Sole Proprietorship in Kenya – Complete 2025 Guide to Registration, Costs & Taxes

September 18, 2025

Table of Contents

What is a Sole Proprietorship in Kenya?
How to Register a Sole Proprietorship in Kenya (via eCitizen)
Starter Kit: What You Need to Register Your Sole Proprietorship in Kenya
How Much Does it Cost to Start a Sole Proprietorship in Kenya?
Minimum Capital Required
Registering a KRA PIN for Your Sole Proprietorship
What Taxes Do You Pay as a Sole Proprietor in Kenya?
Why Should You Register a Sole Proprietorship in Kenya?
How Can a Sole Proprietorship End?
Advantages of Registering a Sole Proprietorship
Disadvantages of Registering a Sole Proprietorship
When is a Sole Proprietorship Right for You?
Sole Proprietorship vs Limited Liability Company (LLC) in Kenya
How to Convert a Sole Proprietorship into a Limited Company
Examples of Sole Proprietorships in Kenya
Final Word
Need Expert Help- Talk to M&A Registrars
Disclaimer

What is a Sole Proprietorship in Kenya?

If you’ve ever said to yourself, “I just want to start my business in Kenya without all that heavy paperwork”, then a sole proprietorship is probably your best starting point.

In Kenya, a sole proprietorship simply means you and your business are one and the same.

You make all the calls, keep all the profits, but you also carry all the risks.

Think about it: if you’re running a mitumba stall in Gikomba, freelancing as a graphic designer in Nairobi, or even opening a small duka in Eldoret, a sole proprietorship is the simplest way to formalize your hustle.

At M&A Registrars, we’ve put together this simple guide to help Kenyan entrepreneurs understand what a sole proprietorship is, how to register it, what it costs, and what to expect as you grow.

Did you know?

In a sole proprietorship, there’s no legal separation between you and the business. If your business makes money, that’s your money. But if your business runs into debts, that’s also your debt.

Turn your hustle into an official business today.

Register your sole proprietorship quickly, affordably, and 100% online with expert guidance.

Book Your Free First Consultation Now

How to Register a Sole Proprietorship in Kenya (via eCitizen)

Good news: you don’t need a lawyer, agent, or stacks of paperwork.

The whole process is 100% online through eCitizen, and you can literally do it over a cup of tea.

Here’s how it works:

How to Register a Sole Proprietorship in Kenya (via eCitizen)
1. Create an eCitizen account with your National ID or passport.
2. Do a name search & reservation – submit up to 3 preferred business names. Approval usually takes 1–2 days.
3. Fill in your details – ID/passport number, KRA PIN, physical & postal address, phone, email, and the nature of your business.
4. Pay the registration fee (KES 950) via M-PESA or card.
5. Download your Certificate – once approved, you’ll get your official Certificate of Business Name Registration.

And just like that, your hustle is official – no middlemen, no delays.

Pro Tip:

Pick a name that gives you room to grow. For example, instead of “Jane’s Cakes Nairobi”, try “Jane’s Foods”. That way, if you later expand into catering or snacks, you won’t need to re-register a new name.

Skip the trial-and-error.

We’ll walk you through every step of the eCitizen registration so you don’t waste time or money.

Get Expert Help to Register Your Business

Starter Kit: What You Need to Register Your Sole Proprietorship in Kenya

Before diving in, pause for a second and ask yourself: “Do I have the basics ready?” Think of this as your mini checklist before unlocking your new hustle:

What You Need to Register Your Sole Proprietorship in Kenya
National ID or Passport
KRA PIN
A unique business name idea (3 preferred business names – catchy but professional)
Physical & postal address (yes, even if it’s your home)
A small budget for fees and permits

If you’ve ticked these boxes, you’re good to go.

How Much Does it Cost to Start a Sole Proprietorship in Kenya?

Starting a sole proprietorship in Kenya won’t drain your pockets.

Here’s the simple breakdown:

Cost of Registering a Sole Proprietorship in Kenya
KES 950 – registration on eCitizen
KES 2,000–20,000+ – County Business Permit (depends on county & type of business)
Optional licenses – like a food handler’s license in Nairobi (around KES 1,000)

Pro Tip:

Always confirm the latest fees in your specific county. Nairobi’s rates may differ from Nakuru or Mombasa..

