Business Setup

Sole Proprietorship Business Registration In The UAE

Sole Proprietor Company in uae

The UAE boasts modern legislation that simplifies business setup for investors of all sizes. A sole proprietorship in the UAE is a legal entity owned or operated by an individual holding a trade license in their own name. The owner assumes full responsibility for the entity, including financial liabilities. Businesses providing professional services without engaging in commercial activities are exempt from the Commercial Companies Law (CCL) but must be licensed by the Department of Economic Development (DED). We offer assistance in establishing Sole Establishments in Dubai or anywhere in the UAE.

Unlike LLCs, where at least 51% of shares must be registered to a GCC/UAE national sponsor, sole proprietorship businesses or qualified foreign investors practicing professional services enjoy complete ownership. Foreign-owned businesses typically appoint a local service agent (LSA) to aid in obtaining licenses, visas, etc. LSAs usually have no direct involvement in the business operations.

What is sole establishment in the UAE?

A sole establishment, also known as a sole proprietorship, in the UAE is a business where the trade license is issued solely in the name of one individual. Unlike other business entities in the UAE, a sole establishment cannot be owned by a company or corporate body. The individual owner bears full personal liability for the business’s activities, meaning creditors can seize personal assets to settle business debts.

Key features of a sole proprietorship in the UAE include:

  • Single ownership: Owned by one person only.
  • No shareholders: There are no other shareholders apart from the individual owner.
  • 100% ownership: The owner has complete ownership of the business.
  • Full control: The owner retains complete control over all business operations.
  • 100% profit retention: All profits generated by the business belong solely to the owner.
  • Personal liability: The owner is personally responsible for all business liabilities and financial obligations.
  • Low startup cost: Generally, the cost of setting up a sole proprietorship is relatively low.
  • Quick registration: The registration process for a sole establishment is typically fast.
  • No business capital requirement: There is no minimum capital requirement to establish a sole proprietorship.

Who can Form a Sole Proprietorship in the UAE?

Individuals eligible to form a sole proprietorship in the UAE include UAE nationals, Gulf Cooperation Council (GCC) nationals, and foreign nationals, each subject to specific conditions and requirements.

For UAE nationals and GCC nationals, there’s flexibility in the type of sole establishment they can form. They can engage in various activities including industrial, commercial, tourism, or professional services. Additionally, they have the option to establish consultancies covering a wide range of activities under their professional license.

Foreign nationals, however, are limited to applying for a professional license for their sole proprietorship. They are eligible to engage in professional activities and consultancy services. However, certain consultancy activities may be restricted to UAE nationals. Furthermore, it’s compulsory for foreign nationals to enlist the services of a Local Service Agent (LSA) to register their sole establishment in the UAE.

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Requirements:

Before initiating the process of registering your sole establishment in the UAE, it’s essential to consider the following requirements stipulated by the sole establishment UAE law. These are necessary documents and details that you’ll need to provide during your trade license application:

Your passport copy: A copy of your passport is required for identification purposes.

Your UAE residence visa or visit visa copy: If you are a resident, you’ll need to provide a copy of your UAE residence visa. If you are on a visit visa, you’ll need to provide a copy of your visit visa.

3 trade name options for your establishment: You’ll need to propose three potential names for your sole establishment.

The business activity your sole establishment will engage in: Clearly specify the business activity or activities your establishment will undertake.

The type of office you will require: Determine the type of office space you’ll need for your business operations.

Your local service agent’s Emirates ID copy: If you’re a foreign national, you’ll need to engage a local service agent, and you’ll require a copy of their Emirates ID.

Process of Starting a Sole Proprietor Company in Dubai, UAE

The process for registering your sole proprietorship business in the UAE involves several steps overseen by the Department of Economic Development (DED), the government body responsible for issuing trade licenses to new businesses.

Here are the steps you need to follow in order to start a sole proprietor company in Dubai:

1). Obtain Initial Approval

You must obtain initial approval from the DED, indicating that the UAE Government has no objection to your business establishment.

2). Secure Trade Name Approval

Submit three trade name options and receive approval for at least one name from the DED.

3). Sign the Local Service Agent (LSA) agreement

Prepare and sign the agreement with your chosen local service agent, ensuring both parties are present during the signing.

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    4). Finalize Office Space

    For mainland company formation, having a physical office is mandatory. Arrange your office space and provide the tenancy contract along with the Ejari* for the office.

    (*Ejari is the regulatory system for the rental market in Dubai, overseen by the Real Estate Regulatory Agency (RERA), ensuring transparency and fairness between landlords and tenants.)

    5). Obtain Additional Approvals (if required)

    Some business activities may necessitate additional approvals from specific government or non-governmental agencies. The DED will inform you of any such requirements, and you must submit the relevant approvals before proceeding.

    6). Make the Payment

    Upon completing the preceding steps, you’ll receive a payment voucher. Make the necessary payment as indicated and collect the trade license for your sole establishment.

