How to set up a sole proprietorship LLC or sole establishment in Dubai
In today’s age of entrepreneurship and digital communication, starting a business has never been so popular.
Dubai, in particular, offers a thriving business environment with favourable policies and initiatives that have attracted over 10,000 small and medium size start-ups to the city.
According to data from the Emirates News Agency, Dubai issued 72,152 new business licences in 2021, which is up from 42,729 the previous year. Of those, 37% were sole proprietorships.
Establishing a sole proprietorship limited liability company (LLC) or a sole establishment (SE) is a great way to set up a business in Dubai. It offers flexibility and low market entry costs and allows business to be carried out both on the mainland and in the country’s many free zones.
What are the key features of a sole proprietorship?
In the UAE, a sole proprietorship is a legal entity owned by a single individual with a trade licence issued in his/her name. The trade licence is issued by the Department of Economic Development (DED) and requires that the holder of the licence bear all financial responsibilities for the entity.
The sole establishment licence allows for the practice of professional services such as accounting, marketing, legal and IT services, but is not permissible for any kind of commercial business and is therefore exempt from the requirements of the Commercial Companies Law (CCL).
The sole proprietorship limited liability company (LLC) is a separate legal personality from the individual 100% shareholder and is required to confirm with UAE Commercial Companies Law (CCL).
A sole proprietorship in Dubai can be established by local citizens as well as foreign nationals. However, as a foreign national, you may require a local sponsor or National Service Agent (NSA) – depending on your activity. The sponsor can either be a 100% owned UAE registered company or an Emirati individual. You will also need a registered address in the UAE to operate legally.
What are some of the benefits of a sole proprietorship in Dubai?
In addition to being able to retain 100% ownership of the business, a sole establishment is free to operate anywhere in the UAE, both mainland and free zones and choose any location for office premises.
As well as these things, a sole proprietorship is cost effective and a good way to set up and begin operating with relatively little expense or risk. It is also an option for individuals that already have residency through other employment in the UAE and want to establish a business as a side project. In this instance, however, it is critical that the individual obtain an NOC from their employer in order to apply for the trade licence under the employer’s visa.
What are the required documents to set up a sole establishment?
As with all companies in Dubai, a sole establishment must be registered with the Dubai Economic Department and the documents that are required for incorporation include, but are not necessarily limited to:
- A copy of the applicant’s passport
- A copy of UAE residency visa
- Proof of registered address
- NOC certificate from employer (if applicable)
- Proof of educational qualification and or professional experience
What is the registration procedure?
The required steps for registration of a sole proprietorship are:
- Choose a trade name for the business – You must submit three trade names and should receive approval for at least one of them
- Select business activities – These must be clearly defined and should be selected from the official DED list
- Get initial approval from the DED – This is acknowledgment that the DED has no objection to you starting a business in the UAE
- Applying for a visa (if applicable) – You’ll need a residency visa to work in the UAE. However, this may not be required if you are already under sponsorship from an existing employer, in which case you’ll require an NOC from your employer
- Complete the application form for the business licence with all required documents.
- Select office space – To form a mainland company, it is mandatory to have office space. However, this could be a flexi-desk, which is more cost effective than a permanent office.
- Pay the fees and receive the trade licence
FAQs on setting up a sole proprietorship in the UAE
1. What activities can be practised under a sole proprietorship?
Under the sole establishment (SE), expatriates may only provide professional services. This includes activities such as management, medical engineering, IT services, engineering consulting, legal consulting and other similar services.
2. Do I need to rent office premises with the sole proprietorship licence?
Yes, you will need a registered office address with a sole proprietorship licence. However, there are more cost-effective options available such as flexi-desks which are also permissible.
3. Can I open a corporate bank account with a sole proprietorship?
Yes, you can open a business bank account with any UAE bank.
4. Can I sponsor others as the owner of a sole establishment?
Yes, you may also sponsor your dependants’ visa applications.
5. What are the total setup costs?
The DED trader licence is a type of sole establishment licence for home-based businesses that can be obtained for as little as AED 1070 (licence fee) + AED 300 (Dubai Chamber membership fees). However, if a visa is required, setup costs will usually start from around AED6,000. This is the lowest cost entry point for a Sole Establishment.
How can PRO Partner Group help?
We can help you choose the best legal structure for your business venture, and we can guide you through the whole setup process, liaising with all government agencies on your behalf to ensure that you are fully compliant with all legal requirements.
If you need assistance with setting up a sole proprietorship LLC business or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.