For an updated reference, check out our article on the official 2025 BRS Business Name Registration Rates.

Start small, grow big — without hidden costs.

We’ll help you budget correctly for registration, permits, and compliance in your county.

Talk to M&A Registrars Today

What is the Minimum Capital Required

Here’s the best part: there’s no minimum capital requirement to start a sole proprietorship in Kenya. You can literally begin with what you have.

Got KES 5,000? That’s enough to set up a small kiosk.
Got KES 200,000? You could open a boutique or small shop.

The law won’t hold you back — your hustle grows at your pace.

Pro Tip:

Start lean. Test your idea with a small budget before scaling up. Many Kenyan entrepreneurs waste money on stock or branding before confirming if customers actually want their product

Registering a KRA PIN for Your Sole Proprietorship in Kenya

To register your sole proprietorship in Kenya, you’ll need your personal KRA PIN.

Everything tax-related – filing returns, paying Turnover Tax (TOT), or even registering for VAT later – will be linked to that personal PIN through iTax.

If your hustle grows into a limited company, that’s when you’ll apply for a separate company PIN. But for now, your business and personal taxes are one and the same.

What Taxes Do You Pay as a Sole Proprietor in Kenya ?

As a sole proprietor in Kenya, your tax life depends on how much money your hustle brings in:

Turnover Tax (TOT): If sales are between KES 1M – 25M, pay 1.5% of gross sales monthly.
VAT: If sales exceed KES 5M annually, register for VAT and file monthly (16%).
PAYE: If you hire employees, deduct and remit tax from their salaries.
NSSF, SHIF, Housing Levy: Apply if you have employees.

Did you know? You don’t pay corporate tax as a sole proprietor — your profits are simply taxed as part of your personal income.

Tax to Pay	Rate
Turnover Tax (TOT)	If your annual sales are between KES 1M – 25M, you pay 1.5% of gross sales monthly.
VAT	If your annual sales exceed KES 5M, you must register for VAT and file monthly at 16%.
PAYE	If you hire staff, you’re responsible for deducting and remitting PAYE from their salaries.
NSSF, SHIF & Housing Levy:	These statutory deductions also apply once you have employees.

Did you know?

Unlike companies, you don’t pay corporate tax as a sole proprietor.

Instead, your profits are taxed as part of your personal income.

That means you and your hustle are viewed as one by KRA.

Why Should you Register a Sole Proprietorship in Kenya?

So, why do most Kenyan hustlers begin with a sole proprietorship?

Simple – it’s the fastest and least stressful way to formalize your hustle.

Fast: You can be registered in as little as 1–3 days. No endless waiting.
Cheap: The entire process costs under KES 1,000 on eCitizen.
Control: You’re the CEO, manager, and decision-maker – no board, no partners, just you.
Flexible: Start lean today, and when your business grows, you can always convert to a company.

Did you know?

Registering your business name also boosts your credibility. Suppliers, customers, and even banks take you more seriously when you’re official.

For more details on registering a business name under the new 2025 BRS rates, check out our full guide: Business Name Registration Kenya (BRS v2, 2025).

How Can a Sole Proprietorship End?

This is something most people don’t think about — but it’s important.

A sole proprietorship in Kenya can end in a few ways:

Causes	Description
Death of the owner:	If you pass away, the business automatically ends. (Unless you’ve converted your sole proprietorship to a company, your hustle doesn’t outlive you.)
Voluntary closure:	You can deregister the business anytime through eCitizen
You convert it into a limited company.	When your hustle grows, you might convert it into a limited company for more credibility, capital, and liability protection
The Kenyan government cancels your registration	If you don’t renew permits, break the law, or fail to comply with county/national requirements, your registration can be revoked.

Pro Tip:

If you want your hustle to survive you, plan early. Many Kenyan entrepreneurs choose to convert to a limited company once the business shows steady growth. That way, the company continues even if ownership changes.

Advantages of Registering a Sole Proprietorship in Kenya

Easy & affordable: Registration is quick and costs less than KES 1,000.
You keep all the profits: No shareholders to split with – what you earn is yours.
Simple tax system: Pay tax under your personal KRA PIN, no complex filings.
Minimal compliance: Fewer rules compared to companies.

