf you’re ready to convert a sole proprietorship into a private limited company in Kenya, here’s a simple, step-by-step guide to walk you through the process:
Step 1: Deregister Your Sole Proprietorship
| Step 1: Deregister Your Sole Proprietorship |
|---|
|
Before your business can become a private limited company, you first need to deregister your sole proprietorship. Here’s how:
|
Step 2: Register Your New Private Limited Company
| Step 2: Register Your New Private Limited Company |
|---|
|
After deregistering your sole proprietorship, it’s time to set up your private limited company:
Bonus: Once your private limited company is registered, a company KRA PIN is automatically created, separating your business taxes from your personal taxes. No extra steps needed! |
While you can handle the conversion yourself, many Kenyan business owners choose to work with professional secretarial firms like M&A Registrars.
Hiring a professional helps ensure the process goes smoothly, saves you time, and reduces the risk of errors.
When you’re converting a sole proprietorship into a private limited company in Kenya, it helps to organise your documents into two stages: before conversion and during conversion.
Before Conversion
These are the documents you need to prepare while deregistering your sole proprietorship:
These documents allow you to officially close your sole proprietorship and make way for your new private limited company.
During Conversion
When you’re converting a sole proprietorship into a private limited company in Kenya, most of the registration forms like CR1, CR2, CR8, and the Statement of Nominal Share Capital will be provided by the Business Registration Service (BRS).
What you need to have ready are your personal and business details to fill them.
Key Documents / Information to Have Ready
Having these ready will make the conversion process faster and smoother, ensuring you can convert your sole proprietorship into a private limited company in Kenya without unnecessary delays.
1. How much does it cost to convert a sole proprietorship into a private limited company in Kenya?
You’ll pay KES 150 for the cessation of your sole proprietorship, KES 10,750 for the government registration fee for the new company, plus a minimum share capital of KES 100,000 (for example, 1,000 shares at KES 100 each).
You’ll also pay professional fees for their services, which can save you time and reduce the risk of mistakes.
Check out our affordable rates here : Company Registration Packages in Kenya
2. How long does the process take?
3. Can I keep my old business name?
Upgrading your sole proprietorship to a private limited company in Kenya is a smart decision for any growing business.
It protects your personal assets, boosts your business credibility with banks, clients, and investors, and opens the door for growth and new opportunities. Taking this step ensures your business is ready to scale safely and professionally.
Are you ready to convert your sole proprietorship into a private limited company in Kenya?
Talk to M&A Registrars and schedule your free consultation.
We’ll guide you through every step – from business cessation to company registration – ensuring your conversion is smooth, compliant, and hassle-free.
Click the WhatsApp button to book your free consultation with M&A Registrars now.
Or email us at info@mnaregistrars.com
WhatsAppThis guide is for general information purposes only. It is not legal advice.
Always consult a licensed company secretary or legal expert before making any decisions regarding business registration, compliance, or conversion.
Converting a sole proprietorship to a company in Kenya – Capita Registrars Kenya Limited
BRS Frequently Asked Questions
Types of Companies in Kenya (2025 Guide) | M&A Registrars
Articles of Association in Kenya Guide| M&A Registrars
Company Registration Packages in Kenya | M&A Registrars
Sole Proprietorship in Kenya – Complete 2025 Guide to Registration, Costs & Taxes
https://mnaregistrars.com/registering-a-private-limited-company-in-kenya/
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