Dubai is one of the most popular destinations for entrepreneurs who want to start or expand their businesses. The city offers a strategic location, a diverse economy, a business-friendly environment, and a tax-free regime that make it an ideal place for doing business.
But how do you business set up in Dubai? What are the steps involved? What are the benefits and challenges of doing so?
In this article, we will guide you through the process of setting up a business in Dubai in 2023. We will cover the following steps:
• Choose a business activity and legal structure
• Choose a company name and obtain approval
• Apply for a trade license and register your company
• Find a local sponsor or agent (if required)
• Get external approvals (if required)
• Open a bank account and deposit capital
• Hire employees and obtain visas
By following these steps, you will be able to set up your business in Dubai in no time. Let’s get started!
Choose a business activity and legal structure
The first step in Company formation in Dubai is to decide what type of business you want to start and what legal structure you want to adopt.
There are three main types of business activities in Dubai:
• Commercial:
This involves trading activities or the buying and selling of goods. Examples include import & export, sales, logistics, travel & tourism, general stores, and real estate.
• Professional:
This involves providing services or consultancy based on professional skills or qualifications. Examples include accounting, legal, medical, engineering, education, media, and IT.
• Industrial:
This involves manufacturing or processing of goods or materials. Examples include food production, textile production, metal fabrication, chemical production, and construction.
Depending on your business activity, you will need to obtain a specific trade license from the relevant authority.
There are also three main types of legal structures in Dubai:
• Sole proprietorship:
This is where you own and run the business by yourself. You have full control over the business decisions and profits, but you also bear all the risks and liabilities.
• Partnership:
This is where you share the ownership and management of the business with one or more partners. You have joint control over the business decisions and profits, but you also share the risks and liabilities.
• Limited liability company (LLC):
This is where you form a separate legal entity that owns and runs the business. You have limited liability for the debts and obligations of the company, but you also have limited control over the company decisions.
Depending on your legal structure, you will need to comply with different rules and regulations regarding capital requirements, ownership restrictions, management structure, etc.
You can also choose to set up your business in one of the following zones:
• Mainland: This is where you can operate anywhere within the UAE market. You can enjoy unlimited visas, greater flexibility, and more commercial activities. However, you will need to have a local sponsor or agent who owns at least 51% of the company (unless you qualify for 100% foreign ownership under the new law).
• Free zone: This is where you can operate within a designated area that offers special incentives and benefits. You can enjoy 100% foreign ownership, 0% corporate and personal tax, and simplified procedures. However, you will have limited visas, restricted activities, and no direct trade with the local market.
• Offshore: This is where you can operate outside the UAE market. You can enjoy 100% foreign ownership, 0% corporate and personal tax, and no minimum capital requirement. However, you will have no visas, no physical presence, and no trade within the UAE.
You should choose a business activity, legal structure, and zone that best suit your needs and goals.
Choose a company name and obtain approval
The next step in setting up a business in Dubai is to choose a unique and relevant name for your company and obtain approval from the relevant authority.
Your company name should reflect your business activity, legal structure, and zone. It should also comply with the local naming conventions and avoid any offensive or prohibited words or phrases.
You can use tools like Google, Trademarkia, or Namechk to check the availability and suitability of your company name.
Once you have chosen your company name, you need to submit an application to the Department of Economic Development (DED) for mainland companies or the respective free zone authority for free zone companies.
You will need to pay a fee and provide some basic information about your company, such as your business activity, legal structure, shareholders, etc.
You will receive an approval or rejection within a few days. If approved, you will receive a trade name reservation certificate that is valid for six months.
Apply for a trade license and register your company
The third step in setting up a business in Dubai is to apply for a trade license and register your company with the relevant authority.
Your trade license is the official document that allows you to conduct your business activity in Dubai. It specifies the type, scope, and location of your business.
To apply for a trade license, you need to submit an application to the DED for mainland companies or the respective free zone authority for free zone companies.
