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What is the Process of Sole Proprietorship Company Formation in Mainland?

By Shivangi - 23 Dec 2021 Last Updated: 07 May 2022
What is the Process of Sole Proprietorship Company Formation in Mainland?

When it comes to company formation, the UAE government boasts one of the most liberal legal frameworks in the world. It enables investors to start new businesses based on their financial constraints. A sole proprietorship is a business owned by a single person, and the trade license is granted in that person's name. All financial duties and liabilities will be under the control of the owner. Entities controlled by foreign nationals should designate a Local Service Agent (LSA) to obtain licenses, Visas, and other documents. There are no limits on the location where a sole proprietorship can rent or own offices. In our study, we will further discuss the process of sole proprietorship company formation in the mainland.

Meaning of Sole Proprietorship

A sole proprietorship is a legal entity owned and run by a single person, known as the sole proprietor. The single owner has complete control over the company's operations and profits, as well as unlimited liability, which means he or she is responsible for all of the company's debts and obligations. Only a UAE national or a Gulf Cooperation Council national can form a Sole Proprietorship Company in Dubai (GCC). Establishing a sole proprietorship as a non-UAE national would necessitate a residence visa and a local sponsor. They could be a Dubai resident or a business. If the sole proprietor wishes to engage in professional or commercial activity, he or she must first obtain the necessary license. Thus, due to liberal policies formation of a Sole Proprietorship in the mainland is a considerably less complex task.

However, connecting with the concerned departments and managing the necessary paperwork becomes a challenge for newcomers.

What are the Features of a Sole Proprietorship Company?

The salient features of a sole proprietorship company are discussed below:

Control over the Entity

  • The sole proprietor oversees all areas of the firm because he has complete authority over all rights and responsibilities.
  • No one has the authority to interfere with the activities of a sole proprietorship.
  • As a result, the sole proprietor is the only one who has the authority to change his views.

Formation and Closure

  • This is a form of business entity that the owner creates.
  • There are no legal constraints on the sole proprietorship business model.
  • In some cases, legal formalities are required, or the proprietor must possess a specific license or certificate in order to operate the firm.
  • The owner has the power to shut down the business at any time.

Profits and Losses

  • Because there is just one owner, the proprietor is responsible for all company risks.
  • The sole proprietor, on the other hand, is entitled to all of the company's profits and losses.

Liability

  • In this form of business, the solitary proprietor has unlimited liability.
  • The owner is personally accountable for all debts, in this case, he/she will be responsible for all dues if he takes out a loan for his company.
  • As a result, if funds are insufficient, he is personally liable for any debt that his personal estate can recover.

No Separate Entity

  • In the sole proprietorship, the owner and the business are treated as two separate entities.
  • The law, on the other hand, makes no distinction between a proprietor and his or her business.

Business Continuity

  • A sole proprietor's death, imprisonment, physical illness, insanity, or bankruptcy will have a direct impact on the business or may end in its closure.
  • He can administer the business on behalf of the proprietor if he is the beneficiary, successor, or legal heir of a sole proprietor.

Read More: Guide On Obtaining A Mainland Co Working License In Dubai

What does a Mainland Company mean?

A Mainland company is one that is registered with the UAE's Department of Economic Development (DED). It means that if you want to do business on the Mainland of the UAE, you must first register a business entity with the DED, which will then provide you a business license to begin doing business in the UAE. Companies from the mainland can engage in any type of industrial, commercial, trading, professional, or tourism activity. Some professional activities are prohibited by DED's business regulations, while others require authorization from regulatory agencies. Foreign investors can either form a partnership in which UAE residents control 51 percent of the company or form a Sole proprietorship company in which they own 100 percent of the shares. Some economic activities, however, are restricted to UAE citizens alone.

What is the Process of Sole Proprietorship Company Formation in Mainland?

The Department of Economic Development (DED) Dubai must approve the formation of a sole proprietorship in Dubai.Every firm in the UAE is registered with the Department of Economic Development (DED). The procedure is particularly cost-effective because no Articles of Association or Memorandum are required for this type of business.

The process of Sole Proprietorship Company Formation in Mainland is outlined below:

  • Choose a trade name for your company.
  • Choose the legal structure, which is a Sole Proprietorship in this case.
  • Obtain preliminary permission from Dubai's Department of Economic Development (DED).
  • The clearance is a prerequisite for registering your company in Dubai.
  • Obtain the necessary approvals from other departments.
  • Submission of an application form together with the required documentation for the registration.
  • After you've registered your business, you can apply for a License.

What is the documentation necessary for Sole Proprietorship Company Formation in Mainland?

  • The Application form consisting the basic details
  • The Business Name which will be used by the sole proprietor
  • The Licensing Application Form
  • The Information of the Local Service Agent in case of dealing with foreign citizens
  • Passport Copy of the Sole Owner
  • Proof of Registered Address
  • Permit of the Residence
  • No-Objection letter provided by the sponsor

Conclusion

Connect with Dhanguard if you are looking forward to Sole Proprietorship Company formation in the mainland. Our business setup team will assist you throughout the process from the start to its end.

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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