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How Do You Start A Sole Establishment in Dubai?

How Do You Start A Sole Establishment In Dubai

Dubai is considered a haven for entrepreneurs and business owners thanks to its favourable tax policies and several incentives provided by the government to boost foreign direct investment in the city. Over the years, Dubai has seen a constant increase in the number of companies set up in the city every year. But it is not only the big companies that are being set up in the city; small and medium businesses in the form of sole establishments are also preferred among the entrepreneurs who want to own the full business and operate it single-handedly. Sole establishments in Dubai can be set up with a quick registration process, no minimum paid-up capital, and low startup costs. This blog talks about the benefits of sole establishment in Dubai and provides an overview of the process of sole establishment registration in Dubai by dividing the process into easy steps.

Sole Establishment in Dubai  

A sole establishment in Dubai is a type of business entity owned and operated by a single individual. The one person who owns and operates the business is fully responsible for the profits and loss of the business, i.e., he or she will be the one who will take all the profits of the business without sharing them with anyone, and he or she will have to bear all the losses and debts of the business individually to the extent of his personal assets. In Dubai, any UAE national, foreign national or GCC national can set up a sole establishment, but only a UAE national and GCC national can engage in commercial activities under their business. A sole establishment in Dubai, if set up by a foreign national, is barred from engaging in any commercial activities and can only deal with professional services like management consultancy, legal consultancy, IT consultancy, medical service, etc. In addition to this, a local service agent has to be appointed to aid in the establishment of your business. An LSA is a UAE national or a local company that represents your establishment in Dubai in front of the government authorities and helps get the necessary licenses, permits and visas. An LSA can also help in some minor tasks, such as translating official Arabic documents into your understandable language.

Benefits of a Sole Establishment in Dubai

The most basic advantage of a sole establishment in Dubai is that you can solely own 100% of the business.

If you set up a sole establishment in Dubai, then you are the sole owner of the business, and there are no shareholders, so you can retain 100% of the profits earned out of the business.

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There are no minimum paid capital requirements in the case of a sole establishment in Dubai, unlike other types of business entities like public and private joint stock companies.

One more benefit of a sole establishment in Dubai is that the UAE government places no restrictions on the location of the office of the sole establishment, i.e., a Dubai sole establishment can buy or rent its office space at its preferred location.

A sole establishment in Dubai can be set up with very minimal startup costs, unlike a limited liability company in Dubai. Due to its low start costs, a Dubai sole establishment is the most preferred type of business entity by small business owners and entrepreneurs.

An additional benefit of the sole establishment in Dubai is that you can retain full control of the business yourself without any need to share it with anyone else. You have full control to make all the important and crucial decisions of the business without consulting anyone.

The registration of a Dubai sole establishment is comparatively quicker in comparison to the registration of other business entities like a limited liability company or a private shareholding company.

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Process of Sole Establishment Registration in Dubai

Step 1: The first step you need to follow to start a sole establishment in Dubai is to select a business activity you will conduct through your business. There are more than 2000 business activities provided by the Department of Economic Development in their list, such as manufacturing, tourism, hospitality, education services, etc. You can choose from the activities the Department of Economic Development listed to start a sole establishment in Dubai. A sole establishment set up by a UAE national or a GCC national can engage in commercial activities like trading or manufacturing. If you are a foreign national who wants to set up a sole establishment in Dubai, you can only engage in professional services such as management consultancy, legal consultancy, IT consultancy, medical services, etc. and are barred from engaging in commercial activities through your sole establishment in Dubai.

Step 2: The next step after selecting a business activity is deciding a trade name for your business. While deciding on a trade name for your business, you need to adhere to the local guidelines of the Department of Economic Development and the laws of the UAE. The name you selected should not offend public morals and should not be similar or identical to any existing business. Moreover, it should not include any name of the religion or any religious organization.

Step 3: After selecting a trade name for your business, you should apply for initial approval from the Department of Economic Development. You can not move ahead to the next step before receiving the initial approval from the DED.

