Company vs. Establishment: Key Differences and How to Start a Company in Saudi Arabia

Are you dreaming of launching your own business but feeling overwhelmed? Not sure whether to start an Establishment or a Company?

Don’t worry — we’re here to help you choose the best legal structure for your business. In this article, we'll explain the key differences between a company and an establishment, and guide you through the steps to register a company in Saudi Arabia.

What is an Establishment?

An Establishment (or Sole Proprietorship) is an economic entity owned and managed by a single individual. It is not legally separate from its owner, and the owner is personally responsible for all business obligations.

What is a Company?

A Company is a legal entity formed to provide goods or services. Unlike establishments, companies can have multiple shareholders and are usually created with the goal of generating profit while limiting personal liability.

Key Differences Between a Company and an Establishment

Steps to Set Up an Establishment in Saudi Arabia:

1. Obtain a commercial registration certificate.
   
   

2. Submit a valid ID or passport for identification.
   
   

3. Sign all required registration forms and select the business sector.
   
   

4. Provide a lease contract or proof of ownership for the business location.
   
   

Steps to Register a Company in Saudi Arabia:

1. Define the Business Activity
   Choose the commercial sector that matches your business goals.
   
   

2. Choose the Company Type
   Selecting the right type (e.g., LLC, joint stock) ensures legal alignment with your business.
   
   

3. Pick a Unique Name
   Your company name should be memorable and relevant to your industry.
   
   

4. Submit Required Documents
   
   

• Valid IDs or passports of all partners
  
  

• Completed registration application
  
  

• Pay the required registration fees
  
  

5. Set a Business Location
   Your location should be strategic and accessible to your target audience.
   
   

Goals of Each Legal Form:

• Establishment:
  
  

• Achieve sustainable profits
  
  

• Provide fair wages to employees
  
  

• Company:
  
  

• Expand market presence
  
  

• Track sales, supply, and demand for profit measurement
  
  

Which One Should You Choose?

Choosing between a company and an establishment depends on your business model, size, and growth plans. Still confused?

Let our experts at Sidrahub guide you through the decision-making and setup process. We have extensive experience helping entrepreneurs establish their companies in Saudi Arabia.

Get your free consultation now on WhatsApp