Disadvantages of Registering a Sole Proprietorship in Kenya

Unlimited liability: If debts pile up, your personal assets are on the line.
Limited funding options: Banks and investors prefer companies over sole props.
No continuity: The business ends if you pass away.
Lower credibility: Bigger clients often want to deal with registered companies.

When is Registering a Sole Proprietorship in Kenya Right for You?

A sole proprietorship is perfect if:

You’re testing out a hustle and want to start small without big costs.

You want full control of decisions and profits.

You don’t need heavy funding from banks or investors (at least for now).

Your risk level is low (e.g., a small shop, freelancing, consulting).

But if you’re planning to raise serious money, bring in partners, or build something that outlives you – then you may want to consider registering a limited company instead.

Pro Tip: Many Kenyan entrepreneurs start as sole proprietors, then upgrade to a company once they grow. It’s a natural progression.

Sole Proprietorship vs Limited Liability Company (LLC) in Kenya

Think of it this way

Feature	Sole Proprietorship	Limited Liability Company (LLC)
Liability	If the business owes money, you personally owe it. Even your car or land can be sold to pay debts.	If the business owes money, only company assets are at risk. Your personal property is safe.
Cost	Cheap – only KES 950 to register on eCitizen.	More expensive – legal, registration, and annual compliance costs.
Setup Time	Super quick – 1–3 days.	Slower – about 7–14 days.
Taxes	Simple – your business income is taxed as your personal income (via KRA PIN, TOT, VAT if required).	Complex – company pays 30% corporate tax, and you pay tax again on salaries/dividends.
Best For	Small hustles, freelancers, kiosks, or side gigs.	Businesses that are growing fast, want investors, or need serious credibility.

Not sure which structure fits you best?

We’ll help you compare options and choose a structure that protects your assets and supports your growth.

Book Your Free First Consultation Today

How to Convert Your Sole Proprietorship into a Limited Company

At some point, your hustle may grow big enough that you need extra protection or want to look more professional to banks and investors.

Here’s how you can convert your Sole proprietorship into a Limited Company in Kenya via eCitizen:

1. Close your sole proprietorship – File Form BN6.

This is simply the form you use to cancel or deregister your business name on eCitizen.

2. Register a limited company – Fill out forms CR1, CR2, CR8, plus your Articles of Association.

Form CR1 – The application form for registering your new company.
Form CR2 – The Memorandum of Association (explains your company’s objectives, e.g., what your business does).
Form CR8 – Lists the residential addresses of all company directors.
Articles of Association – The rulebook of your company (e.g., how decisions are made, how shares are managed).

3. Apply for a company KRA PIN – This separates your business taxes from your personal taxes.

It’s required for paying taxes, opening a bank account, or doing business with suppliers.

The big win: Once you register as a limited company, your personal assets are protected, and your business looks more credible when dealing with banks, suppliers, or investors.

Examples of Sole Proprietorships in Kenya

Retail shops & kiosks
Bodaboda/taxi businesses
Freelance consultants & creatives
Small farms/agri-businesses
Food vendors & restaurants

Final Word

If you’re starting small, a sole proprietorship is the fastest, cheapest, and simplest way to make your hustle official in Kenya. You don’t need big money, fancy documents, or a lawyer to begin.

But remember – as your business grows, it’s smart to upgrade to a limited company for better protection, credibility, and access to funding.

At M&A Registrars, we help Kenyan entrepreneurs register, stay compliant, and scale. Whether you’re opening your first kiosk or preparing to pitch to investors, we’ll guide you every step of the way.

Need help? Contact M&A Registrars today for expert guidance on business registration, compliance, and conversions.

Every day you delay, your business loses opportunities.

Don’t risk compliance issues or slow growth.

Let M&A Registrars register your business the right way — fast, simple, and stress-free.

Book Your Free First Consultation & Start Today

Need Expert Help?

Don’t get stuck in the paperwork. At M&A Registrars, we make business registration in Kenya simple, fast, and stress-free.

Register your sole proprietorship
Convert to a limited company
Stay compliant with KRA & county permits

Contact M&A Registrars today and let us help you take your hustle to the next level.

Disclaimer

This guide is for general information only. It’s not legal or tax advice. Always confirm requirements with eCitizen, KRA, or your county office, as rules and fees may change.