Step-by-Step Process for Sole Proprietorship Registration in the UAE

In the last several years, people from different parts of the world have set up businesses in the UAE. The business-friendly environment of the country has drawn businessmen and entrepreneurs of different nationalities towards it. The attractive tax incentives offered by the country have been another important reason behind people wanting to establish businesses here.

The success stories of entrepreneurs keep imploring people from all parts of the world to do business in the UAE. Many have achieved tremendous success by being sole proprietors. However, before you start your journey as a sole proprietor in the UAE, you should have some knowledge of the process behind registering a sole proprietor company in the country.

What It Means To Be a Sole Proprietor in the UAE?

A sole proprietorship also referred to as a sole establishment, can be best described as a business in the UAE where one issues the trade license solely in one individual’s name. Different types of business entities can be owned by a corporate body or a company, which is not the case with a sole establishment.

When an individual owns a sole establishment, they take complete responsibility for it. They are the only person responsible for the activities of the business. When a difficult situation arises, they have to take the onus of it and deal with using their skills and the resources they have. For business, when a creditor needs to settle a personal debt, they could seize some personal property or assets of the sole proprietor.

Features of a Sole Establishment

There are some distinctive features that a sole establishment has in the UAE. These are the features that make it different from other types of businesses. First and foremost, a sole establishment is defined by it being owned by a single individual. If a company is owned by two or more people, it cannot be recognized as a sole establishment.

Barring the individual owner, a sole establishment cannot have any shareholder. The 100% ownership of a sole proprietorship lies with the individual owner. All the operations of the business are controlled and managed by the owner. They also receive all the profits the business generates. Along with all the financial obligations, the owner assumes responsibility for all the liabilities of the business.

While most sole establishments are set up with limited funds, the owner could choose to launch a sole proprietorship on a big scale. No minimum capital requirement has been stated to lay the foundation for a sole establishment. It does not take much time for the sole proprietorship business registration process to go through. If you do all the right things, the process will be completed very quickly.

Who Is Eligible To Set Up a Sole Proprietorship in the UAEAlong with UAE nationals, a sole proprietorship in the UAE can be set up by foreign nationals and Gulf Cooperation Council (GCC) nationals. They will have to fulfil certain conditions and requirements first.

UAE and GCC nationals get a lot of flexibility and freedom while setting up a sole proprietorship in the UAE. Through their company, they can offer industrial, professional, commercial and tourism services. They can also set up consultancies and carry out several business activities after procuring a professional license.

What You Need To Have To Register a Sole Proprietorship in the UAE

Before you start the process of registering your sole proprietorship in the UAE, you should know about the laws governing it. The law makes it compulsory for you to submit certain documents and provide specific information while applying for a trade license.

During the identification process, you will be required to submit a copy of your passport. If you happen to be a UAE resident, you have to produce a copy of your UAE residence visa. If you are in the country on a visit visa, you have to show it to the authorities. You happen to be a foreign national, you will have to seek the help of a local service agent. The agent will have to show a copy of their Emirates ID to the authorities.

While applying for a trade license as a sole proprietor, you need to be clear about the activities or work your business will engage in. You will also have to be specific about the kind of office space you want to have for your business. The authorities would want to have a clear picture of the business you want to set up and the way in which you plan to run it.

Process of Registering a Sole Proprietorship in the UAE

When you have the intention of registering a sole proprietor company in the UAE, you have to go through a variety of steps determined by the Department of Economic Development. It is a dedicated government body that handles the responsibility of giving trade licenses to new enterprises or businesses.

To set up a sole proprietorship in the UAE, you need to go through the following steps:

Get Initial Approval

The first step involves getting initial approval from the DED. The approval would indicate there is no objection from the UAE government’s end towards any aspect of your business establishment.

Get the Trade Name Approved

Another process of approval involves getting the trade name approved. You have to submit as many as three trade names as options and wait for the DED to approve one of the names that you submitted.

Put Your Signatures on the Local Service Agent Agreement

Prepare an agreement with your local service agent and sign it. This is important to show that both parties were a part of the signing process.

Get an Office Space

When somebody wants to set up a sole establishment on the mainland, it is mandatory to have a physical office. After you secure an office space for your business, you have to show the tenancy contract. You also need to adhere to Ejari, a regulatory system designed by the UAE authorities for its rental market.

Secure Addition Approvals

Certain business activities make it mandatory to get additional approvals from some government and non-governmental agencies. If any such requirements are there, the DED will inform you about them. Before moving ahead, you must submit all the required approvals.

Initiate the Payment

The final step involved in registering a sole proprietor company in the UAE is to make the final payment upon receiving a specific payment voucher. After you make the payment, you will get the trade license.

Conclusion

Once you get a business trade license in the UAE, setting up a sole proprietorship will turn out to be an extremely smooth process for you. If you face any confusion or difficulty during the process, you have the option of reaching out to an agent or consultant and getting your doubts cleared.