Did you know that out of the 3.5 billion total global workforce, 1.1 billion (or 35%) are freelancers?
With that many solo entrepreneurs building their freelance businesses, it makes sense that more people are becoming interested in setting up sole proprietorships. And what better place to do that than in the UAE?
The UAE is one of the most entrepreneur-friendly countries in the world. The favourable tax regimes and unique business setup solutions make it an attractive place for sure.
Did we mention that it’s quite simple to start a business here? Yep, that includes setting up a sole establishment UAE business setup option.
Aside from figuring out whether you want to set up your business on the mainland or in one of the UAE’s free zones, there are a few other steps you’ll need to get past before being ready to do business in the UAE.
Here’s how to make that decision and the entire business setup process a whole lot easier.
What Is a Sole Establishment in the UAE?
A sole establishment (also known as a sole proprietorship) is a legal entity owned by one individual. This means that if you start a food truck in Dubai, for example, and you register it as a sole proprietor, you’re liable for the full extent of assets and liabilities of the business. A sole establishment can legally practice professional services anywhere in the UAE.
If you’re a foreign national in the UAE and are interested in setting up a sole establishment, it’s important to know that you’ll need to appoint a local service agent. The local service agent can be either a citizen of the UAE or a company.
However, as the owner of the company, you’ll have complete control over all aspects of the business. Likewise, you will be solely responsible for any debts or losses incurred.
Although a sole establishment is relatively simple to set up, it does have some disadvantages, such as the lack of limited liability protection for the owner. Don’t let that deter you, though. Let’s walk you through some of the benefits of being a sole proprietor so you can weigh your options.
Sole Establishment vs. LLC in the UAE
Sole establishments and Limited Liability Companies (LLCs) are business structures available to entrepreneurs in the UAE.
When it comes to a Limited Liability Company vs. a sole proprietorship in the UAE, the main difference is that a sole proprietorship can only be owned by one person.
A Limited Liability Company, on the other hand, at least if it’s set up in a free zone, must have a minimum of two owners.
Other differences are minimal but can be important in making your decision. For example, LLC business owners are not personally responsible for business debts and liabilities.
Sole establishments are less expensive and often easier to set up than LLCs, but they offer less protection for the owner’s personal assets.
Which is the best option for you? Ultimately, being a sole proprietor in the UAE is best if you’re looking for the following:
- 100% ownership of your business
- Single owner
- Complete control of all business decisions and operations
- Quick business setup
- Low startup costs
Finally, the biggest benefit of a sole establishment in the UAE as part of starting a business in Dubai is that there is no minimum capital required. Save your money to invest in your business.
Benefits of a Sole Establishment in Dubai
A sole establishment in Dubai is a great way to get your business up and running quickly and efficiently. There are many benefits to setting up a sole establishment, including the fact that starting a business in Dubai as a sole proprietorship is quite simple.
Overall, the setup process is simple and doesn’t require a lot of paperwork or red tape. This makes them ideal for businesses that want to get started quickly and without hassle.
Sole establishment owners in Dubai also benefit from the city’s pro-business environment. Dubai is well-known for its favourable tax regime and its commitment to attracting foreign investment. This makes it an attractive destination for businesses of all types.
Similarly, Dubai is a world-class city with a cosmopolitan atmosphere. This provides a great base for businesses that want to tap into the city’s many opportunities. The city is also home to many foreign nationals, which can provide valuable networking opportunities.
Overall, setting up a sole establishment in Dubai is a great option for entrepreneurs who want to take advantage of everything the city has to offer.
Sole Establishment UAE Setup Process
Define Your Business Activities
Defining your business activities is the first step in creating a UAE company as a solo entrepreneur. This is because your chosen activities need to be clearly stated on your license.
To find out what kinds of business activities you’re eligible to register for, you’ll want to check with the official Department of Economic Development (DED).
They’ve got a handy list you can scroll through.
Choose Your Business Name
Now it’s time to choose your trade name! This is the name that you’ll officially register. First, you’ll submit three options and then get approval for one final option from the DED.
You should choose your business name carefully. Not only is it going to represent your brand, but you’ll want to be mindful of the language you’re using. The UAE is a conservative country and you don’t want to offend anybody.
You should also avoid the names of well-known organizations and avoid abbreviations if you’re naming your company after yourself. If that’s the case, then just use your regular name.
Choose a name that…
- Is simple and easy to remember
- Reflects the nature of your business
- Is unique and different from your competitors
- You will be proud to market online and in person
And, finally, be sure to check that your chosen name is available to register. You can’t register a name that’s already taken!
