Sole Proprietorship Company Formation in Dubai

Sole Proprietorship Company Formation in Dubai

A business owned and operated by a single individual is known as the sole proprietor. The sole proprietor is in complete control of the company’s operations and profits to bear unlimited liability. All the financial liabilities are single-handed owned by the proprietor including debts and obligations. A company or a corporate body cannot own a sole proprietorship business. 

Features of a Sole Proprietorship Business in Dubai

1. A sole proprietor can appoint one manager as per the Department of Economic Development (DED) business regulations.
2. The trade name must be related to the commercial activity of the firm.
3. A sole trader can have more than one branch. Each may undertake one or all of the activities included in the main business license.
4. A sole proprietorship cannot have a branch outside the Emirates.
5. If the trader is a National of a country other than the UAE or GCC, they require a Local Service Agent (LSA).
6. A corporate body cannot own a sole proprietorship.

Advantages of Sole Proprietorship Business in Dubai

1. Foreign professionals can retain 100% foreign ownership in the business.
2. The company can legally practice professional services anywhere in the UAE, including Free Zones.
3. The company can be set up at any location without any restrictions.
4. The government has wholly waived any paid-up capital requirements.

Terms and Conditions to Set up a Sole Proprietorship in Dubai

Below are the terms and conditions to set up a sole proprietorship company in Dubai.

1. The sole proprietor must have obtained an education qualification for the same activity that he/she has selected.
2. There is a limitation to the number of managers that can be appointed on a professional license.
3. The capital of the business is not a constraint for a sole proprietorship.
4. The business name must be related to the commercial activity of the company.
5. A sole proprietorship can have more than one branch. Each may undertake one or all the activities included in the main business license.
6. The owner can also change its legal form according to DED procedures.
7. A single establishment may need the owner or a manager to appear for exams with an American University in Dubai in support of practicing certain economic activities. These exams are required at the time of setup and renewal of the license.

Who can form a Sole proprietorship in UAE?

Unlike a UAE Limited Liability Company (LLC), which requires that at least 51% of shares must be registered to a UAE/GCC national sponsor, a qualified foreign investor that sets up an establishment or sole proprietorship to practice a professional service is permitted 100% ownership in the company.

Establishments that are owned by foreign nationals are required to appoint a National Service Agent (NSA) to assist in obtaining licenses, visas, etc. NSAs have no direct involvement in the business. Sovereign can act as the NSA.

A sole trader from Dubai may carry out commercial or technical activities throughout the Emirates. Therefore the obtained license will represent these activities. Even if there is no minimum amount to open a sole proprietorship in Dubai a person must calculate the amount required to do their business.

Process of Sole Proprietorship Company Setup in Dubai

1. Select and finalize a unique trade name that correlates with business.
2. A person needs initial approval from the Department of Economic Development for business registration in Dubai.
3. Collect approval from various other departments to be clear on the legal side.
4. Submit documents with the application form.
5. Apply for a license after business registration.

What are the Documents Required to Set up a Sole Proprietorship Company In Dubai?

Below are the documents required to set up a sole proprietorship company in Dubai.

1. Business application form.
2. Licensing application form.
3. Name, residence permit, and passport copy of the sole proprietor.
4. Details of the local sponsor, in case the sole proprietor is a foreign citizen.
5. No-objection letter by the sponsor, if applicable.
6. Proof of registered address of the company.
7. Details of the local sponsor, in case the sole proprietor is a foreign citizen.
8. No-objection letter by the sponsor, if applicable.
9. Proof of registered address of the company.

All the documents must be attested from the relevant UAE consulate. All documents must also be translated into Arabic by an official translator before they can be presented to the UAE’s authorities.

The registration process for Sole Proprietorship Business in Dubai

The Department of Economic Development (DED) is the governing body responsible for registering and issuing trade licenses to new businesses in UAE. So here is the complete process for registering the sole proprietorship in UAE:

1. Initial approval from DED is needed. This approval is an acknowledgment form that the UAE government has no objection to the company formation in Dubai.
2. To get approval for the trade name the concerned person has to submit 3 trade name options among which he/she must receive approval for at least 1 of the names.
3. Prepare and sign the local agreement. The Local Service Agent and the person must be present while signing.
4. To form a mainland company it is mandatory to have a physical office. So an office space has to be finalized. Once it is done the person has to submit the tenancy contract for the office.

Once all the above steps are complete the person will receive a payment voucher. Make the payment and collect the trade license for the sole establishment.

Let's Build Connection

Danburite Corporate supports companies globally to set up business in Dubai by handling all the formalities and legalities of sole trader company registration from start to finish. Our team of experts has years of expertise in company formation in Dubai, which can help your business gain a robust foothold in this growing economy. Contact us for business setup services in Dubai, and we’d be glad to assist you.