Entrepreneurs experience difficulties when deciding on the right form of business. A limited company is the most preferred business form when it comes to profit-oriented organizations. Registering a company creates some benefits that are absent in other forms. Besides a company, other forms of business organisation include sole proprietorship, partnership, corporations, and cooperatives. Company registration requirements in Kenya include a national identification card or passport, coloured passport photographs, and a KRA pin certificate. All directors must be iTax registered.
Advantages of registering a company
Most entrepreneurs are confronted with choosing between registering a limited company, a partnership, or a sole proprietorship. The following are advantages of registering a limited company over a sole proprietorship and a partnership.
Limited liability– the liability of company shareholders is limited which implies that their assets cannot be sold to pay liabilities incurred by the company. However, the corporate veil that protects shareholders can be pierced in case they engage in fraudulent activities. In such a case, the concerned directors are personally liable for liabilities arising from fraudulent transactions.
Credibility– registering a company makes a business to appear more legitimate compared to sole proprietors and partnerships. It creates an impression that the business is bigger than its owners thus boosting external stakeholders’ confidence when transacting with the business.
Access to credit– registering a company increases chances of securing financing. Financial institutions prefer advancing loans to companies as it is easy to ascertain the company’s worth and its ability to pay.
Ownership flexibility– changing the ownership of a company is easy as shares are easily transferred from one shareholder to the other. It is also easy to issue shares to a new member which is used for admitting strategic persons and also to raise additional capital.
Continuity– the life of a company is not pegged on the shareholders. An exit of a shareholder does not terminate a company as is the case in partnerships and sole proprietorships.
Professionalism in management– registering a company improves management as a company is governed by directors who are agents of the shareholders. The responsibility of ensuring the business is run well, therefore, lies with the directors. As a result, a reliable accountability mechanism is put in place to ensure persons in charge of performing specific tasks do not fail.
At Blue Ocean Outsource we save you from the straining company registration process that is associated with uncertainties. We register companies at a record time of between 1 and 7 days where the end products include a certificate of incorporation and a KRA pin certificate. Other outputs may include AGPO certificate, NSSF registration, and NHIF registration. Contact US