Sign an Agreement with a Local Service Agent
Once the DED approves your trade name, your next step is to sign an agreement when appointing a Local Service Agent (LSA).
Apply for a Visa
To apply for your trade license, you’ll need to submit a copy of your residency visa.
You can apply for your initial work permit approval through the UAE Ministry of Foreign Affairs or the relevant consulate or embassy in your home country.
The application is somewhat straightforward, but you will need to provide supporting documents, including your passport, a business plan and proof of finances.
Once your application has been approved, you will be issued a work permit. This will allow you to live and work in the UAE for a period of time. You can then apply for a residency visa, which will allow you to stay in the UAE indefinitely.
The residency visa application process is similar to the work permit process, and you will need to provide supporting documents and proof of finances.
Finding all this a bit confusing? Don’t worry. Speaking with one of our specialists might help. Get in touch if you need help getting your visa.
Apply for a Trade License
Now it’s time to apply for a Trade License from the Department of Economic Development (DED). In order to operate your business and perform professional services legally, you must apply for your trade license.
You can complete this application online through the DED website.
You will need to provide some basic information about your company, such as the trade name, activity, and address.
In addition, you will also need to upload several documents, including:
- Your completed application form
- A copy of your passport
- A copy of your UAE residency visa
- Proof of a registered address
- A certificate from your sponsor
If you’re not sure where or how to get those documents then we can definitely help you here at DUQE.
After you submit these documents, assuming everything is good, you’ll get your trade license in about 4 to 6 weeks.
Once you have received your trade license, you can then go ahead and start setting up your company bank account. You’ll also want to make sure you’re registered for VAT.
Open a Corporate Bank Account
Assuming you have completed all the necessary paperwork and obtained the correct licenses, the next step in setting up your sole establishment is to open a corporate bank account.
This is the account you’ll use to manage the finances of your business, so it’s pretty important to choose a bank that offers favourable terms and conditions.
The best business banks in Dubai, for example, should offer multilingual support and business features such as free or discounted international wires.
Take a look at what’s going to be best as you grow your new sole establishment in the UAE and contact a few banks to ask about their fees and features.
Sole Establishment UAE FAQs
As business setup specialists in Dubai, we’ve gotten many questions from entrepreneurs when they’re considering starting a business in the United Arab Emirates.
Ultimately, owning a sole proprietorship in the UAE is a great option for those who want to have full control over their business, but there are some key things to keep in mind.
Here are answers to some frequently asked questions about this type of UAE company.
How Much Does It Cost to Create a Sole Establishment in the UAE?
The answer to this question depends on a number of factors, including the type of business, the location of the business, and the amount of capital investment required.
Generally speaking, it’s inexpensive to set up a sole establishment in the UAE, with many entrepreneurs able to get their business up and running for less than $5,000.
However, do keep in mind that there’s no minimum capital required. The costs mentioned above are really only related to how much assistance you need during the process.
What Documents Do You Need to Start a Sole Establishment in the UAE?
In order to start a sole establishment in the UAE, you will need basic immigration and business documents. This includes your passport and your UAE residency visa.
However, it also includes your completed application form, proof of a registered business address, and other business details that you might need to help ensure the DED approves your application.
Likewise, it’s important to keep in mind that in some cases, you’ll need a No Objection Certificate from your local service agent (whoever is helping you set up the business).
Is a Sole Establishment in Dubai Better Than an LLC?
There are a few factors you might want to consider when deciding whether a sole establishment or LLC is better for your business in Dubai.
One key difference is that a sole establishment is less expensive to set up and requires less paperwork, while an LLC is a slightly more complex business structure. Additionally, sole establishment requires office space to incorporate the company and be recognised by the Department of Economic Development (DED).
If you’re planning on doing business with other companies in the UAE, it’s worth noting that an LLC gives you more flexibility in terms of how you can structure your business relationship.
In terms of taxation, LLCs are generally taxed at a higher rate than sole establishments. But honestly, because the tax regime in the UAE is so great, that doesn’t make much of a difference.
Ultimately, the best business structure for your needs will depend on a variety of factors. However, taking the time to carefully consider all your options will help ensure that you choose the right option for your business.
Get Help with Your UAE Sole Establishment
We hope this guide has been helpful, but we know just how stressful it can be to set up a sole establishment in the UAE. That’s why we created DUQE. Our mission is to make it easy to set up a business in Dubai, plain and simple.
We have years of experience setting up businesses and can take care of all the paperwork for you so that you can focus on running your company.
Get in touch to learn more about our services and how we can help you and your business thrive.