Starting a sole proprietorship in Dubai, UAE, is a simple way for entrepreneurs, including UAE nationals, GCC nationals, and foreign nationals, to start and operate their own businesses in the UAE.
This business structure allows owners to make decisions independently, and is appealing for those seeking a cost-effective and flexible setup. Sole proprietorships are ideal for individuals offering professional services, consultancy, or small-scale commercial activities.
Begin by selecting the appropriate business activities that align with your expertise and the UAE’s regulations. Ensure that these activities are permissible for a sole proprietorship and are registered under the Department of Economic Development (DED).
Choose a trade name that complies with the DED’s naming regulations. The name should not violate public morals or include the names of any religious or political groups. It must be unique and relevant to the business activity.
Submit your selected trade names and chosen business activities to the DED to obtain initial approval. This step confirms that your business is compliant with local regulations and can proceed to the next stages.
For foreign nationals, appointing a Local Service Agent (LSA) is mandatory. The LSA, a UAE national or a UAE-owned entity, will handle government-related tasks but will not have any ownership in the business.
You are required to lease or purchase an office space to register your business. Dubai’s regulations mandate that every business must have a physical office, though options like flexi-desks are also permissible.
Collect and submit all necessary documents to the DED, including passport copies, the LSA agreement, tenancy contracts, and any other specific documentation related to your business activity.
After submitting the documents, pay the required fees to receive your trade license for your sole proprietorship. This license officially authorizes you to start operating your business.
With the trade license in hand, you can apply for visas for yourself and any employees. This process includes medical tests, Emirates ID application, and visa stamping.
If your business income exceeds AED 187,500 annually, you will need to register for VAT with the Federal Tax Authority.
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Following are the required documents for Sole Proprietorship in Dubai:
Here are the main features and requirements for starting a sole proprietorship in Dubai.
| Aspect | Free Zones | Mainland |
|---|---|---|
| Ownership | 100% foreign ownership allowed | 100% ownership for UAE nationals; foreign nationals may require a local service agent |
| Liability | Unlimited liability (personal assets at risk) | Unlimited liability (personal assets at risk) |
| Business Activities | Restricted to activities permitted by the free zone | Wider range of business activities allowed |
| Local Sponsor Requirement | No local sponsor needed | Local service agent needed for foreign nationals (no ownership rights) |
| Office Space | Office space or Flexi-desk required within the free zone | Must have a physical office space in Dubai |
| Cost | Higher setup costs due to free zone fees | Generally lower setup costs compared to free zones |
| Scope of Business | Limited to operating within the free zone or for export | Allowed to operate across the UAE and internationally |
| Tax Benefits | Corporate tax benefits; no VAT on some activities | Corporate tax exemptions but VAT applies to most activities |
| Regulatory Authority | Regulated by the specific free zone authority | Regulated by the Department of Economic Development (DED) |
| Aspect | Sole Establishment UAE | LLC UAE |
|---|---|---|
| Ownership | 100% owned by one individual | Ownership can be shared (foreign nationals can own up to 49%; 51% by UAE national sponsor) |
| Liability | Unlimited liability (personal assets at risk) | Limited liability (owners are only liable up to their share in the company) |
| Legal Structure | Not a separate legal entity | Separate legal entity |
| Business Activities | Suitable for professional services, consulting, or small businesses | Wide range of business activities allowed |
| Control & Management | Complete control by the owner | Managed by a board or designated managers |
| Taxation | No corporate tax (subject to changes) | No corporate tax (subject to changes) |
| Capital Requirement | No minimum capital requirement | Minimum capital requirement varies by Emirate and activity |
| Ability to Expand | Limited ability to expand or take on partners | Greater potential for expansion and attracting investors |
| Ideal For | Entrepreneurs or freelancers offering professional services | Businesses looking for protection from personal liability and broader activities |
Riz & Mona Consultancy is renowned as one of the top business setup consultants in Dubai, with over 15 years of experience facilitating a wide range of businesses throughout the UAE. Our deep connections with government officials and key authorities, combined with our extensive expertise in consultancy, streamline the process of establishing your business in Dubai. Additionally, we offer comprehensive financial, legal, and corporate services to support our clients throughout their business endeavors.
We are here to provide comprehensive support in Setting up a Sole Proprietorship Company in Dubai, from preparing your documents to completing the process. Connect with us now to begin your journey with a FREE consultation!
A sole proprietorship offers 100% ownership with personal liability, while an LLC limits liability to the shareholders’ investments and requires at least two shareholders.
Yes, you can open a corporate bank account for a sole proprietorship with the required documents like your trade license and Emirates ID.
Yes, you can sponsor family members and employees for visas, depending on your office space and business activity.
You need to be a UAE or GCC national (for commercial activities), or appoint a local service agent if you’re a foreign national, plus secure an office space and obtain DED approvals.
Yes, a physical office space is required, though flexi-desks are acceptable for smaller operations.
Visa requirements include securing a trade license, medical tests, and Emirates ID registration, with visa quotas depending on your office size and business activity.