Step 4: Now, there is an additional requirement to hire a local service agent to assist you in setting up your sole establishment in Dubai if you are a foreign entrepreneur. A service agreement needs to be prepared and signed with the LSA.

Step 5: After you have hired a local service agent, you need to obtain additional approvals required for specific business activities, which will be informed to you by the Department of Economic Development.

Step 6: When you have completed all the above steps, you need to submit the required documents to the Department of Economic Development, pay the fees and obtain the trade license for your sole establishment in Dubai.

Step 7: Following the receipt of the trade license for your sole establishment in Dubai, you should start finding an office space to conduct your business operations. In the case of a sole establishment in Dubai, you can buy or rent an office space for your business at any location in the UAE, as there are no restrictions as to the location of a Dubai sole establishment.

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Step 8: Lastly, you need to look for a local bank to open a business bank account for your sole establishment in Dubai. Opening a business bank account is necessary to make or receive payments for your Dubai sole establishment.

Conclusion

Dubai is a land of opportunities for big companies and unicorn startups and small business owners and entrepreneurs. It provides equal business opportunities to all business owners, whether they are the owners of a small business or the CEO of a big company. If you are a small business owner willing to enter one of the fastest-growing economies around the globe, then you should set up a sole establishment in Dubai. A sole establishment in Dubai provides you with 100% ownership of the business and 100% retention of profits.

You can start the business with a minimum startup cost as compared to other business entities like a limited liability company in Dubai. A Dubai sole establishment can be registered very quickly and has no legal requirement to have a minimum paid-up share capital. With full control over the business, there is also no restriction on the location of the business, and you can set up your office at any location in the UAE. The only fact you need to be aware of is that if you are a foreign national who wants to establish a sole establishment in Dubai, then you can’t engage in the commercial activities as listed by the DED and can only deal in professional services such as legal consultancy, management consultancy, IT consultancy, medical services etc.

FAQs

  1. What is meant by a sole establishment in Dubai?

    A sole establishment is a business entity owned and operated by only one person. He or she is solely liable for all the losses and debts of the business and also has the benefit of taking all the profits of the business all by himself.

  2. What is the difference between a partnership and a sole establishment in Dubai?

    A sole establishment is a business entity with only a single owner who owns and operates the business on its own. On the other hand, a partnership business has a minimum of two partners who own and operate the business together. In a sole establishment, the single owner is solely responsible for the profits and losses of the company, while in a partnership business, the partners share the responsibility for profits and losses in a company.

  3. What is the process of a sole establishment registration in Dubai?

    To set up a sole establishment in Dubai, you need to follow some easy steps, such as selecting a business activity you will conduct through your business. If you are a foreign national, then you are not allowed to conduct commercial activities under your business and can only engage in professional services, including consultancy services, medical services, etc. You can now select a trade name for your sole establishment in Dubai and apply for initial approval from the Department of Economic Development after choosing a trade name. There is also an additional requirement to hire a local service agent if you are a foreign national. Now, you might require additional approvals based on your business activity (the DED will inform it). After completing all the above steps, you need to submit the required documents with the Ded, pay the fees and obtain the trading license for your sole establishment in Dubai. Following the receipt of all the approvals, you should now find an office space to conduct your business operations. In the end, find a local bank and open a business bank account to conduct your financial transactions.

  4. Why should I choose Dubai to start my sole establishment?

    The answer to this question is easy and straightforward, i.e., if you are a small business owner or an entrepreneur who wants to enter the global market, then Dubai is the right choice for you owing to its favourable business climate and lenient policies for foreign entrepreneurs and investors. You can start a sole establishment in Dubai with low startup costs and a fast registration process.

