Dubai offers an inviting entrepreneurial landscape for those seeking to start a business in the UAE. Among many considerations for company formation in Dubai, UAE, is selecting the appropriate business structure.
They are 5 main types of business structures in Dubai, with sole proprietorship and LLC company formation emerging as two prominent choices. But which of them is the best fit for your company?
This article compares sole proprietorship and LLC company formation in Dubai to help you make an informed decision.
What is a sole proprietorship or LLC Company Formation in Dubai?
- A Sole Proprietorship is the simplest business structure in Dubai, UAE, where a single person is the sole owner, thereby responsible for all aspects of the company, such as profits, decision-making, and debts.
- On the other hand, an LLC – an acronym for Limited Liability Company – allows for up to fifty shareholders in a single company. However, an LLC company formation is the most popular type of business structure in Dubai, where shareholders share profits, decision-making, and debts. Click here to find out how to setup an LLC in Dubai.
Key Differences Between Sole Proprietorships and LLC Companies in Dubai
Some of the major differences between a sole proprietorship and an LLC company in Dubai include:
Ownership Structure:
- A Sole Proprietorship business allows for a single owner.
- An LLC company allows for Up to fifty shareholders in the company.
Liability for Debts, Decision-Making, and Profits:
- In a sole proprietorship business, the owner is liable for all profits, decision-making, and the company’s debts.
- For an LLC company, the owners enjoy limited liability protection for their assets, thereby sharing responsibilities, profits, and debts among shareholders.
Steps to Setup a sole proprietorship or LLC Company in Dubai
- Determine Your Business Activity: Defining your business activity for selecting appropriate business licenses that align with your goals.
- Choose a Business Name: Select a unique name for your company that adheres to naming guidelines set by the Dubai Department of Economy and Tourism (DET).
- Prepare a Memorandum of Association (MOA): Create an MOA detailing number of shareholders (for LLC formation).
- Submit the Application: Apply for company registration in Dubai, either in a free zone or mainland.
- Pay Fees and Obtain Initial Approval: Pay necessary license fees and get initial approval.
- Get a Trade License: Upon approval, receive your business license, legally permitting business operations in Dubai.
- Open a Bank Account: Open a business bank account in UAE for handling financial transactions.
Conclusion: Selecting the right business structure for your needs in Dubai
Determining the right type of business structure in Dubai holds significant weight as it directly influences your business’s operation and success in Dubai, UAE.
In this context, seeking the aid of proficient business setup consultants from a professional company like Corporate Business Services (CBS) in Dubai can prove invaluable.
For more details, you can book a cost-free consultation with our expert consultants, who are eager to lend their expertise to help setup your company in the UAE.