In recent years, Saudi Arabia has become one of the most attractive environments for investors in the Middle East, thanks to the ambitious economic transformations driven by Vision 2030. Registering a company in Saudi Arabia is no longer just a routine procedure; it has become a strategic step to enter a rapidly growing market filled with unprecedented opportunities.
From startups to global entities, everyone is eager to leverage the advanced infrastructure, government incentives, and streamlined processes for both local and foreign investors. In this article, we will explain the step by step process of setting up your company in the Kingdom, highlighting everything you need to start confidently.
Types of Legal Entities in Saudi Arabia
When thinking about registering a company in Saudi Arabia, it's important to understand the different types of legal entities available. Each one offers unique opportunities tailored to your business needs and ambitions, so choosing the right one based on your project’s nature is crucial
1.Limited Liability Company (LLC)
A Limited Liability Company is the ideal choice when you’re looking to start your own business with a small number of partners. In this type of company, liability is limited to the capital, which means you won't be personally responsible for the company's debts. It allows you to expand into various fields, from trade to providing services.
2. Joint Stock Company (JSC)
A Joint Stock Company is perfect for attracting other investors or splitting capital into shares. Through this model, you can work in large and diverse sectors like industries and trade. It requires the establishment of a board of directors to manage the operations.
3. Branch of a Foreign Company
If you already have a company abroad and want to expand into Saudi Arabia, you can open a branch in the Kingdom. This branch will be an extension of the parent company and can conduct activities related to the same field of the parent company abroad, offering great opportunities in the local market.
4. Representative Office
You can establish a presence in the Saudi market without engaging in direct business activities, a representative office through this office. It can gather market information, promote products, and organize promotional events, helping you strengthen your market presence without getting involved in complex business operations.
Requirements for Registering a Company in Saudi Arabia
Registering a company in Saudi Arabia is an important step for anyone looking to start a business in the Kingdom, especially with Vision 2030, here’s the essential legal steps and requirements to establish your company:
1. Reserving the Company Name
The first step in setting up your business is reserving the company name. The process is simple, but it’s important to make sure that the name you choose is unique and hasn’t been used by another company.
You can reserve the name via the "Meras" platform, which is managed by the Ministry of Commerce. Make sure that:
- The name is unique and unused.
- This name reflects the nature of your business, such as including the word "Company" or "Services" based on your business type.
- You submit the reservation request through the "Meras" platform.
2. Obtaining Preliminary Approvals
Once the company name is reserved, the next step is to obtain preliminary approvals. Depending on the type of business, various government authorities may require approval, such as the Ministry of Commerce or the Saudi Arabian General Investment Authority.
These approvals are a vital step before moving on to complete the other procedures. You should prepare the following Documents:
- Copy of the founders' IDs.
- Business plan for the activity.
- Preliminary draft of the articles of association.
3. Drafting and Notarizing the Articles of Incorporation
After receiving the preliminary approvals, the next step is to draft the articles of incorporation. This document includes essential information such as the company name, capital, and the business activities you will be conducting. Once drafted, it must be:
- Notarized at the notary office.
- Submit the notarized contract to the relevant authorities.
4. Opening a Bank Account and Depositing Capital
Before you can apply for a commercial registration, you must open a bank account in the company’s name with an accredited local bank and deposit the required capital.
This step is crucial as it confirms the existence of the agreed-upon capital and is necessary for obtaining your commercial registration. These are the required Documents:
- Articles of incorporation.
- ID copies of the founders.
- Capital deposit receipt from the bank.
5. Obtaining the Commercial Registration
The next step is to obtain your commercial registration, which is the official document that allows you to conduct business in the Kingdom. You can apply through the "Meras" platform, which makes the submission of documents and application process easy. The responsible Authority is The Ministry of Commerce after verifying that all requirements have been met.
6. Registering with the Chamber of Commerce
After obtaining the commercial registration, you must register with the Chamber of Commerce. This registration is important because it provides numerous benefits, such as participating in business events and networking with other companies.
You need to register with the Chamber of Commerce in the region where your business is based to take advantage of the support and services it offers, And this can be done by:
- Submitting your commercial registration and articles of incorporation.
- Paying the required registration fees.
The Best Saudi Companies for Registration
If you're thinking about registering a company in Saudi Arabia or expanding your business in the Kingdom, Motaded is the perfect partner you can rely on. Motaded offers a complete range of services that make every step of the establishment process easier for you, from reserving your business name to obtaining the necessary licenses.
With their deep expertise and professional team, Motaded ensures that you smoothly navigate all procedures without complications. Motaded is not only a leader in simplifying the registration process but also provides specialized consultancy to ensure your success and avoid any legal or financial issues.
Required Licenses and Permits in Saudi Arabia
In Saudi Arabia, obtaining the necessary licenses and permits is a crucial step to starting any business. The type of business you’re running will determine the licenses you need.