  5. What are the benefits of sole establishment registration in Dubai?

    If you are a small business owner or an entrepreneur who wants to enter the UAE market, then a sole establishment in Dubai is the best solution, as you can own 100% of the business and also retain 100% of its profits. Moreover, there are no restrictions as to the location of the office, and there is no minimum paid-up capital required to set up a sole establishment in Dubai. A Dubai sole establishment has a quick registration process and low startup costs, and you can also retain full control of the business.

  6. What are the documents required to set up a sole establishment in Dubai?

    There are various essential documents required for setting up a sole establishment in Dubai, such as the licensing application form, registered address's proof, business application form, details of the owner such as name, permit of residence and a copy of passport, details of an LSA (if you are a foreign national).

  7. What is the cost of setting up a sole establishment in Dubai?

    The starting cost of setting up a sole establishment in Dubai is around AED 18500. The actual cost is dependent on the type of your business activity and the location of your business.

  8. What is the difference between a limited liability company and a sole establishment in Dubai?

    As the name suggests, a limited liability company limits the liability of its owners or members and protects their personal assets. A sole establishment has only one member who is responsible for all the liabilities of the business. An LLC is a separate legal entity from its members and can sue and be sued in its own name, which is not the case in sole establishment business in Dubai. If a company goes south, then the owner of a sole proprietorship may have to sell even his personal assets for the repayments of debts of the business, while on the other hand, a limited liability company protects the owners of the company and the liability is limited to the assets of the company.

  9. What are the documents required to obtain a trade license for my sole establishment in Dubai?

    If you want to start a sole establishment in Dubai, then you need to apply for a trade license with the Department of Economic Development. You have to submit various documents to obtain a trade license, such as a copy of your passport, the business activity of your sole establishment, an Emirates ID copy of your LSA, a copy of your Visa (residence or visit) and 3 tradenames selected by you for your sole establishment in Dubai.

  10. Is there any minimum capital requirement for a sole establishment in Dubai?

    No, there is no minimum capital requirement for setting up a sole establishment in Dubai.

  11. Who is eligible to set up a sole establishment in Dubai?

    A UAE national, nationals of Gulf Cooperation countries and a foreign national are eligible to set up a sole establishment in Dubai. But a foreign national can’t set up a sole establishment dealing in commercial activities like manufacturing and trading. They can only set up a Dubai sole establishment dealing in professional services such as IT consultancy, legal consultancy, medical services, management consultancy and other similar kinds of services.

  12. Which license do I need to set up a Sole Establishment in Dubai?

    If you want to set up a sole establishment in Dubai, then you need to apply for a trade license with the Department of Economic Development.

  13. Who is a local service agent in Dubai?

    A local service agent is an Emirati national or a local company that assists in setting up the sole establishment in Dubai by helping in obtaining the necessary licenses, permits or visas. An LSA acts as a bridge between the Dubai sole establishment and the government authorities and assists in various minor tasks such as translating Arabic documents into English or Hindi.

  14. Is hiring an LSA mandatory to start a sole establishment in Dubai?

    Yes, to start a sole establishment in Dubai by a foreign national, it is mandatory to appoint a local service agent from the government authorities who will assist you in applying for the required permits and licenses.

  15. Can a foreign national set up a sole establishment in Dubai?

    A foreign national can set up a sole establishment in Dubai but can't deal in commercial activities like manufacturing and trade. He or she can only deal in professional services like IT consultancy, management consultancy, legal consultancy, medical services, etc., through the sole establishment. They also need to appoint a local service agent to start a Dubai sole establishment who will assist them in getting the required licenses, work permits and visas.

  16. How many trade name options do you need to submit to the Department of Economic Development?

    You are required to submit 3 trade name options for your sole establishment in Dubai and should receive approval for at least one of them.

  17. What type of services can be conducted through a sole establishment in Dubai?

    A sole establishment can conduct various business activities, but if a sole establishment set up by a foreign national can't engage in any commercial activities listed by the Department of Economic Development and can only deal with professional services such as legal consultancy, IT consultancy, management consultancy, medical services, etc.

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