Unlock Your Dubai Venture: Setting Up a Sole Proprietorship in 2025
May 8, 2025
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Thinking about launching your professional venture in Dubai? You're not alone. The city buzzes with opportunity for skilled individuals and freelancers 
[5]
[13]
[32]. One popular and accessible route is setting up a Sole Proprietorship, also known as a Sole Establishment 
[3]
[4]
[6]. It's a common choice, especially for those offering professional services [5][32]. This guide provides a comprehensive look at the 2025 landscape for setting up your Dubai Sole Proprietorship, based entirely on official structures and regulations 
[15].
What is a Dubai Sole Proprietorship (Sole Establishment)?
So, what exactly is this structure? A Sole Proprietorship (or Sole Establishment) is a business owned and run by just one person [3][4][6]. The trade license itself is issued directly in the owner's personal name [3][4][6]. Here's the crucial part: legally, the business and the owner are considered one and the same 
[7]
[27]. There's no separation [7]. This direct link means the owner is personally on the hook for all business debts and obligations 
[2][3][4][6]
[1][5][7][13][15][27]
[33]. Think about that – your personal assets could be at risk if the business runs into financial trouble [4][5][6][7]
[8]
[11]
[12][15]
[16]
[18]
[21]
[23]
[25]
[41]
[37]. It's different from a Freelance Permit, which is often more like a work permit for an individual rather than a fully licensed business entity [4]
[35]
[39].
Who Can Set Up a Sole Proprietorship in Dubai?
Eligibility depends on your nationality and the type of business you plan to run [2][4][8]. UAE nationals and citizens from other GCC countries have broader options; they can set up Sole Proprietorships for commercial, industrial, tourism, or professional activities [2][4][8]. For foreign nationals (expatriates), the rules are generally tighter [2][4][8][25]
[31]. You're typically limited to establishing a Sole Proprietorship for professional services only [2][4][8][25][31]. This covers fields like consulting, IT, legal advice, medical services, engineering, accounting, and similar service-based professions [5][8]
[17][31]. Commercial trading or industrial activities usually aren't permitted under this structure for expats on the mainland [8]
[9][31]. The good news? Qualified foreign investors setting up for professional services can enjoy 100% ownership [2][3][18][31].
Understanding the Local Service Agent (LSA) Requirement
If you're a foreign national setting up a Sole Proprietorship for professional services on the Dubai mainland, you'll likely need a Local Service Agent, or LSA [2][3][4][8][12][25][6]
[22][33]. Who can be an LSA? It must be a UAE national individual or a company that's 100% owned by UAE nationals [3][8]. Now, don't worry – the LSA's role is purely administrative [2][8][16]. They act as your liaison with government departments for things like license renewals and visa processing [2][8][16]. Critically, the LSA has absolutely no ownership stake, equity, or say in how you run your business [16][25]. This relationship is formalized through a Local Service Agent Agreement, which needs to be properly notarized and registered with the Department of Economy and Tourism (DET) [8][25]
[30]. Always double-check the specific requirements for your activity, as some rules might evolve 
[26].
Advantages of Choosing a Sole Proprietorship
Why do people choose this route? There are some compelling reasons [5][6][12][22]. Setup is generally simpler and faster compared to forming a company like an LLC [4][5][6][12][22]. You get complete control – 100% ownership means all decisions and profits are yours alone [2][4][6][11][16][26][1][5][7][15]. Initial costs tend to be lower too, partly because there's no mandatory share capital needed [2][3][4][6][11][26][1][6][7][33]. Estimates vary, but basic license costs might start around AED 7,000-9,000, with overall setup potentially ranging from AED 18,500 to AED 40,000 depending on specifics [2][16][18][37]. You also have flexibility in choosing your office location anywhere on the mainland, though a registered address is essential [4]
[10][18][26]. Ongoing compliance can also be less complex than for an LLC [6]. It's a structure particularly well-suited for consultants, creatives, and other professionals starting out [5]
[24].
