Sole Proprietorship Company Formation in Dubai, UAE

A sole establishment, also known as a sole proprietorship in Dubai, is a type of business held entirely by one person. As a result, a sole proprietorship cannot be owned by a corporation. The individual owns the entire company. This offers the business owner entire control and 100 percent of the profits. As a result, he or she is fully responsible for any obligations or losses.

A sole proprietorship, often known as a professional licence, can be established by anyone of any country. If the person is a national of a country other than the UAE or the GCC, a Local Service Agent (LSA) is required to support the licence. The job of a service agent is to provide the firm with the services it requires. Support with the Immigration Department, the Department of Economic Development, and the Ministry of Labour, for example. They have no financial commitments or duties to the company, both within and outside the Emirate.

What is Sole Establishment in UAE?

Because initial fees are often modest and you can start your business with just one shareholder, a single establishment, also known as a sole proprietorship, might be a viable alternative for entrepreneurs looking to go it alone in the UAE. A qualified foreign investor who establishes a business or establishes a sole proprietorship to provide a professional service is allowed to own 100 percent of the company.

Professional service establishments are excluded from the Commercial Companies Law (CCL), although they must be licenced by the Department of Economic Development (DED).

Only UAE nationals or GCC nationalities can form a sole proprietorship to engage out business activity (subject to certain conditions). Expatriates can only establish Sole Proprietorships to provide professional and consulting services (such as medical services, engineering consultancies, management consultancies, legal consultancies, IT consultancies).

Foreign-owned businesses must appoint an NSA to assist them in acquiring licences, visas, and other documents. In exchange for an annual fee, a National Service Agent is a UAE national who assists a foreigner with licencing procedures and other government-related affairs. NSAs are not involved in the business in any way.

Criteria for Individual to start a Sole Proprietorship in Dubai

• The majority of a sole proprietorship's activities are professional. Medical services, engineering consultancies, management consultancies, legal consultancies, IT consultancies, and other similar services are examples of these types of services. To get a licence for many of the operations covered by this legal form, the owner or manager must demonstrate specified educational requirements.
• It may also be necessary for the owner or management to sit for tests in order to prove their qualifications in the UAE. Depending on the activities chosen, these exams may be required on a yearly basis. These exams are held at the American University in Dubai.
• Some of the tasks may need the licence manager to demonstrate his experience in the business. Work experience letters, for example, to qualify as a licence manager.
• Apostille is required for all documents relating to education qualifications or letters of work experience that are not from the UAE. The UAE consulate in the place of origin and the Department of Education can help with this. The originals must then be authenticated by the UAE Ministry of Foreign Affairs. Additionally, if the educational materials are not written in Arabic or English, they must be legally translated into one of these languages. As a result, this is a crucial rule to remember while forming a sole proprietorship.

Requirements for beginning a Sole Proprietorship

• The number of managers that a single establishment can appoint is limited.
• There should be a link between the firm's trade name and its economic activities.
• The number of branches that a single establishment can have is regulated and limited. Each branch, on the other hand, may engage in any or all of the activities covered by the main company licence.
• When a sole proprietor engages in consulting activities, he or she must have received an academic certificate for the same activity.
• The number of managers who can be appointed under a professional licence is limited.
• A sole proprietorship does not have to worry about its capital.
• A sole proprietorship might have multiple locations. Each individual may engage in any or all of the activities listed in the main business licence.

Benefits of a Sole Proprietorship in Dubai

• Foreign professionals can keep 100 percent ownership of their company.
• Anywhere in the UAE, including Free Zones, the corporation can legally provide professional services.
• There are no restrictions on where the corporation can rent or buy office space.
• Any paid-up capital requirements have been completely waived by the government.
• According to DED rules, the owner/s can also change the legal form.

Disadvantages of a Sole Proprietorship or an Establishment

• For business debts and other financial commitments, the owner is personally liable. Because the firm is inextricably linked to its owner's personality and financial situation, this liability cannot be minimised by shares.
• Establishment takes longer than a Free Zone corporation, usually 8 to 10 weeks;
• In order to incorporate the business, you'll need an office space. Virtual offices are often not recognised by the DED.

Key steps to setting up an Establishment or Sole Proprietorship

• Speak with one of Dhanguard's advisors about the best legal structure for your business based on the activities you plan to do in the UAE and your target markets. A client may also get legal advice to confirm Dhanguard's recommendations.
• Appoint a National Service Agent (NSA), who must be a UAE national or a corporation with 100% UAE ownership.
• Connect with our experts to learn more about the documents needed to start a sole proprietorship.
• All needed documentation must be given to Dhanguard, which will then oversee the entire application procedure.

Why choose Dhanguard?

Business setup in Dubai is a lucrative option, and it is critical that a businessperson chooses the best company structure for their operations. Dhanguard assists enterprises from over the world in establishing their operations in Dubai by managing all of the paperwork and regulations of sole trader company registration from beginning to end. Our team of professionals has years of experience forming companies in Dubai and can assist your company in establishing a strong foundation in this rapidly rising market. If you require business setup services in Dubai, please contact us and we will gladly assist you.