Sole Establishment

A sole establishment is a business owned by one person who takes full responsibility for its profits, losses and liabilities. It’s a common choice for consultants, freelancers and other professionals offering specialised services under their own name.

Setup is straightforward. The paperwork is light, the fees are relatively low and the owner has complete control over the business. There are no partners to consult, no shareholders to involve and no company board to manage. That simplicity makes it appealing to professionals who want to get started quickly and stay in charge.

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Foreigners can still own 100% of a sole establishment in many cases, especially in the professional services sector. Depending on the activity and the licensing authority, some owners may need to appoint a local service agent—a UAE national who acts as a formal liaison with government departments. This requirement is not universal and has been relaxed in recent years, particularly in Dubai.

This setup works well when the model is clear and the risk is low. That said, the owner is personally liable for any debts or legal claims, which is something to weigh up before choosing this route.

Pros

Easy to set up
Full control
Lower setup costs
Eligible for small business tax relief (subject to conditions)

Cons

Unlimited personal liability
Harder to raise capital
Less appealing to banks and investors

Sole Establishment vs LLC in Dubai

When setting up a business in Dubai, one of the first things you need to get right is the legal structure. It shapes everything—your risk, your taxes, your options down the line.

Two structures come up more than any others: the Limited Liability Company (LLC) and the Sole Establishment. Both are well-established, widely used and backed by clear procedures. But they’re built for different types of businesses.

A Sole Establishment is simpler and suits professionals who want to work independently under their own name while an LLC offers protection for personal assets and is often a better fit for companies planning to hire, scale or bring in partners.

Let’s look at how the two compare—so you can decide which one suits your plans.

Key differences: Sole Establishment vs LLC

The structure you choose shapes how your business operates day to day—how it’s owned, how much protection it offers, how investors and banks see it, and how easy it is to grow. Here’s a side-by-side look at the key differences between the two structures:

Factor	Sole Establishment	LLC (Limited Liability Company)
Ownership	One individual	Up to 50 shareholders
Liability	Unlimited personal liability	Liability limited to capital invested
Setup Complexity	Quick and straightforward	More steps, paperwork and approvals
Taxation	Taxed under owner’s personal income	9% corporate tax above AED 375,000 profit
Growth Potential	Suited to solo operations	Structured for scaling and partnerships
Market Perception	Viewed as a smaller, individual setup	More formal, often seen as more credible
Investor Appeal	Limited	Easier to attract outside investment

The choice between the two will depend on your goals, appetite for risk and how you see your business evolving over time.

Changing from Sole Establishment to LLC

Plenty of businesses in the UAE start out as sole establishments and later switch to an LLC. The reasons are generally to limit personal risk, bring in partners, or get access to bigger contracts and financing.

While it’s a well-trodden path, the process isn’t just a licence swap. Legally, you’re setting up a new entity and transferring the business over. That means updating the commercial register, notifying creditors, and publishing notices in Arabic newspapers. If those steps aren’t followed properly, the change can be challenged, and in some cases, the owner may still be held personally liable for past debts.

Done right, though, the conversion is smooth. The key is understanding what’s required and having someone experienced handle the details—from drafting the sale agreement to coordinating with the relevant authorities. With the right support, it’s a straightforward step that can open the door to a more secure and scalable setup.

How can Sovereign PPG help?

Whether you're starting fresh or switching from a sole establishment to an LLC, Sovereign PPG can manage the process end to end. With deep knowledge of local requirements and strong ties to key authorities, we handle everything—from licensing and structuring to visas and ongoing PRO support.

For expert help with company setup, restructuring or local partner services across the UAE, Oman, Qatar or Saudi Arabia, call us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below. We’ll be happy to support you.