Did you know that the oldest form of business is “sole proprietorship”? It is also one of the most common type of business entity. Your local chemist, your grocer, even an IT consultation service are mostly sole proprietors. The moment you start offering goods and services to others, you form a “sole proprietorship”. It’s that simple. Legally, there is no distinction between you and your business.

Due to its simplicity, the sole proprietorship is a popular type of business. It is really easy to set up and the cost for setting up such a business is also nominal. A sole proprietor just needs to register his or her name and secure local licenses, and the sole proprietor is ready for business. One thing a sole proprietor should keep in mind is that he or she is personally responsible for the company or business’s debts, obligations, legalities, and profits.

Dubai’s blooming business climate allows traders to set up their business through diverse legal forms. Foreign investors can enter the UAE market according to their budgets and needs by establishing the operations as sole proprietorship.

By obtaining a license from the Department of Economic Development (DED), Dubai nationals or those from countries that are members of the Gulf Cooperation Council (GCC) can open sole proprietorships in Dubai. Only UAE nationals or GCC nationals may own sole proprietorships engaged in industrial or commercial activities. Likewise, Dubai’s sole traders can be individuals of any nationality but need to prove their technical abilities.  Foreign investors in Dubai may appoint a commercial agent to participate in the business activities performed by a sole trader on their behalf.

In Dubai, sole proprietorship addresses venture capitalists who are willing to have 100 percent ownership and full responsibility for losses and profits. It is good to know that it is also possible to establish the activities of sole traders in the free trade zones of Dubai.

Registration Process

To register a sole proprietorship in Dubai, approval from the Department of Economic Development (DED) Dubai is needed. DED is the main authority where every business in the UAE is registered. The procedure is very economical as there are hardly any Articles of Association or Memorandum needed to be prepared for this form of company.

Written below are the steps one must follow to register their business in Dubai:

• Select a trade name for your business.
• Select the legal structure, which in this case is a Sole Proprietorship
• Get the initial approval from the Department of Economic Development (DED) in Dubai. The approval is a primary permission to register your business in Dubai
• Obtain approvals from other departments
• Register your business by submitting an application form along with the documents
• Once you get the business registered, you can apply for a license.

List of Documents Required

Following is a list of all the documents needed to be filed with Dubai Trade Register for setting up a sole establishment UAE company.

• The application form
• Business name of sole trader
• Licensing application form
• Information about local agent (if the business owner is a foreign citizen)
• A copy of the passport of the business owner
• Proof of registered address
• The residence permit
• A no-objection letter or NOC obtained from the sponsor

There can also be additional documents needed based on activities carried out by a sole proprietorship. Another important thing is that all the documents must be notarized and attested with the relevant UAE consulate. As the notarization process can be very lengthy and time consuming, it should be started as early as possible, in order to save time. Before they can be presented to the authorities in the UAE, all documents must also be translated into Arabic by an official translator.

A sole trader from Dubai may carry out commercial or technical activities throughout the Emirates; therefore, the obtained license will represent these activities. Even if there is no minimum amount to open a sole proprietorship in Dubai, a person must calculate the amount required to do their business. Another requirement for this type of business form is to have your registered address in Dubai.

Setting up a business in Dubai is a profitable option, and it is important that a businessman chooses the most appropriate company structure to pursue one’s business.

The below advantages show why setting up a sole proprietorship in Dubai is a good move:

• There are no corporate taxes. A business owner needs to file for personal income tax only.
• The owner gets total flexibility to run it with total freedom.
• Of all types of business establishments, this form of business is the easiest and most inexpensive to set up.
• With the assistance of a local service agent, you can retain 100% of business ownership.
• A sole proprietorship has no minimum requirement for business capital.