Establishing a one-person comp...

Establishing a one-person company is a bold and exciting step that combines personal ambition and financial independence.

 In entrepreneurship, a one-person company is ideal for those seeking to achieve their business dreams without needing partners.
Whether you aim to achieve an innovative idea or create a project that serves the needs of a specific market, establishing a one-person company in Saudi Arabia puts you in complete control, from making decisions to directing the strategic path.
This article will cover everything you need to know about this type of company, from the benefits and advantages to the practical steps that help you transform your idea into a successful and independent business entity.

What is meant by a one-person company in Saudi Arabia?

It is a form of limited liability company and is one of the types of money companies whose capital is owned by only one person who is responsible for managing the company according to the laws and regulations and bears the profit and loss within the scope of the company's capital and his financial liability is completely separate from his personal property, but not separating his property from the company's financial liability may make creditors demand the property of the company owner, so it is very important to differentiate between your company's financial liability and your private property.

Conditions for establishing a one-person company.

Since companies play an important role in the progress, economic growth, and development of countries, it is important to be aware of the conditions for establishing a one-person company in Saudi Arabia to establish a successful, stable company. The most important of these conditions are the following:

1_ Determine the type of company you want to establish, whether it is a fixed model or separate, and based on that, you seek the help of a specialist to set the basic terms of the incorporation contract for you.

2_ One person must submit the incorporation application and write one-person company or "S.S.W." next to the company name.

3_ The founder must be a Saudi national or from a Gulf Cooperation Council country and the manager who will be appointed as well.

3_ Prepare the required papers to establish a one-person company and then submit them to the electronic system of the Saudi Ministry of Commerce and Investment.

4_ Ensure that the contract is reviewed by the General Administration for Companies before submitting it.

5_ Obtain all the initial approvals you need for commercial activities and then pay the fees.

6_ Document your application through competent accredited authorities such as a notary public or an accredited notary.

Once you have completed these initial steps, you will have come a long way towards establishing your one-person company in Saudi Arabia.

Characteristics of a one-person company

1_ the possibility of establishing a company by only one person and acquiring its legal personality.

2_ A one-person company may be established in two ways, either by establishing it by one person or by being a limited liability company, and all the company's shares are transferred to one person.

3_ It limits the spread of fictitious companies in the market, as the previous company system required at least two partners.

4_ Managing the company and making decisions is faster as it is owned by one person who has all the powers and authority as a director, the company's board of directors, and the general assembly without the need to refer to anyone to make decisions.

5_ Continuity of business and its easy transfer.

6_ Tax flexibility and the inability to have shares.

Advantages of establishing a one-person company in Saudi Arabia

The one-person company is characterized by many advantages that make it the ideal choice for most investors in Saudi Arabia. These advantages include

1_ Ease and speed of establishing it as it takes less time compared to other types because it is owned by one person.

2_ It is characterized by ease of management and organization as only one person is responsible for all aspects of the company's decisions and monitors all aspects of management equally without negotiating or coordinating with anyone else.

3_ It provides the investor with easy opportunities to expand and achieve his ambitions and goals without the presence of any people, obstacles, or complications that may prevent him.

4_ It provides and achieves stability and security as it protects the investor from limited liability.

5_ It is very suitable for owners of emerging projects and medium and small activities.

6_ It helps prevent fictitious companies and reduce fraud operations.

7_ Ease of obtaining loans from the bank.

8_ The presence of only one owner or shareholder helped in the transferability of shares and stocks.

9_ Flexibility in dealing with taxes and paying them in a manner appropriate to the company owner.

Disadvantages of a one-person company

Despite its many advantages and the interest of pioneers and investors in it, there are some disadvantages that these companies suffer from, such as

1_ It is dealt with based on a private company, so it pays taxes of up to 30%.

2_ Government and professional fees must be paid before the registration process and the company must be registered with the Registrar of Companies.

3_ The Company’s return is signed by the company's director only.

4_ This company or its shares cannot be offered for public subscription, whether upon establishment or even in the event of a capital increase.

5_ Financial support for this company is through one person only.

6_ This company cannot trade any shares or bonds.

Procedures for establishing a one-person company in Saudi Arabia

To be able to successfully establish a one-person company in Saudi Arabia, there are some important procedures that you must follow to successfully establish your company. These procedures differ slightly from the rest of the procedures for establishing other companies and are characterized by their simplicity and speed of registration and establishment. To do this by the Saudi regulations and laws related to companies, follow the following.

1_ Choose a headquarters for your company.

2_ Choose the name of the company according to its activity according to the regulations and provisions.

3_ choose the type of contract from among the two existing types, as there is a fixed contract and a detailed contract, and then write the company contract with the necessity of seeking the help of a specialist.

4_ Submit the company's incorporation contract and the basic form to the Saudi Ministry of Commerce and Investment.

5_ After reviewing the incorporation contract, you must obtain the necessary approvals to establish your company.

6_ Attach a personal agency and copies of the national ID of the company owner.

7_ Extract the commercial register of your company.

8_ Register with the Ministry of Taxes and Zakat.

9_ Pay the fees required for these procedures.

10_ Publish the news of establishing your company.

Prohibitions for a one-person company

Despite its many advantages, there are some prohibitions, such as

1_ The owner must separate his liability and the company's capital.

2_ The owner of a one-person company cannot establish more than one company.

3_ It is prohibited for a one-person company to practice insurance business.

4_ It is prohibited to distribute any fictitious profits through this company.

5_ The manager of this company cannot manage any other similar and competing companies except with the permission of the company owner.

6_ In the event of the owner's withdrawal, he loses more than half of his company's capital.

7_ It is prohibited to practice any banking business such as receiving deposits, saving, or investing others' money.

The difference between an Individual Company and a single-person company

Despite the similarity between an Individual Company and a single-person company, there are some differences in many points between them, the most prominent of which are:

1- A single-person company has limited liability, while an Individual Company has unlimited responsibilities for the owner.

2- An individual Company is a form of personal company, while a single-person company is a form of Capital Company.

3- The financial status of an Individual Company is the same as the owner's financial status, while the capital status of a single-person company is separate from the owner's status.

4- After establishing a single-person company, it has a legal personality, while an Individual Company does not have any legal personality.

5- An individual Company has moral activities, unlike a single-person company with limited activities.

6- There is a minimum capital for a single-person company, unlike an Individual Company, which has no minimum.

The most important frequently asked questions about establishing a single-person company.

1- Can foreigners establish a single-person company?

Yes, foreigners can establish a single-person company in Saudi Arabia, according to certain conditions, and these conditions include obtaining the necessary licenses from the Saudi Ministry of Investment for foreign investment.

2- What are the tax obligations imposed on a one-person company?

A one-person company is subject to taxes and zakat according to the regulations of the Saudi system, including value-added tax and income tax on commercial activities.

3- Can a one-person company be converted into any other type of company?

Yes, this happens according to legal procedures, as a one-person company can be converted into a limited liability company or a joint-stock company.

After we learned everything related to establishing a one-person company, do not forget that Etmaam is the best person to help you establish your company.

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