Disadvantages and Key Risks to Consider
Okay, let's talk about the flip side, and it's a big one: UNLIMITED PERSONAL LIABILITY [2][3][4][6][11][1][5][7][13][15][27][33]. We mentioned it before, but it bears repeating. Because the business isn't legally separate from you, your personal assets – savings, car, even your home – could be used to cover business debts or lawsuit settlements [4][5][6][7][8][11][12][15][16][18][21][23][25][41][37]. A lawsuit against the business is essentially a lawsuit against you personally [6]. For foreigners, remember the restriction to professional services on the mainland [5][8][9][25][31]. Raising funds can also be tougher; you can't sell shares, and banks might be warier compared to lending to an LLC [11][18][22][1][6][33]. Some larger clients might also view a Sole Proprietorship as less established [13]. Plus, the business is tied directly to you – it dissolves if you pass away or face bankruptcy, and selling it can be complicated [6][10][23]. There might also be some limitations on visas or owning assets compared to an LLC, although visas are definitely possible [5][10][17][21][24].
Step-by-Step: How to Register Your Sole Proprietorship in Dubai (2025)
•
•
Step 7: Submit Documentation: Gather all your paperwork for DET [9][25][30][37]. Key documents usually include the application form, passport/visa/EID copies, name/initial approval certificates, LSA documents (if needed), Ejari, and possibly attested qualifications [2][4][6][9][12][25][31]. Remember, foreign documents often need attestation and translation [31][39].
After You Get Your License: Essential Next Steps
Getting the license is a major milestone, but not the final step. You'll need to apply for an Establishment Card via the immigration authorities [9]. Then, process your own residency visa and visas for any employees you plan to hire [9][4][13]
[20]. Opening a corporate bank account is also essential 
[36][37]. And don't forget about taxes [6][8][24][17]. You must register for Value Added Tax (VAT) with the Federal Tax Authority (FTA) if your annual turnover exceeds AED 375,000 [8][13][31]
[42]. For Corporate Tax (CT), registration is mandatory if your annual turnover from business activities crosses AED 1 Million in a calendar year [3]
[14][16][18][23][25]
[29][31][17]. The CT rate is 0% on taxable income up to AED 375,000 and 9% above that [6][13][23][31]. If your revenue is AED 3 million or less, you might opt for Small Business Relief, but registration is still needed if you cross the AED 1 million turnover mark [3][16][25][17]. Importantly, for CT, you (the natural person) are the Taxable Person, not the establishment itself [3][14][18][29][17]
[40].
Managing the Risk: Liability Protection & Insurance
Let's circle back to that unlimited liability risk – it's inherent in the Sole Proprietorship structure [1][5][6][7][13][15][27][33]. How can you manage it? Professional Indemnity (PI) Insurance is highly recommended, especially if you provide advice or services [11]
[19][21][26]
[34]. PI cover protects you against claims of negligence or errors in your work, covering legal costs and potential damages [11][19][21][26]. Honestly, it's crucial peace of mind [21][34]. Consider other potential coverage too, like Public Liability insurance (for third-party injury/damage) or Cyber Liability insurance (for data breaches) [11]. Beyond insurance, use clear contracts, maintain high professional standards, and keep meticulous records 
[38][42]. And if the liability risk feels too high, especially as you grow, think about converting to a Limited Liability Company (LLC) down the line for that crucial liability shield [5][6][7][13][15][22][33].
Setting up as a Sole Proprietor in Dubai offers a straightforward path with full control, making it ideal for many professionals starting their journey [5][6][12][22][24]. However, the unlimited personal liability is a critical factor that cannot be overlooked [2][3][4][6][11][1][5][7][13][15][27][33]. Weigh the simplicity and control against the significant personal risk. Carefully consider your own circumstances, risk tolerance, and perhaps seek professional advice before making your final decision [1][22]
[28].
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