One of the ways through which a businessperson can open a company in Bahrain is by setting up a sole trader. Also known as a sole proprietorship, this entity can be created by natural persons who plan to operate in their own name.
Below, our local specialists explain the procedures related to opening a sole trader in Bahrain. We can offer support through the entire registration process.
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How to register as a sole proprietor in Bahrain
The procedures for setting up a Bahraini sole trader are simple, as this business form requires the following documents:
- trading name reservation form;
- application form where the personal information and qualification/professional data must be filled out;
- Articles of Association;
- clean criminal record;
- proof of the business address;
- information about the activities to undertake.
The documents will be filed with the Ministry of Industry Commerce, and Tourism.
Our Bahraini company formation agents can assist with the drafting of the necessary documents for your sole trader. If you want to open a company in another country, such as Qatar, we can help you get in touch with our local partners. The time frame for incorporation in this country is 3 weeks.
Who can open a sole trader in Bahrain?
There are several conditions to meet in order to be allowed to operate a sole proprietorship in Bahrain, namely:
- the founder must be at least 18 years old;
- the person must hold Bahraini citizenship or must be a citizen of one of the Gulf Cooperation Council countries;
- a foreigner can also set up a sole proprietorship based on a Bahraini residence permit;
- the applicant must have full mental capacity;
- the sole trader must not have been convicted of any criminal activity.
Please note that for operating a small business, such as a sole trader, the Bahraini Ministry of Industry issues virtual commercial registration certificates. Feel free to discuss the option of filing for such a license with our company registration consultants in Bahrain.
Types of sole traders in Bahrain
A great advantage of setting up such a structure in Bahrain, is that you can choose between its several types:
- a professional sole trader if you are a freelancer, designer, engineer, doctor, dentist, etc.;
- a commercial sole proprietorship if you want to sell goods internally or externally (including through an e-commerce platform);
- an industrial sole trader if you want to engage in a manufacturing or production activity.
The choice will also matter when you file for the necessary business licenses available in Bahrain. Please note that this permit is different from the commercial registration mentioned above.
Taxation of a sole proprietorship in Bahrain
When you open a business in Bahrain as a foreigner, the main benefit you will enjoy is that you will not have to pay personal or corporate income taxes. However, you must consider:
- the payment of the value added tax at a rate of 10%;
- social insurance of 7% if you are a Bahraini national;
- 3% as social insurance if you are a foreign citizen.
With respect to VAT payments, the minimum registration threshold is at BD 37,500 (around USD 100,000). Our accountants in Bahraincan offer more information on the financial requirements to respect as a sole trader.
Advantages of sole proprietorships in Bahrain
Establishing a sole trader in in this country has several benefits, among which:
- the simple registration requirements;
- the quick incorporation process (around 5 working days);
- access to all the profits generated by the business;
- the basic financial compliance requirements.
As a downside, please note that you will be liable with your personal belongings.
If you decide to open a sole trader in Bahrain, do not hesitate to contact us.