Sole Proprietorship Business Registration in the UAE [A Guide]
The UAE is an entrepreneur-friendly country that offers businessmen several options to start a business in Dubai or any other emirate in the country. You have many options for the choice of your business activity, the type of company you want to form, the number of shareholders you can have for your business, and the jurisdiction in which you want to set up your company. Here, you will learn everything about sole proprietorship business registration in the UAE.
The UAE boasts some of the most modern legislation, allowing both small and medium investors to start their businesses quickly. In the UAE, a sole establishment Dubai is a legal venture owned or run by a single person who holds a trade license in his or her own name. All of the entity’s obligations, including financial liabilities, are assumed by the owner.
The CCL, or Commercial Companies Law, exempts any business that provides professional services but does not engage in any commercial activity. A competent foreign investor who practices professional service is permitted total ownership of a sole proprietorship business in the UAE. Organisations owned by foreign nationals hire a local service agent to assist them in getting licenses, visas, and other documents.
What is sole establishment in the UAE?
A sole establishment (also known as a sole proprietorship) is a business that has a trade license issued in the name of just one person. This indicates that a company or corporate body cannot own the business, in contrast to other business entities available in the UAE. This person is personally liable for business activities. Thus, creditors may also seize personal property to recoup business debts.
A Sole Establishment is a business that is solely owned by one person, who is liable for the debts of the business up to the full extent of his personal assets.
Here is a quick look at the features of sole proprietorship in the UAE:
- Single owner
- No shareholder
- 100% ownership of the business
- Complete control of business operations
- 100% profit retention
- Solely responsible for business liabilities and financial obligations
- Low start-up cost
- Quick business registration
- No business capital requirement
Who can form a sole proprietorship in the UAE?
UAE nationals, Gulf Cooperation Council (GCC) nationals, as well as foreign nationals can form sole proprietorships in the UAE. But the conditions and requirements differ.
If you are a UAE national or a GCC national, you can form any type of sole establishment. It can be an industrial, commercial, tourism, or professional activity. You can also set up consultancies across a range of activities under your professional license.
If you are a foreign national, you can only apply for a professional license for your sole proprietorship. All professional activities are eligible for a sole establishment. You can also engage in consultancy activities. However, certain consultancy activities can only be practiced by UAE nationals. As a foreign national, it is also mandatory for you to have a Local Service Agent (LSA)* to register your sole establishment in the UAE.
Before you start the process of sole proprietorship business registration for registering your sole establishment in the UAE, you should keep the following requirements in mind. You will have to provide these during your trade license application process as per the sole establishment UAE law:
- Your passport copy
- Your UAE residence visa or visit visa copy
- 3 trade name options for your establishment
- The business activity your sole establishment will engage in
- The type of office you will require
- Your local service agent’s Emirates ID copy
Sole proprietorship business registration process
The Department of Economic Development (DED) is the government body responsible for registering and issuing trade licenses to new businesses in the UAE. The process for registering your sole proprietorship in the UAE is quite straightforward. However, depending on your business activity, there may be additional requirements or steps to follow to complete the registration process.
1. Get initial approval
You must get this approval from the DED, which is the licensing authority in the UAE. This approval is an acknowledgement that the UAE Government has no objection with you starting your business.
2. Get trade name approval
You must submit 3 trade name options. Of the options submitted, you must receive approval for at least one of the names.
3. Sign local service agent (LSA) agreement
Prepare and sign the agreement. You and the local service agent must be present at the time of signing.
4. Finalize office space
To form a mainland company, it is mandatory to have a physical office. Once you have arranged for your office space, you must submit the tenancy contract as well as the Ejari* for the office.
*Ejari is the regulatory system for the rental market in Dubai. It is governed by the Real Estate Regulatory Agency (RERA). It was introduced to ensure transparency and fairness between the landlords and tenants in Dubai.
5. Get additional approvals (if any)
Some business activities are required to submit additional approvals from specific government or non-government agencies. DED will communicate these requirements to you. Only after you have submitted the relevant approvals can you move on to the final step in the registration process.
6. Make the payment
Once you complete all the above steps, you will receive a payment voucher. Make the payment and collect the trade license for your sole establishment.
Sole establishment license cost in Dubai
A sole establishment in the UAE is an affordable venture that you can start with minimal capital investment. It’s because you won’t be needing a lot of staff members, employees, and business partners. Therefore, the cost of sole establishment in Dubai starts at AED 18,500 approximately.
However, it’s imperative to note that the sole proprietorship UAE cost is subject to change depending on your business operations. Some ventures require additional approvals, while some have to meet the minimum capital investment criteria. Hence, it’s better to consult with the business advisors at Shuraa to get an accurate cost estimate of your Dubai sole establishment.
Benefits of sole proprietorship establishment in Dubai
Here are a few benefits that a sole establishment in Dubai can enjoy alongside several other advantages:
- Foreign professionals can easily keep full ownership of their company.
- A company’s choice of locations for purchasing or renting office space is unrestricted.
- In any region of the UAE, including the free zones, a corporation can legally practice professional services.
- The UAE government has permanently eliminated all paid-up capital restrictions in relation to single proprietorships.
Launch your sole proprietorship business in Dubai!
To know more about which professional activities you can apply for as a foreign-national sole proprietor, or to avail our exclusive business setup packages, contact Shuraa Business Setup today! Book your FREE consultation with our company formation experts to get answers to all your business-related queries. Speak with them on +97144081900 or WhatsApp them on +971507775554. You can also send us an email email@example.com