You will need to pay a fee and provide some documents, such as your trade name reservation certificate, passport copies of shareholders and managers, proof of capital deposit, memorandum of association (MoA), etc.
You will receive an approval or rejection within a few weeks. If approved, you will receive a trade license that is valid for one year.
Your company registration is the process of creating a legal entity that owns and runs your business. It involves registering your company details with the relevant authority and obtaining a commercial registration certificate.
To register your company, you need to submit an application to the DED for mainland companies or the respective free zone authority for free zone companies.
You will need to pay a fee and provide some documents, such as your trade license, memorandum of association (MoA), share certificates,
etc.
You will receive an approval or rejection within a few days. If approved, you will receive a commercial registration certificate that is valid for one year.
Find a local sponsor or agent (if required)
The fourth step in setting up a business in Dubai is to find a local sponsor or agent if you are setting up a mainland company that requires one.
A local sponsor or agent is a UAE national who acts as your representative in dealing with the government authorities and local market. They can either own at least 51% of your company (sponsor) or act as a service provider (agent).
Depending on your business activity and legal structure,
you may need to have a local sponsor or agent who can help you with:
• Obtaining external approvals from ministries or departments
• Obtaining visas and labor cards for employees
• Opening bank accounts
• Renting office space
• Importing goods
• Paying taxes
• Resolving disputes
Get external approvals (if required)
The fifth step in setting up a business in Dubai is to get external approvals from ministries or departments if your business activity requires them.
Some business activities are subject to additional regulations or restrictions by certain authorities.
For example,
If you want to start a healthcare business,
you need to get approval from the Dubai Health Authority (DHA).
If you want to start an education business,
you need to get approval from the Knowledge and Human Development Authority (KHDA).
If you want to start a media business, you need to get approval from the National Media Council (NMC).
To get external approvals, you need to submit an application to the relevant authority and provide some documents, such as your trade license, passport copies, certificates, etc.
You will need to pay a fee and wait for an approval or rejection. If approved, you will receive a permit or certificate that is valid for a certain period.
Open a bank account and deposit capital
The sixth step in setting up a business in Dubai is to open a bank account and deposit capital for your company.
A bank account is essential for managing your company’s finances, such as paying salaries, taxes, bills, suppliers, etc.
To open a bank account, you need to choose a bank that offers the best services and rates for your company. You can use tools like Souqalmal, BankBazaar, or Yallacompare to compare different banks and their products.
You will need to submit an application to the bank and provide some documents, such as your trade license, commercial registration certificate, passport copies, etc.
You will also need to deposit a minimum amount of capital in your bank account as per your legal structure and zone. For example,
• you are setting up a mainland LLC, you need to deposit AED 300,000 in your bank account.
• you’re setting up a free zone LLC, you need to deposit AED 50,000 in your bank account.
• If you are setting up an offshore company, you have no minimum capital requirement.
You will receive an approval or rejection within a few days. If approved, you will receive a bank account number and access details.
Also read – Best Business Ideas Doesn’t Have To Be Hard. Read These 8 Tips
Hire employees and obtain visas
The final step in setting up a business in Dubai is to hire employees and obtain visas for them.
Employees are the backbone of your business. They can help you with various tasks, such as sales, marketing, accounting, customer service, etc.
To hire employees, you need to follow the labor laws and regulations of the UAE. You can use tools like Indeed, Bayt, or Naukrigulf to find and recruit qualified candidates.
You will also need to obtain visas and labor cards for your employees. A visa is a document that allows your employees to enter and stay in the UAE. A labor card is a document that allows your employees to work legally in the UAE.
To obtain visas and labor cards for your employees, you need to submit an application to the Ministry of Human Resources and Emiratisation (MOHRE) for mainland companies or the respective free zone authority for free zone companies.
You will need to pay a fee and provide some documents, such as your trade license, commercial registration certificate, passport copies, employment contract, etc.
You will receive an approval or rejection within a few weeks. If approved, you will receive a visa and labor card for each employee that is valid for two years.