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Overview
Choosing the right legal structure is the first major decision every entrepreneur makes. If you’re an Indian planning to start a business in Dubai or anywhere in the UAE, you’ve probably come across two popular options: Sole Proprietorship and Limited Liability Company (LLC).
In this blog, we break down the differences, advantages, limitations, costs, licensing process, and legal implications of sole proprietorship vs LLC in UAE, so you can confidently choose the best fit for your business goals.
A sole proprietorship in UAE is a business owned and operated by one individual. This structure is ideal for professionals (consultants, trainers, freelancers) and small-scale service providers.
Key Features:
For Indian expatriates, a Local Service Agent (LSA) is required. The LSA does not hold shares or interfere in business operations.
A Limited Liability Company (LLC) is the most common business structure for medium to large-scale operations. It provides liability protection, flexibility in activities, and potential for expansion.
Feature
Sole Proprietorship
Limited Liability Company (LLC)
Ownership
100% (with LSA for expats)
100% foreign ownership allowed
Legal Identity
Same as owner
Separate legal entity
Liability
Unlimited
Limited to company capital
Business Activities
Professional only
Trading, services, contracting
Setup Cost
Lower
Higher (licenses, legal, rent)
Local Sponsor/Agent
Required for expats
Optional (depends on activity)
Visa Eligibility
1–2 employee visas
Multiple visas (based on quota)
Office Space Requirement
May be optional
Mandatory (Ejari contract)
Profit Repatriation
100% allowed
Corporate Tax
9% on profits > AED 375,000*
*As per Federal Decree-Law No. 47 of 2022 on corporate tax.
✅ Pros:
❌ Cons:
Freelancers and independent consultants
Entrepreneurs launching a scalable startup
Sole Proprietorship: No corporate tax unless turnover exceeds AED 375,000 (as per Decree-Law 47)
Expense
Sole Proprietorship (AED)
LLC (AED)
Trade License
8,000 – 12,000
12,000 – 25,000
Local Sponsor/LSA Fee
5,000 – 7,000/year
Not applicable in many cases
Office Space
Optional or virtual
Mandatory (Ejari lease)
Visa Cost (Owner/Staff)
3,500 – 5,000
3,500 – 5,000 per visa
Bank Account Setup
1,000 – 2,000
1,000 – 2,500
Note: Actual costs depend on jurisdiction, business activity, visa quota, and office location.
Still confused about sole proprietorship vs LLC in Dubai? Here’s a simple summary:
At Flyingcolour, we help Indian entrepreneurs make the right business decisions based on their needs, risk appetite, and budget.
Our Services:
We simplify business setup so you can focus on growing your vision.
1. Can I convert my sole proprietorship into an LLC later?
Yes. You can upgrade to an LLC anytime by applying through DED or Free Zone.
2. Is LLC required for product-based business?
Generally, yes. Product trading and imports require an LLC structure.
3. Can I get a UAE residence visa with sole proprietorship?
Yes, but visa quota is limited. LLCs offer better visa scalability.
4. Is LLC more expensive than sole proprietorship?
Yes, due to licensing, office space, and compliance costs. But it also offers more benefits.
5. Do I need a UAE national for a sole proprietorship?
Yes, Indian expats need a local service agent (non-shareholding).
Our Success lies in honestly and integrity which are used as motivational factors to inspire us to arrive at success as well as prosperity for the company plus our customers.
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