Should you create a group structure from the beginning or once established?

When starting a business, one big question many entrepreneurs face is:

 Do I need to create a group structure right away, or should I wait until my business (s') grows?

The answer depends on your business goals, and getting it wrong can lead to unnecessary costs, high accountancy fees, and tax headaches with the Kenya Revenue Authority (KRA).

When a Group Structure May Not Be Necessary

If you’re just starting out as a small entrepreneur or  a consultant maybe offering one-to-one services, coaching, or professional consultancy, setting up multiple companies in a group structure may not make sense.

Here’s why:
- You’ll increase your accounting and compliance costs.
- You’ll spend more time dealing with KRA filings for each entity.
- The extra complexity doesn’t necessarily give you any tax benefit at this early stage.

Tip: If your business is still small and not looking to expand rapidly, a simple sole proprietorship or limited company is often the best starting point.

When a Group Structure Can Work in Your Favor

On the other hand, if you are an ambitious entrepreneur with plans to:
- Take on investors
- Expand into multiple industries
- Scale nationally or regionally
- Separate business risks across different entities

…then creating a group structure from the beginning can be a smart move.

In Kenya, group structures can help with:
- Tax planning – for example, offsetting losses from one company against profits from another.
- Attracting investors – many investors prefer clean structures where different business units are separated.
- Limiting risk – if one company fails, the others are protected.

But this must be carefully planned with accountants and tax advisors to make sure it aligns with KRA requirements and doesn’t cause unnecessary tax exposure.

Key Takeaway For Entrepreneurs

- Small & simple businesses: Start with a basic structure (sole proprietorship or one limited company). Don’t complicate things.
- Big growth plans: If you want to raise funds, scale, or dominate an industry, consider setting up a group structure early to maximize tax and commercial advantages.

At Makabe Consulting, we help YOU choose the right business structure, stay compliant with KRA, and avoid costly mistakes.

Smart and sustainable businesses don’t evade taxes; they plan for them!