How to Start a Sole Proprietorship in Dubai, UAE – 2025

Sole Proprietorship is exciting to start! This is a business structure where a single individual owns and operates the business without any external entity involved as partners.

This business concept has its pros and cons when it comes to profit sharing.

Starting a sole proprietorship in the UAE is easy at present compared to any other business structure. The industries revolve around IT, management, medical, and engineering. 

What Is a Sole Proprietorship in the UAE?

Sole proprietorship is a business structure that is owned and operated by the a single person.

In UAE sole proprietorship meaning to have the business name, trading license and other documents are registered under a single person’s name. 

Unlike other business structure i.e., LLC, partnership, and corporation the proprietor have 100% ownership and there is no concept of profit shares.

In UAE the owner must register the business under sole proprietorship to ensure proper tax compliance.

There is no concept of income tax for individuals in UAE, while business have to pay corporate tax if their earnings are above 375,000 AED. 

Who Can Start a Sole Proprietorship?

Anybody from different nationality can start a sole proprietorship in UAE while the eligibility criteria, terms & conditions vary depending on the countries. GCC nationals and emirates can completely own and operate their sole proprietorship in UAE without any restrictions. These owners have to abide by the rules and regulations set by DED and process will be carried forward without any hassle.

They can setup both professional and commercial activities and operate across freezones and mainland. On the other hand foreign nationals can establish sole proprietorship in UAE but there are a list of few industries which can’t be accessed through this business structure.

Activities like commercial trading, import/export, and goods exchange can’t be handle by single individual. Other sectors like – consultancy, IT services, marketing, and more can be owned by a single person.

When you consider the professionals like – engineers, doctors, designers, and more have the right to hold a sole proprietorship. Whereas if the same professional requires access to trade goods or carry out commercial activities must consider other structures.

The major objective of this policies is to ensure appropriate licensing & regulatory requirements are met based on the nature of the business.

Benefits of Starting a Sole Proprietorship in the UAE

This business structure has more benefits when it comes to profit sharing and ownership compared to other types of business. Here are a few of the advantages – 

• Establishing a sole proprietorship in the UAE gives you 100% ownership, especially for UAE & GCC nationals without any major restrictions. 
• This structure allows these nationalities to operate freely across freezones and mainland without involving any partners or shareholders.
• Another big advantage is the ease of business setup and operations. The registration process is quick and regulatory policies are less compared to other business structures.
• Anybody with the vision to start a business can enter into sole protership in UAE as there is no minimum capital requirement.
• The decisions making power is completely with the owner, therefore the ideas and the executions can be implemented as soon as possible without any confusions and permissions.

Additionally, the UAE provides a growing support ecosystem for businesses and solo entrepreneurs.

The government has backed with incubators, co-working spaces, startup hubs, and legal advisory services to ease and support financial to sole proprietors.

These are valuable for professionals and service-based businesses looking to establish a strong presence in the market with minimal overhead.

Key Considerations Before Starting

From the above benefits, it may sound interesting to start a sole proprietorship in UAE but is recommended to understand several important factors to consider before proceeding.

1. The major cosnideredation should be on the legal aspects of the business structure. In sole proprietorship the person is responsible for the company’s and personal liabilities. Therefore there is no legal separation between the business & owner. This means to the individual is responsible for all debts, liabilities, and legal obligations. Personal assets may be at risk if the business faces financial trouble or legal claims.
   
2. Check if the business activity you chose have the permitted, this is another key consideration. As discussed in the benefits of sole propirotership, foreign nationals are limited to professional services (e.g., consultancy, IT, design), while only UAE/GCC nationals can engage in commercial or trading activities. Also depending on the industry of your business, it is mandate to get sector-specific approvals from relevant regulatory bodies. For instance, if your busines revolves around healthcare then you need permission from the Department of Health. Follwed by there are other authorities like –  the Education Ministry, or local municipality departments.
   
3. Office space requirements is also an important aspect of business in UAE. There are options of physical office or virtual office setup for other business structure. BUT sole proprietorship doesn’t work like that, a physical office address is mandatory for a sole proprietorship, and virtual offices are not accepted for mainland licenses.
   
4. Lastly, understand the general HR and employment rules in UAE. you’ll need to register with the Ministry of Human Resources and Emiratisation (MOHRE) and ensure your trade license allows for such activities. The sole proprietors can sponsor employees visas. Understanding these administrative and legal obligations is essential to starting on the right foot.

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

Business Setup in DMCC is a structured and efficient process. Below is a step-by-step guide:

1. Choosing Business Activity and Jurisdication

Select the appropriate business activities suitable for sole in UAE approved list. Decide on the legal structure: Free Zone Establishment (FZE), Free Zone Company (FZC), Branch Office, or Subsidiary. Ensure the selected structure aligns with business goals and regulatory requirements.

2. Trade Name Reservation and Approval

Choose a unique trade name that complies with the naming guidelines. Submit the name for approval to DED authorities. Obtain trade name reservation confirmation before proceeding.

