What is Sole Establishment in UAE

Due to its business-friendly atmosphere, the UAE makes it simpler for entrepreneurs to launch their companies. For people who want to launch their own businesses, a sole establishment UAE is a good choice. Sole proprietorships, particularly for professional services, can be entirely held by foreigners, in contrast to LLC Company Formation in Dubai, which normally requires an Emirati sponsor.

To help with licensing, visa processing, and other administrative duties, foreign nationals might need to designate a Local Service Agent (LSA). Typically, the LSA doesn’t actively participate in the day-to-day activities of the company. The main ideas of sole proprietorship in the United Arab Emirates is presented in this blog, dealing with the key features, establishment process, benefits, and sole proprietorship license cost.

What is Sole Establishment UAE?

A sole establishment UAE is a business structure in UAE where a trade license is issued exclusively in the name of one person, which can also be referred to as a sole proprietorship. A company or corporate body cannot own a sole establishment, in contrast to other business entities in the United Arab Emirates. Since the business’s operations are entirely the personal responsibility of the individual owner, creditors may take personal assets to pay off business obligations.

Sole Establishment UAE law: key features

The key features of sole establishment UAE can be considered both advantages and disadvantages. These are the aspects that make it unique and different at the same time. Here are these features for better comprehension.

• One Ownership: A sole proprietorship is run and owned by just one person.
• No Shareholders: No additional shareholders are participating.
• Total Ownership and Control: The owner has total control over all corporate decisions and activities in addition to enjoying full ownership.
• 100% Profit Retention: The proprietor is the only owner of all business profits.
• Personal Liability: All business debts and liabilities are the owner’s personal responsibility.
• Low Startup Costs: Compared to other business formats, starting a sole proprietorship typically entails cheaper startup costs
• Fast Company Registration in UAE: In comparison to other corporate entities, the registration procedure is usually simpler and quicker.

Sole proprietorship business setup in Dubai

Here is a step-by-step guide to start a sole establishment UAE:

1. Choose business location:

First you must decide if you want to start your establishment in a freezone in Dubai or the mainland. Each zone has its own regulatory body and licensing procedures. Choose what suits your business the most.

2. Describe your business operations.

First things first, since your license will need to specify your business activities, we will assist you in accurately defining them. Any activity selected needs to fit the official list provided by the Department of Economic Development (DED).

3. Selecting a name for your business

You then decide on a name for your business. At this point, there are a few important points to remember, many of which would not be applicable in any other location. Be mindful that there are stringent naming conventions that you must follow. Simply put, you should refrain from using any derogatory or blasphemous language.

When calling your business after yourself, stay away from acronyms and names of well-known organizations. Additionally, you need to confirm that the name you have selected is accessible for registration.

4. Obtain initial approval:

To start your business in Dubai, you must acquire an NOC from the Department of Economic Development (DED) or respective freezone authority.

5. Secure office space:

For your business in Dubai, you would want to have a nice office space. Whether a physical office space is mandatory or not depends on your business license type and jurisdiction where you choose to operate. In freezones, you may get the option to operate through a virtual office address.

6. Sign the local service agent agreement:

Foreign nationals may need to engage local service agent who can aid in obtaining licenses, visas, etc, without taking share in business.

7. Obtain additional approvals:

For some business activities, you may need to get the permits from additional government bodies like specific Ministries or departments.

8. Making a trade license application

You can now apply for a license to operate as a lone proprietor. At this point, you will need to provide certain business-related information along with a number of documents, such as copies of your passports, business addresses, bank statements, and other documents as needed.

9. Making your visa applications

Lastly, a residency visa is required in order to work in the United Arab Emirates. Once more, applying for a visa can be really simple if you have the correct advice. You can sponsor other people’s visas as the owner of a UAE business license. A spouse, parent, child, or domestic worker like a housekeeper could be an example of this.

10. Creating a business bank account

In order to function as a sole proprietorship in the United Arab Emirates, you will also need to register a corporate bank account.

What is the sole proprietorship license cost?

A sole proprietorship license cost in Dubai is around AED 7,000* (with Arabic name) and AED 9,000* (with English name). But there are other expenses to take into account. The following variables will affect the overall cost of your general trade license:

• Business activity type
• Organizational structure
• Visa quota
• The number of business associates
• Office space and storage facilities

Challenges of having sole establishment UAE license

While there are several benefits, it is not without its challenges. Here is a glimpse of all such obstacles.

Unlimited Liability:

All business debts and liabilities are directly owed by the owner. This implies that in the event that the company experiences financial difficulties, its personal assets may be utilised to pay off commercial debts.

Restricted Options for Capital Raising:

Since the owner is the only one who can finance the company, raising a sizable amount of money might be difficult.

Sole Decision-Making:

The owner makes all of the decisions, which can be quite taxing and may make it more difficult for the company to adjust to shifting market conditions.

Limited Growth Potential:

A sole proprietorship’s ability to expand may be constrained by the resources and capabilities of each individual owner.

Challenges with Succession Planning:

Since there are no well-defined procedures for transferring ownership, succession planning can be difficult.

Restricted Access to Investment:

It may be challenging to draw in outside investors since they could be reluctant to fund a company with infinite liability.

Dubiz Business Setup’s aid

Dubiz Business Setup is a firm that helps you establish your firm in the Emirates. A team of efficient members who have mastered the workings of the UAE market when it comes to company formation in UAE. Not only this, but our experts can help you navigate the types of trade licenses in UAE, to make the best decision for your business venture.

If you have any queries regarding sole establishment UAE or with your Dubai work visa, feel free to contact us at +971563695485, WhatsApp: at +971563695485, or email at info@dubiz.co

Frequently Asked Questions (FAQs)

1. What activities are included under sole establishment UAE?

Non-GCC nationals can use this legal organization to provide professional services; however, only GCC nationals are permitted to engage in commercial activity through a sole establishment. Consulting, marketing, IT, engineering, and creative operations are a few of these.

2. What are the eligibility criteria for holding a sole proprietorship in UAE?

The eligibility criteria for holding sole proprietorship in UAE include:

• For UAE nationals and GCC nationals: They can engage in industrial, commercial, tourism or professional services as they wish.
• For foreign nationals: They can apply for only professional license for their sole establishments.

For registering their sole establishments, foreigners may also need to enlist the services of a local service agent (LSA).

3. What are the documents required for a sole proprietorship license in UAE?

Documents required for sole proprietorship license include:

1. Copy of valid passport
2. Copy of UAE residence visa, if applicable
3. No Objection Certificate (NOC) from current sponsor, if applicable
4. Local service agent agreement, if required
5. Bank statements
6. Office lease agreement, if required
7. Proof of educational qualification and experience (for professional license)
8. Any additional document as may be asked by the authority

4. Can sole proprietor license be cancelled by the government?

Yes, sole proprietor license can be cancelled by the government. It mostly entails getting approval from the appropriate authorities and filing a cancellation application to the Department of Economic Development (DED). Usually, these approvals come from the Ministry of Emiratization and Human Resources, Foreign Affairs and Residency Directorate, etc.

5. As a lone proprietor, am I able to sponsor others?

Yes, you are able to sponsor the visa applications for your dependents.