How to Register a Sole Proprietorship in Kenya

Setting up as a sole proprietor in Kenya is appealing because it allows you to formalize your hustle with minimal red tape. It's one of the simplest and most affordable business structures for freelancers, traders, and entreprenuers. Plus, the process is largely digital and very accessible via the eCitizen platform.

That said, navigating tax registration, permits, and required contributions can feel overwhelming, especially if you're doing it alone.

The biggest challenges are ensuring you register correctly, stay compliant with national and county tax requirements, and keep up with annual renewals. The top benefits include fast registration, low costs, full control over your business, and easier access to formal opportunities.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check the official sources or seek professional guidance before taking action.

What is a sole proprietorship in Kenya?

In Kenya, sole proprietorship is a term commonly used to refer to a business owned and run by one person. There's no distinction between you and your business, which means all profits are yours, but you're personally liable for any debts or obligations.

How does a sole proprietorship work in Kenya?

Sole proprietorship vs other business structures in Kenya

Step-by-step guide: How to register a sole proprietorship in Kenya

Step 1: Check eligibility

You must be at least 18 years old and provide a valid National ID or passport. Foreign nationals may need additional documentation or permits.

Step 2: Choose your business name

Use the eCitizen Portal to conduct a name search. You need to submit up to three unique business names for approval. This typically takes 1–2 working days.

Step 3: Gather required documents

You’ll need:

• Your Kenyan national ID or passport

• KRA PIN

• Business name reservation certificate

• Physical and postal address, activity description, and contact details

Step 4: Register with the authorities

After you create an eCitizen account, you can use eCitizen’s Business Registration Service to register your business as a sole proprietor and pay the registration fee (typically around KES 950). Once approved, download your Business Registration Certificate.

Step 5: Apply for permits and tax compliance

Obtain a Single Business Permit from your local county government. Also register for tax via KRA by obtaining a Tax Compliance Certificate, and register for Turnover Tax or VAT as applicable.

Step 6: Post-registration obligations

You’ll need to:

• Renew business permits annually

• File taxes and returns (Turnover Tax, VAT, PAYE if you hire staff)

• Keep accurate records and submit annual tax returns

Financial and tax obligations for sole proprietors in Kenya

Income tax / Turnover Tax vs VAT:

• Turnover Tax (TOT): If your annual gross sales are between KES 1 million and KES 25 million, you're eligible. The rate is 1.5% of gross sales (as of 2023), and it's a final tax—no further income tax applies on that income. TOT is filed and paid monthly via iTax.

• Value Added Tax (VAT): This is an indirect tax paid by those who consume taxable goods and services in Kenya and/or imported into Kenya. Businesses with turnover above KES 5 million (and supplying VATable goods) must register for VAT. The general VAT tax rate is 16%. VAT is filed monthly through iTax and allows input tax deductions.

PAYE (if hiring employees): You must deduct and remit Pay As You Earn taxes for any salaried staff via iTax. Taxable employment income includes all payments and value of benefits exceeding KES 5,000 per month.

Recordkeeping: Maintain records of revenue, expenses, sales and purchase registers, and VAT returns if registered. iTax allows e-filing, and it’s recommended to keep records for audit purposes.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.