3. Documentation and Initial Approvals

Prepare required documents, including passport copies, business plans, and LSA agreements. Apply for initial approvals from industry specific authorities. Receive a provisional approval certificate to proceed with licensing.

4. Business License Application and Issuance

Apply for the relevant, Service, Industrial, or E-commerce License. Pay the necessary fees and submit supporting documents. Once approved, receive the official business license.

5. Office Space and Ejari Registration

Choose office space within freezone (flexi-desk, shared office, or dedicated office). Sign the lease agreement and register the office with Ejari (Dubai’s tenancy registration system).

Ensure compliance with office space requirements based on business activity. 

6. Bank Account Opening and Financial Setup

Obtain the necessary legal documents, including the trade license and office lease agreement.

Choose a local or international bank for corporate account opening. Submit KYC documents and complete compliance checks to activate the account.

7. Visa Processing and Employee Onboarding

Apply for investor and employee visas through any visa services. Complete medical tests, Emirates ID registration, and residency stamping. Onboard employees as per UAE labor laws and company HR policies.

8. Timeline and Duration of the Setup Process

The entire setup process typically takes 2 to 4 weeks, depending on approvals and documentation. Fast-track options are available for businesses needing quicker establishment.

Cost and Fees Involved in Setting Sole Proprietorship in the UAE?

The major cost requirement for setting up a business is the initial capital and the amount invested varies depending on the structure, the type of industries, and the licensing cost.

An entrepreneur should have at least AED 5000 to set up a business. There are other additional costs like the office space, gadgets, and other collateral costs.

Office space costs are also a significant factor, as businesses must lease a physical office. Options include flexi-desk facilities starting from AED 16,000 per year, while private offices can cost anywhere from AED 25,000 to AED 100,000 or more, depending on size and location.

License and Registration Fees

License and registration fees cannot be ignored as these play a major role in the smooth operation of the business.

It is advised to complete the procedure at the beginning so the fine amount imposed can be avoided.

The cost of obtaining a business license depends on the type of activity chosen, with fees typically ranging between AED 10,000 to AED 50,000 annually. Registration and incorporation fees add to the initial expenses, usually around AED 9,000 to AED 12,000.

Visa Processing and Employee Sponsorship

For companies hiring employees, visa processing and employee sponsorship costs must be factored in.

The cost per visa typically ranges between AED 3,500 to AED 7,000, including medical tests, Emirates ID, and residency permits. Additional costs may apply for dependents or multiple employees.

Banking & Accounting Costs

Bank account setup and financial costs include initial deposit requirements, compliance fees, and banking service charges. Many banks require a minimum balance of AED 50,000 to AED 500,000, depending on the account type and financial institution.

Compliance and Regulatory Requirements

There are a few compliance and regulatory requirements that need to be fulfilled to run the business without any glitches.

• RERA – Real estate businesses must obtain certification from the Real Estate Regulatory Agency (RERA). Ensures compliance with property laws, broker regulations, and ethical real estate practices in Dubai.
• AML (Anti-Money Laundering) Compliance – Companies must adhere to UAE’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations. This includes maintaining proper financial records, conducting due diligence, and reporting suspicious transactions.
• LSA Agreement – The Local Service Agreement is made between the foreign nationals and the government when registering for a sole proprietorship in UAE. This bridges the owner and the government authorities. This help in managing administrative tasks like license applications, renewals, and obtaining approvals.
• Legal Obligations and Annual Reporting – Businesses must comply with UAE legal frameworks, including corporate governance and tax requirements. Annual audits and financial reports must be submitted to maintain transparency and regulatory compliance.
• Renewals and Ongoing Compliance Requirements – Business licenses, visas, and office leases must be renewed annually to ensure legal operation. Companies must stay updated on changing regulations, filing deadlines, and corporate governance updates.

Common Mistakes to Avoid

Starting a sole proprietorship in the UAE is relatively straightforward, but certain missteps can lead to costly delays or legal issues.

• Conduct a proper ground research before setting up business as a sole proprietorship in UAE. Go through the rules and regulations and choose the industry accordingly.
• The sole proprietorship is resonasble for all the liabilities i.e., company’s and the personal asset, so if any debts or financial obligations the owner is sole responsible. Better plan your finances properly.
• Stay compliant and complete the process on time to avoid penalties, also have the LSA ready to ensure smooth process of business setup.

Conclusion

If you have reached so far congratulations! By now you would nave understood what it take to start a sole proprietorship in UAE. The mission in possible if you algin the business and the authoritative guidelines together.

Plan you finance properly such that the company doesn’t face any downfall due to this. Sole proprietorship is exciting to start as you own 100% profits and the decision making power is the owner but some situations can pull you down.

Once the business is well establish the owner can sponsor employment visa, arrange for a physical office space which is mandate if you’re running business in mainland.

We at Arnifi simplify the business setup by guiding you through the registration, licensing and tax compliance process. How about leaving the stress of get visa processed and HR compliance with us? This is beneficial to your business growth and innovation while we handle the setting process.