Professionalize your hustle today

Professionalize your hustle today

Research shows that most people living in third-world countries are middle class earners. For instance, according to the Kenya National Bureau of Statistics, the people middle-class are those who earn between Ksh 23,670 and Ksh 199,999 per month. This is proof that this group of people is not only growing but also expected to exceed the anticipated average growth rate of 5% by the year 2030.

At imperial registrars as a professional firm dealing in secretarial services, we offer a variety of services among them is the incorporation of new companies or converting different business units to the desired form as required by the client. Some of the recent common conversions of different business units is that of business names mostly known as a sole proprietorship to a private limited company.

Types of Businesses

Sole proprietorship

Legal Requirements for forming a Sole Proprietorship

A sole proprietorship is a solely owned business enterprise by a single person. It requires few legal requirements to start since the individual starting the business needs to seek permission from local authorities to start and run the business. Once the permission is granted, the business owner is issued a trading license after paying the required fee.

Advantages of Starting Sole Proprietorship

These forms of businesses require a small amount of capital to start with the owner investing in his or her savings in the business. The trader may raise more capital by borrowing, credit buying, ploughing back of profits etc. The trader enjoys advantages of business of this kind such as quick decision making, having all the profit for themselves, having close contact with customers and is accountable to no one else but themselves.

Disadvantages of Starting Sole Proprietorship

In addition, this kind of business have also their disadvantage which may cause the trader to dissolve the business or motivate him/her to professionalize the business unit to the next level some of the disadvantages of this business unit include 

  1. Unlimited liabilities as the assets available in the business are not enough to pay for the debts of the business.
  2. Poor decision-making due to lack of consultation adversely affects the business since the trader makes the decisions alone.
  3. Lack of specialization as the trader cannot effectively manage all the business operations hence cause the business to perform poorly.
  4. The owner bears all the risks alone and when losses occur in the business, then the owner of the business suffers the losses alone.
  5. The business may undergo minimal expansion because of the capital being scares since the sole proprietorships require little capital to start.

Starting a company in Kenya

However, the trader can implement the solution to such disadvantages of sole proprietorship form of business units by professionalizing it to a higher level such as that of companies. A company is an association of individuals who contribute capital ‌ to start and run the business in order to make profits. They also require promoters who come up with the idea of starting a company and are also involved in preparation of memorandum of association and articles of association. Once done the application is submitted to the registrar of companies and payment of registration fee is done, a certificate of incorporation is issued. The sources of capital in this form of business unit includes shares, debentures issued, loans from banks and other financial institutions, profits ploughed back, etc.

Companies are divided into two i.e. private companies and public companies. The private companies are better suits for beginners since they require few legal requirements.

Characteristics of private companies.

Unlike sole proprietorships, Private companies have features such as 

  1. Restricts transfer of shares to only existing members.
  2. Does not sell its shares to the public.
  3. Can be formed by members between 1 and 50 shareholders.
  4. Can start immediately upon issuance of certificate of incorporation among others.

Private companies also have the following advantages.

  1. Has wide source of capital that enables the company to enjoy economies of scale when the business increases in size.
  2. Professional management as the company has access to a large pool of professional managers who bring in professional skills that are advantageous to the company in form of annual retainers and other secretarial services.
  3. Continuity as the death of one shareholder does not affect the operations of the business since there is succession planning in the company where all the unforeseen events are catered for.
  4. Beside the decisions taking long, as a result of the consultation among shareholders and company secretaries, the process may lead to better decisions that are of benefit to the company.
  5. The company also enjoys limited liabilities as the shareholders are not liable to the company debts beyond the amount they contributed.

Where can you find help for company registration?

Company registrars exist just for this purpose. We are‌ one of such Firms where we guide you as an individual through the registration process of various entities and after registration we ensure the company is compliant with all the relevant laws and regulations anywhere in Kenya and East Africa for business operating in all industries.

It is prudent to get all the statutory obligations needed in your industry before venturing into business. We ease the process of Company registration by making sure you have all the necessary legal documents and permits to operate your venture with peace of mind.

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