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An Exhaustive Study on the Documentation for the Setting up of Sole Proprietorship in Dubai

By Shivangi - 16 Dec 2021 Last Updated: 06 May 2022
An Exhaustive Study on the Documentation for the Setting up of Sole Proprietorship in Dubai

Dubai one of the most attractive Emirate across the Middle Eastern regions has been playing an important role in revenue generation for several years across numerous industry verticals. Strong government support to emerging entrepreneurs coupled with good growth has further propelled the investments by foreign nationals across the city to set up sole proprietorship businesses across several sectors majorly including Medical services, engineering consultancies, and management consultancies among others. Moreover, several local nationalists have been actively participating in setting up sole entities across the Emirate. However, the legal documentation differs in both the cases of local and foreign nationalists. Here, we are going to discuss the documentation regarding the setting up of a Sole Proprietorship in Dubai.

The UAE offers some of the most modern company formation rules in the world, allowing both big and small investors to set up entities according to their budgets. Individuals are permitted to register sole proprietorships in Dubai, just as major corporations are permitted to form private and public businesses. In Dubai, these are commonly referred to as sole establishments, and they can be established by both local and foreign residents. This type of business form is also available for professionals, but only if the individual possesses a professional license can it be registered. However, in this case, the authorities have mandated several requirements out of which appointing a local agent is considered to be one of the most important when establishing a sole proprietorship in Dubai.

What is Sole Proprietorship?

The sole proprietorship is the simplest form of business to operate. A sole proprietorship is not a legal entity, It simply refers to the owner of a company who is personally liable for its debts. A sole proprietorship might do business under its owner's name or under or any other name which the owner finds suitable. The suitable name decided by the owner is merely a trading name; it does not establish a different legal entity from the sole proprietor. Because of its simplicity, ease of setup, and low cost, sole proprietorship is a popular business structure. A sole proprietor needs only register his or her name and secure local licenses, and the sole proprietor is ready for business.

What are the Advantages of a Sole Proprietorship Business in Dubai?

Since Dubai offers lucrative growth opportunities to business owners in terms of both growth and brand recognition. Several opportunities lie in the hands of proprietors which are discussed briefly below:

Ownership

Foreign professionals can own 100 percent of their company; the company can lawfully provide professional services anywhere in the UAE, including Freezones.

Ease of doing business

The company can legally provide professional services anywhere in the UAE, including Free Zones. Also, there are no restrictions on where the corporation can rent or buy Office Space.

Government Support

The government of Dubai plays an important role to support Small Businesses in several manners as paid-up capital requirements have been completely waived by the government. Moreover, According to DED rules, the owner/s can also change the legal form.

Legal Requirements to be fulfilled to Set Up Sole Proprietorship in Dubai

Nominal legal requirements are there which have been regulated by the authorities such as the Department of Economic Development. However, there are different regulations in the case of local and GCC nationalists and foreign nationalists as the case may be. The differences between the legal requirements of the former and the latter have been discussed in detail below:

For Local and GCC Nationalists, for local nationalists nominal requirements are there which include deciding a trade name under which the entity will operate, getting the initial approvals from the Department of Economic Development.

For Foreign Nationalists, foreign entrepreneurs who wish to establish sole businesses in Dubai will require a local sponsor as well as a resident visa. The sponsor can be a local or international corporation based in Dubai. A Dubai sole trader can carry out a commercial or professional activity, therefore the license to be obtained must reflect these activities. Even if there is no minimum amount required to open a single trader in Dubai, an individual must assess the amount required to carry out their business. A registered address in Dubai is also required to establish this type of company entity.

Read More: Setting up a Holding Company in Dubai

Major Terms and Conditions for the Setting up of setting up of Sole Proprietorship in Dubai

Some of the terms and conditions are mentioned below:

  • All the activities for which the business is being set up are professional. Some examples of professional services may be consulting, IT, and medical among others. The proprietor should possess and demonstrate specific educational requirements which are to be aligned to the services he/she is going to provide.
  • Specific documents related to past work experiences are also considered to be a part of some terms and conditions to qualify as a license manager.

List of Documentation for the Setting up of Sole Proprietorship in Dubai

Some of the documentation is listed below:

Application Form

An application form is a basic form that is to be filled in by the applicant consisting of basic details.

Licensing Application Form

The licensing application form is a report with details of the plan of operation to be performed by the entity. In simpler terms, it is considered as a form majorly required to apply for an operating license.

Business Name

It is the name that the sole owner has to provide in which the entity will operate.

Passport copy of the proprietor

The proprietor must provide a copy of his/her passport as a document for legal verifications.

Details of the Local Agent

If the sole proprietorship is set up by a foreign nationalist he/she has to provide the details for the local agent.

Proof of the Registered Address

The proprietor must provide the address proof of the registered office of the entity.

No-objection letter of the sponsor

If the owner is a foreign national, he/she must show a no-objection certificate by the local sponsor.

Conclusion

The documentation for the setting up of a sole proprietorship in Dubai is pretty simple. However, certain things regarding the paperwork and the appointment of local agents may act as a hurdle for the owner. We at Dhanguard offer hassle-free services as the team of our experts and years of experience has helped us build a vast network that further leads to smooth assistance to our clients. If you require business setup services in Dubai, please contact us and we will gladly assist you.

Dhanguard provides the business setup and company formation services in Dubai, UAE with the guidance of our professional team of consultants. Faster and hassle-free company setup in Mainland and Freezone in UAE.

Dhanguard provides the company formation services in Dubai, UAE with the guidance of our professional team of consultants. Faster and hassle-free offshore company formation services and company formation services in Mainland and Freezone in UAE.

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