Advantages of Registering a Limited Company over Registering a Business Name.

Now that that you have already gotten some expert advice on whether to register a business name or a limited company, This Article will focus on the advantages of registering a limited company over registering a business name.

  1. Limited Liability

As the name suggests, liability in this business is limited to the company alone. The company is a legal entity, separate from its owner. This legal implication protects and separates the company’s assets from your individual assets and hence you are well protected if the company goes under.

  1. Credibility

There are advantages of registering a limited company because naturally a limited company sounds more credible than a mere business name and can position your business well, especially when bidding for contracts and tenders. Investors are also more comfortable putting their money on a limited company because they know that they are legally protected from risks and liabilities.

  1. Perpetual Succession

Once a limited liability company is registered, it is valid and eligible for succession even after the directors pass away. Unless the company is dissolved it will always be in existence, as opposed to a sole proprietorship which might come to an end soon after the sole proprietor dies or becomes bankrupt.

  1. Ease of staffing

During a start up’s initial stages, there is usually no need for staffing. However, as the company grows, the business may need to hire one or more individuals to run the day to day activities. A company, as a legal entity, is able to hire. With its own KRA PIN and bank account, there will be ease of staffing and even paying out salaries without these being embroiled in the directors’ personal accounts.

  1. Sole Directorship

After the enactment of the Companies Act 2015,you can now register the company as a sole director. Many entrepreneurs in Kenya seek to register business names as they want to be the sole decision makers in their businesses, but the good news is that now, one can be the only director in a limited company and make decisions as he/she pleases all the while not sharing out company profits and control.

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