Sole Proprietorship Company Formation
Company Formation in
Dubai
Sole proprietorship company formation is an exciting opportunity as it’s a company owned and run by an individual and the business license too is issued in their name. It’s a common company set up for individuals involved in professional services. A distinctive feature of the sole proprietorship setup is that it is prohibited from involving any shareholder or partner, as well as a company or corporate body.
Although there is no shareholder involved in this case, depending on your business activity, you may be required to hire a local service agent to assist you in going back and forth to obtain government approvals, licenses, visas, and more. As is the case with LSAs generally, they do not hold any power over decisions, nor do they have any shares within your business. You retain 100% ownership, while they are given an annual fee in exchange for the services they provide.
While a sole proprietorship company formation allows for a more affordable setup cost, the unlimited liability aspect of it can tend to be problematic in the long run. A sole establishment awards complete financial responsibility to the individual in charge, this includes the profits as well as the losses and debts. In this situation, if the company were to go through a tough financial situation, the individual may have to use all they’ve invested into the business as well as their personal assets to pay off those involved.
At Business Link, we understand the technicalities that go into setting up a sole establishment, as well as the risks associated with this. Our aim is to simplify these processes for you, guide you through alternatives, and provide the best strategies that are unique to your business needs. Let’s work together towards greatness!
Benefits of a setting up a sole proprietorship
Setting up a sole proprietorship comes with significant advantages for the individual involved, these are:
100% Ownership
Owners of sole proprietorships enjoy having complete ownership of their businesses, regardless of whether these are local owners or foreign owners.
Ease in trading
A massive benefit for sole proprietorships and other companies set up under the mainland license is that they can easily conduct business activities anywhere in the country, including free zones.
Affordable
To make sole establishments more accessible to qualified people, the UAE Government has permanently waived off paid-up capital requirements that were once set in place for these company types.
Operate as an LLC
Those looking to set up businesses in the service-providing industry have the golden chance to set up their establishments as LLCs. Through an LLC structure, personal assets of the investor remain safe, and they are liable only to the extent of the funds invested in the business.
Documents required to set up a sole establishment
Much like with other licenses and company types, for a sole proprietorship company formation as well, you need to submit all documents as per the requirements set by the DED. This ensures the smooth processing of your application. Here are the documents required for the same;
- Filled application form
- Passport copy of the owner
- Owner’s residence visa or visit visa copy
- Business activity and trade name options
- Proof of registered office address
- Local service agent’s Emirates ID copy (if any)
- Proof of knowledge in the professional field (educational qualifications or professional experience/ required by some activities only)
How can you establish a Sole Proprietorship?
To deal in the Mainland in any Emirate, the main governing body for businesses is the Department of Economic Development (DED), and this is the entity you’re required to seek approvals from to legalize your business activities.
- Your first step to setting up a sole establishment is to send in your business activities and business name to the DED to receive initial approval. This serves as a green light by the DED and allows you to go ahead with the remaining process.
- If you require a Local Service Agent, depending on your business activities, now would be the time to hire one. Along with this LSA, you’re required to draft and sign an agreement that puts down each of your responsibilities (as well as the annual fee that the LSA will be awarded, if required).
- Once the above are sorted, it’s time to focus on office space. For mainland licenses, a physical office is mandatory. After finalizing and renting an office space, along with other documents, you must also submit your tenancy contract and Ejari to the DED.
- If your business activities require any type of special permission from other entities, now would be the time to apply for those.
- Finally, after you have the above received and ready, you may submit all documents back to the DED, make your payment, and collect your business license
Setting up a business can easily become a tedious task when you don’t have access to professional guidance. We want to be the helping hand that launches your business towards success. To know more about how we can assist you in setting up a sole proprietorship, get in touch with our expert team, and let’s get the ball rolling.
