When a person decides to start establishing a sole proprietorship, he must perform many legal steps and procedures, and among the basic steps that must be followed is consulting a lawyer specialized in legal matters related to business. Diwan office It is the ideal entity to seek help in this case, because it provides you with several important information about the individual establishment, and the lawyers also have the experience and knowledge necessary to help you establish the establishment in a legal and organized manner, in a way that does not conflict with local laws and legislation.
Information of interest to you about the sole proprietorship
A sole proprietorship in Egypt is considered a type of small company that is established and managed by only one person, who is solely responsible for it legally and financially. It is one of the common forms of business in Egypt due to the ease of establishment and management and the lack of financial requirements. We will explain the steps for establishing it as follows:
Choosing a trade name: An appropriate, non-duplicate trade name must be chosen, and it must also be ensured that the name is not used by another establishment.
Obtaining a tax card: You must submit an application to obtain a tax card from the Tax Authority.
Registration in the Commercial Registry An application for registration must be submitted in the Commercial Registry, as registration requires the submission of some documents such as a copy of the ID card, a copy of the ownership or lease contract, and security approval if the establishment operates in specific fields.
Opening a bank account A bank account must be opened in the name of the establishment to pay taxes and other financial dues.
Obtaining the necessary licenses The type of licenses required depends on the type of work you intend to do, knowing that you may need to apply for special licenses from the relevant bodies such as the Ministry of Health, if the work includes medical products, or the Ministry of Industry if the work includes specific production or manufacturing.
See also: Advantages and disadvantages of a sole proprietorship
Information of interest to you about the sole proprietorship
What are the most important features of a sole proprietorship?
It is not possible to provide information of interest to you about the sole proprietorship without mentioning the most important advantages of that type of company, which are as follows:
- Ease of establishment: An individual can establish a sole proprietorship easily and at low costs compared to hiring workers or establishing a joint-stock company.
- Flexibility: The owner of a sole proprietorship can make decisions quickly without the need for the approval of other partners, and this increases his ability to adapt to changes in the market.
- Confidentiality: A sole proprietorship enjoys a high level of confidentiality regarding business operations and profits, as its owner is not required to disclose financial details to other partners or shareholders.
- Complete control: The owner of a sole proprietorship can completely manage the company according to his own vision and goals, without interference from other partners.
- Retention of profits: The owner of a sole proprietorship is able to retain all of the company’s profits without having to share them with other partners.
- Ease of management: Due to the small size of the company, it is easier and easier to manage a sole proprietorship compared to companies with large structures.
Information of interest to you about the sole proprietorship
What are the most important disadvantages of a sole proprietorship?
We continue clarifying information of interest to you about the sole proprietorship by clarifying the defects, as this type of establishment is not devoid of defects that we will mention below:
Unlimited Liability: In a sole proprietorship, the owner bears all financial and legal responsibilities. Any debts or financial obligations incurred by the owner can affect his personal finances.
Difficulty attracting investments: It can be difficult for a sole proprietorship to attract investors or obtain loans from banks, as they see investing in a sole proprietorship as too risky.
Limited growth and expansion: A sole proprietorship may face difficulty in expanding due to its heavy reliance on the owner's capital and personal experience.
Short economic life: The structure of a sole proprietorship is mainly related to the life of the owner, and if the owner dies or decides to stop operating, the enterprise may cease to operate or be transferred to another person under inheritance law.
High dependence on the owner: Daily operations and important decisions depend on one individual, which can lead to energy drain and owner burnout.
Lack of flexibility in management: With a single owner, decision-making can be slow or incomplete, which can lead to missed opportunities or making ill-informed decisions.
Difficulty in obtaining diverse skills: In large establishments, a variety of individuals with different skills are employed, but in a single establishment, skills are limited by the capabilities of the owner or available workers.
Capital: Growth and financial sustainability may be limited due to the lack of partners to inject additional capital.
Read also: Procedures for establishing a sole proprietorship
Services provided by Diwan’s office in establishing a sole proprietorship
When establishing a sole proprietorship, individuals face many legal and administrative procedures that may be complex and take time and effort. Therefore, many people resort to using law firms to provide them with the following services:
- Legal Consultations The lawyer provides initial advice on the appropriate legal structure for a sole proprietorship, including advice on legal and tax obligations.
- Preparing and drafting documents: A lawyer can prepare all documents necessary to establish the facility, such as articles of incorporation and articles of association, and ensure that all documents adhere to legal and regulatory requirements.
- Registration and licenses: Assistance in registering the establishment with the competent authorities, and obtaining the necessary licenses to practice commercial activities, where the lawyer can submit applications and follow up with government agencies until the procedures are completed.
- Negotiating and signing agreements Negotiating lease contracts, suppliers, and customers, ensuring that the client’s interests are protected and that contracts are drafted fairly.
- Compliance and Legal Follow-up Monitor compliance with applicable laws and regulations, including commercial, tax and labor laws, and provide necessary advice to avoid penalties.
- Resolving disputes Providing legal support in the event of legal or commercial disputes, whether with customers, suppliers, or government agencies, and working to resolve disputes as quickly as possible.
- Tax consultations help in understanding and applying tax regulations, and provide advice on tax matters to avoid future tax violations and problems.
- Expansion and Development Providing advice on expansion and development procedures, including merging new business activities, expanding the scope of activities, and entering into business partnerships.
The difference between a one-person company and a sole proprietorship
The last thing we mention in our conversation about some information of interest to you about the sole proprietorship is the difference between that type of company and a one-person company, which is as follows:
First: One person company
A one-person company is considered one of the legal forms that one person can establish and manage, and it is fully owned by one individual, but the one-person company is considered a separate legal entity from its owner.
The owner of the company has limited financial liability for debts and losses that the company may incur. A one person company must be registered in accordance with local laws and tax facilities to operate business activities.
Second: the sole proprietorship
A sole proprietorship is a business structure that is independent and viable but is not legally owned, and a sole proprietorship is not considered a separate legal entity from its owner.
The owner of a sole proprietorship bears full responsibility for the debts and losses incurred by the business, and this means that all of the assets of the business owner can be used to offset debts.
Establishing a sole proprietorship does not require registration in the same form as a one-person company.
We have provided several information of interest to you about the sole proprietorship, and it is worth noting that when you seek help from a specialized lawyer’s office with legal experience, he will provide you with the necessary advice to ensure the proper and smooth implementation of the procedures, help you prepare the necessary contracts and legal documents, and provide the necessary support during the establishment process.
