How to Start Your Company in Saudi Arabia

Legal Structures, Key Differences & Step-by-Step Setup Guide

Planning to launch your business in Saudi Arabia?

Whether you're a local entrepreneur or a foreign investor, the first real step is registering a legal business entity.

But with different company types and legal rules, it’s natural to ask:

 "What kind of company should I choose? And how do I register it properly?"

This guide will walk you through:

Company types in Saudi Arabia

The difference between Sole Proprietorship and LLC

Legal steps to register your business

Types of Companies in Saudi Arabia

Saudi law allows several company structures depending on your needs:

1. Sole Proprietorship

• Owned by one person
  
• No legal separation between personal and business assets
• Ideal for small projects
• The owner is personally liable for all debts

2. Limited Liability Company (LLC)

• From 1 to 50 shareholders
• Legal protection of personal assets
  
• Best for growing, scalable businesses
• Requires official articles of incorporation
  

3. Joint Stock Company

• Designed for larger enterprises
• Common for companies looking to go public
  
  

4. Professional Company

• For licensed professions: lawyers, engineers, consultants
• Requires academic credentials or official license

Bottom line:

 Go for a Sole Proprietorship if you're testing the waters.

 Choose an LLC if you want structure, protection, and growth potential.

How to Register a Company in Saudi Arabia

1. Reserve a Trade Name

Through the Ministry of Commerce: mc.gov.sa

2. Choose Your Company Type and Business Activity

3. Draft & Notarize Articles of Association

• (Only for companies like LLCs)

4. Issue the Commercial Registration (CR)

• Once the contract is notarized, your business is legally recognized

5. Register with Government Entities

• Zakat & Tax Authority
  
• Social Insurance (if hiring staff)
• Ministry of HR
• Local Chamber of Commerce

6. Get Your Municipal License

• Based on your office/shop location
•  Requires a valid lease contract (Ejar platform)

7. Open a Business Bank Account

Most banks require:

• CR
• ID or Iqama
  
• Zakat certificate
• Incorporation docs

Sidrahub Tip

Choosing the right structure from the start saves you stress later.

 Think about your future plans:

Do you want investors?

Will you scale up?

Is legal separation important?

Let Sidrahub walk with you from day one — clear, legal, and fully compliant.