There are specific procedures for obtaining each type of license, and understanding these requirements is essential for a smooth startup process.Registering a company in Saudi Arabia involves making sure you secure the proper licenses based on your business type.
General Commercial Licenses
General commercial licenses are the first step for anyone looking to start a business in Saudi Arabia. This includes activities like retail shops or service based businesses that cater to the public.
To get this license, you need to apply through the Ministry of Commerce via the "Meras" platform. Once you get your commercial license, you can start your business. This is the basic license required for most businesses in the Kingdom and is one of the easiest to obtain.
Industrial Licenses
You will need an industrial license if your business involves manufacturing products. This allows you to operate in the manufacturing sector, such as setting up factories for food products, medicines, or other goods.
You can obtain an industrial license by applying to the Saudi Authority for Industrial Cities and Technology Zones (MODON).
This process also requires submitting a business feasibility study and details about the factory’s location and required equipment.
Professional Licenses
Professional licenses are required for individuals who want to practice specific professions that require special qualifications, such as law, engineering, medicine, or consulting.
To begin a career in any of these professions, you need to obtain a professional license from the relevant authority. For example, if you're a doctor, you need to get a license from the Saudi Commission for Health Specialties.
These licenses usually involve passing professional exams or undergoing specific training to ensure you're qualified to practice the profession safely and legally.
Tourism Licenses
For businesses in the tourism sector, such as hotels, travel agencies, or tour operators, a special tourism license is required from the Saudi Tourism Authority.
Getting this license involves inspecting the tourism facilities according to national standards for hospitality and tourism services. It also requires reviewing the activities offered by the business to ensure they comply with Saudi tourism laws and regulations.
Environmental Licenses
Any business that may impact the environment, like heavy industries or energy companies, will need an environmental license to ensure they comply with environmental standards.
These licenses are issued by the General Authority of Meteorology and Environmental Protection. The process includes submitting plans to minimize pollution and protect the environment during production or service delivery.
E-commerce Licenses
If your business is primarily online, such as running an e-commerce store or offering online services, you’ll need an E-commerce License from the Ministry of Commerce.
The e-commerce license allows you to legally sell products or provide services online. It’s essential for businesses that operate entirely or partially on the internet.
Other Industry-Specific Licenses
Some business activities require additional specific licenses, such as:
- Educational activities require licenses from the Ministry of Education.
- Transportation businesses need licenses from the General Authority of Transport.
- Health-related businesses need approval from the Ministry of Health.
Read more about Types of Business Licenses in Saudi Arabia.
Tax and Financial Considerations for New Businesses in Saudi Arabia
When starting a business in Saudi Arabia, it's essential to understand the key tax obligations: Value Added Tax (VAT) and Zakat, along with a few other potential taxes.
1. VAT Registration
If your company’s annual revenue exceeds 375,000 SAR, you must register for VAT. Companies earning between 187,500 SAR and 375,000 SAR have the option to register voluntarily. Registration is carried out online through the Zakat, Tax, and Customs Authority. The VAT rate is 15% on most goods and services.
2. Zakat and Other Taxes
Zakat is a mandatory Islamic tax, typically 2.5% of zakatable assets, calculated based on annual profits. It must be paid annually. In addition to VAT and Zakat, foreign companies or branches of foreign companies may be subject to income tax, ranging from 20% to 25% on their profits. Local companies are generally exempt from income tax.
Conclusion: Next Steps to Start Your Business in Saudi Arabia
Once you complete all the necessary steps for registering a company in Saudi Arabia, such as choosing the right business activity and legal structure, reserving your company name, and obtaining the required initial approvals, you’ll be well on your way to getting started. Next, you'll finalize the incorporation contract, open a bank account, and obtain your commercial registration. Then, you'll register with the Chamber of Commerce based on your business activity and, finally, acquire the necessary licenses.
With these essential steps in place, you'll be ready to launch your business with full confidence. Registering a company in Saudi Arabia through Motaded expert guidance presents a fantastic opportunity in the local market.that ensure a smooth process and long term success in the Kingdom
FQAs about registering a company in Saudi Arabia.
How much does it cost to register a company in Saudi Arabia?
Registering a company in Saudi Arabia comes with an initial fee of 1,825 SAR, and there’s a renewal fee of 1,200 SAR. In addition, you’ll need a municipal license, which depends on the size and location of your business. This license is essential to start any commercial activity.
Can a foreigner register a company in Saudi Arabia?
Yes, foreigners can register a business in Saudi Arabia, with most cases allowing expats to be the sole owners. Only a few sectors require a local partner.
How long does it take to register a company in Saudi Arabia?
It typically takes 6-8 weeks to register a company, including steps like obtaining the MISA license, registering with the Ministry of Commerce, and setting up a bank account.
What is the cheapest way to register a company?
Costs vary by location, with DBA registration being the cheapest option. LLCs and corporations cost more due to extra filing requirements and liability protections.