    Sole Establishment License Cost in Dubai

    Establishing a sole establishment in Dubai is a cost-effective option, requiring minimal capital investment since you won’t need many staff members or business partners. Typically, the starting cost for a sole establishment in Dubai is approximately AED 18,500.

    However, it’s important to understand that the cost of setting up a sole proprietorship in the UAE can vary based on your specific business operations. Some ventures may require additional approvals, while others might need to meet minimum capital investment criteria. Therefore, it’s advisable to consult with business advisors, such as Company Setup, to obtain an accurate cost estimate tailored to your Dubai sole establishment.

    Benefits of Sole Proprietorship Establishment in Dubai

    A sole establishment in Dubai offers several advantages and benefits, including:

    #1. Full ownership for foreign professionals:

    Foreign professionals can retain complete ownership of their company, allowing for greater control over business operations and decision-making.

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    #2. Flexible choice of office locations:

    Sole establishments have the freedom to choose office space from various locations across Dubai without any restrictions, providing flexibility in meeting business needs.

    #3. Legal practice of professional services:

    Sole establishments can legally practice professional services in any region of the UAE, including free zones, enabling entrepreneurs to tap into diverse markets and opportunities.

    #4. Elimination of paid-up capital restrictions:

    The UAE government has permanently removed all paid-up capital restrictions concerning sole proprietorships, making it easier for businesses to start with minimal financial obligations and facilitating smoother entry into the market.

    Frequently Asked Questions on  Sole Proprietorship Company in Dubai

    What is sole proprietorship Dubai?

    A sole proprietorship company in Dubai is a type of company structure where there is a single owner of the company. To clarify, the company structure is the legal framework of the company that determines the rules and regulations it needs to follow.

    This means that a sole proprietorship company in Dubai can have a single owner and its liabilities will not be limited. So, the owner must fulfill the dues of the company from his personal properties if the need arises.

    Which company comes under sole proprietorship?

    Any company that has a single owner and unlimited liability comes under sole proprietorship. Previously, a sole proprietorship company could only be started by a local or an Emirati.

    However, after a few changes to the existing laws, foreigners can also start companies with the sole proprietorship company structure on the mainland.

    Additionally, this applies to most of the sectors in the UAE except for a few that are strategically important to the government like the oil and gas sector.

    What are examples of sole proprietorship businesses?

    Examples of sole proprietorship businesses in Dubai include anything small from a local grocery store to large travel agencies.

    The most common types of businesses that go with the sole proprietorship company structure include clothing stores, care centers, beauty and hair salons, freelance writers and graphics designers, electricians, handyman businesses, etc.

    Keep in mind that you can start a business as a sole proprietorship company in Dubai but later change it to a public company through an IPO if you need more funds for expansion.

    What is the difference between LLC and a sole establishment in Dubai?

    The main difference between an LLC and a Sole Establishment in Dubai is that the LLC has limited liability and the Sole Establishment has unlimited liability. In order words, the liabilities of the Limited Liability Company will be limited to the capital invested in the company.

    However, in the Sole Establishment, the owner would have to fulfill the liabilities of the company from his own personal belongings if needed. On the bright side, in a Sole Establishment, the owner can take loans using his personal properties as collateral, which is not possible in a Limited Liability Company.

    How do I start a sole proprietorship in UAE?

    The main requirement to start any business in the UAE is to obtain a business trade license. As a result, you can start a sole proprietorship in the UAE by completing the following steps:

    1. Decide your business activities
    2. Select an economic jurisdiction
    3. Get the initial approval
    4. Register a trading name
    5. Sign the LSA Agreement
    6. Get an office space
    7. Get the external approvals
    8. Submit the documents and payment.
    Is LLC the same as a sole proprietor?

    No, a Limited Liability Company and a Sole Proprietorship are regulated by different laws and regulations. For example, the biggest difference between an LLC and a Sole Proprietorship is that an LLC has limited liability whereas a Sole Proprietorship has unlimited liability.

    Additionally, an LLC can have multiple owners, but a Sole Proprietorship can have only one owner.

    What are the 3 advantages of a sole proprietorship?

    A sole proprietorship company in Dubai has a lot of benefits, but here are the three biggest advantages that you can enjoy in the city as a sole owner of a company:

    1. No  need to look for a local sponsor to start the company and share ownership.
    2. You will be the sole decision maker of the company so conflict in management will be non-existent.
    3. You can easily make the company public through an IPO to raise capital for expansion.
    Start Your Sole Proprietorship Journey in Dubai Today!

    Embark on launching your sole proprietorship business in Dubai today! Discover the professional activities available for foreign-national sole proprietors and explore our exclusive business setup packages with Company Setup Consultants. Schedule your FREE consultation with our knowledgeable company formation experts to address all your business inquiries.

    To Speak with our Experienced Business Consultants for further information and assistance, call us at +971582595164. Send a WhatsApp Message for Chat Query on +971 582595164 or email us at info@companysetup.ae.

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