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Are You Confused Between Obtaining Sole Proprietorship or LLC? Read To Know What’s Right For You!

January 16, 2022

When it comes to starting a business in the UAE, one has more than many options. So you will have to choose what’s right for your company among all the options. And trust us when we say those are some hard choices to make. 

Startup Zone is here to help you make the right choices, we guide you through the entire process and make it easier for you. One of the major decisions includes having to choose between Dubai mainland or Freezone. 

Mainland Vs Freezone

Setting up your business in Freezone has various benefits which includes having 100% ownership of the company along with full repatriation of capital and profits. The other beneficiaries include 100% exemption from export and import tax, there also remain no currency restrictions. Having a Freezone company setup also exempts you from 100% personal and corporate tax.

The Mainland business setup has various benefits such as being a part of the local market and trading directly. Setting up a business in the mainland may seem like a complex procedure at first glance. However, it is very easy to set up your business in the mainland with the right guidance. 

Once you have decided the location, your first step is to choose between obtaining sole proprietorship or LLC

Sole Proprietorship Vs LLC

The sole proprietorship or sole establishment of a company is one of the best options for entrepreneurs willing to establish their business on their own. Setting up a start up costs generally low and usually requires a single shareholder. Moreover, the sole proprietorship obtained under a Local Service Agent(LSA) allows one to retain 100% ownership of their business. 

But when opting for a Limited Liability Company(LLC) the local sponsors take up nearly 51% of the company’s shares. Despite holding the larger stakes the local sponsors have no power in decision making and even the profits are not split with them in correspondence with the stakes. 

In comparison between the two, the difference that one faces at most is that LLCs are possible to be formed with many shareholders but the sole proprietorships are not. At the same time, the sole establishments consisting of multiple liabilities are expensive which could cause trouble to the owner when run into any legal trouble.

The right decision Vs The Wrong Decision

When it comes to setting up a business there is no right or wrong decision. One can always choose what’s right for their business based on the nature of the business activities and the location.  

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