How to set up a business in Dubai?

Following six steps are necessary to start your own business in Dubai:

Step 1: Decide your Business Activities

The first stage in establishing your UAE business is determining your business operations. There are hundreds of potential activities to select from, and it’s critical that you include any that you intend to do on your license application.

Failure to define all of your intended actions may result in problems later on. As a result, when making this decision, it is best to consult with a business formation specialist such as Shuraa. Our professionals are aware of allowed activities and may recommend those that are most appropriate for your company.

Step 2: Choose a Company Name

With your business operations defined, it’s time to select a name for your organization. When naming a business in the UAE, there are a few factors to consider. Here, you must follow a rigid yet simple set of naming standards. Once again, our business formation specialist can assist you with this phase.

In short, avoid using disrespectful or profane words. If you want to name your company after yourself, avoid well-known corporate names and acronyms. You must also ensure that the name you want to use is accessible for registration.

Step 3: Choose a setup – Free zone or Mainland?

Before submitting your license application, you must determine whether you want to establish your business in a free zone or on the mainland.

Both have several advantages to start your own business in Dubai. Free zones provide advantages such as a simple incorporation procedure, continuing company assistance, and financial incentives such as tax exemptions and no currency limitations.

In contrast, mainland business allows you to trade directly with the UAE market and compete for potentially lucrative government contracts.

The best arrangement for you will be determined by the type of your business. Again, our professionals in business creation may advise on the optimal way.

If the expense of establishing a business in Dubai is a major consideration in your decision-making process, don’t worry: the prices are equivalent whether you choose a free zone or a mainland setup.

Step 4: Applying for your Business License

A business license is an essential requirement when starting a business, playing a significant role in ensuring legal compliance.

The process of acquiring a business license is straightforward for both free zone and mainland enterprises. The following are the conditions for starting a business on the mainland: Apply for your license directly to the Department of Economic Development or the Municipality in the Emirate where you intend to establish your business. Typically, it takes around 3-4 working days for mainland license applications to be processed.

If you want to start your own business in UAE from a free zone, it usually takes 5-7 working days to process the License. It is a good idea to retain the services of a business formation professional at this point to guarantee a seamless procedure.

You are normally just required to give a few facts and some basic paperwork, whether you make your application yourself or through a company formation agency, such as:

• Completed application form
• Provide a scanned copy of the passport belonging to the individual or individuals intended to be the owner(s).
• Two color passport-size photos.

If you’re wondering how to establish a business in Dubai on a shoestring budget, free zones are frequently a viable alternative. Many economical license packages are available, with no paid-up share capital required, no yearly audit, and a simple incorporation process. There is also no requirement for you to be present in the UAE in order to start your new company.

Step 5: Applying for Visas

Obtaining a UAE visa is a crucial requirement when initiating a business venture. The procedure for applying for your personal visa, as well as that of your staff, is specific yet simple. Again, a UAE business creation specialist can assist you with this phase.

You can sponsor others for visas as the owner of a UAE company license. Consider a spouse, parent, or child, or a domestic worker such as a housekeeper.

The maximum number of visas you may apply for is determined by the size of your firm, the configuration you choose, and, in the case of dependant visas, your personal earnings.

Step 6: Opening a Corporate Bank Account

The rigorous money laundering restrictions in the UAE make it difficult for foreign enterprises to have access to corporate banking services. Working with an expert in the subject makes the process go much more smoothly.

Experts in company formation have strong ties to both local and international banks and can readily connect you with the one best suited to your needs, including organizing face-to-face meetings if necessary.

Our experts can assist you with obtaining a company license in the UAE, whether in a free zone or on the mainland.

To start a business in Dubai, you need to follow the below steps.

• Choose the right legal form for your business
• Register the trade name
• Apply for initial approval
• Draft Memorandum of Association/Local Service Agent Agreement
• Get additional government approvals
• Apply for Business License

We will explain each of these in detail below.

Choose the right legal form for your business

You can start your business as a Sole Establishment, where the expatriate or foreign citizen can be the full proprietor of the business and the UAE citizen can be the regional agent. 

Another option is to initiate your business as a Civil Company where there can be more than 2 overseas resident partners and the UAE resident can be the regional partner.

The third option is that you start your business as a Limited Liability Company where the UAE citizen has 51% of the equity and the migrant has 49% equity. 

Register the trade name

A trade name distinguishes one business from another. It also reflects the nature and the form of the business. 

You should prepare a list of 3 to 4 names that you wish to have as your legal name and present it to the concerned department. 

Once you have presented your request, the department would analyze it and sanction all the eligible business names. Therefore, you have the freedom to choose the one that you like most.

Here are some guidelines you must follow while creating a trade name.

The trade name must:

• not violate the public morals or the public order of the country
• be compatible with the required type of activity and the legal status of the company or business entity
• not contain names of any religion, or governing authority, nor names or logos of any external bodies
• not have been previously registered.
• not have a name starting with words like "Universal", "Middle East", "International" and/or translate them into Arabic.

Apply for initial approval

Initial approval is a preliminary approval granted by the UAE Government to allow a foreign investor to proceed with setting up a business in the country.

It indicates that the government has no objection to the establishment of the business, but it does not give the business owner the authority to run or practice the business activity. 

Draft a Memorandum of Association (MOA) / Local Service Agent Agreement (LSA)

Memorandum of Association is considered as the constitution of the business organization and is a mandatory document for company formation in UAE.

It will contain the details of the shareholders, board of members, regulations regarding the operation of the company, policies, safety and security aspects, and so on. MOA has to be submitted along with other documents for business formation in the UAE.

Kindly note that businesses owned completely by non-GCC residents require a Local Service Agent from the UAE. Appointing the local service agent will be under an agreement attested by the notary public or the court.

Get additional government approvals

Based on the specific type of your business you might require additional government approvals as well. 

It is better to have an experienced consultant by your side at this stage as they will help you in getting all the government approvals required for your business.

Apply for Business License

Once you have completed all the above steps it is now time to apply for the business license. The type of business license you will apply for depends on the primary activity of your business.

Once you have the business licence, you can start practicing business activities legally in Dubai.

You can collect the business licence from service centres of the economic departments or through their websites.

Documents required to register your business in Dubai

You need to submit the  following documents for registering your company in Dubai:

• Copy of the passport of the shareholders and directors
• Copy of the national identity card of the directors and shareholders
• Recent bank statements, credit card statements or utility bills containing the name and residential address of the shareholders and directors
• Initial approval receipt and all the previously-submitted documents
• Copy of the lease contract duly attested by the Real Estate Regulatory Agency (RERA) in Dubai
• Duly attested memorandum of association
• Approvals from other government entities concerned, as may be required

Open a bank account

After obtaining all the registrations and approvals from the concerned authorities, the company needs to open a corporate bank account to send and receive money relating to the company’s affairs.

Cost to set up a business in Dubai

The cost to set up a business in Dubai varies based on factors like the type of company you are planning to register, government approvals, location, etc.

However, based on a rough calculation, it might cost you AED 15000 to 20000 to set up a business in Dubai.

Benefits of registering a company in Dubai

If you think the cost to set up a business in Dubai is high, this can be offset by the following benefits.

• Exemption from personal or corporate income taxes
• Allowance of 100% repatriation of capital and profits
• Lenient labor laws make it cost-effective to recruit labor forces
• Excellent physical infrastructure
• Some of the FTZs provide shared and virtual office facilities 
• Commercial company’s law provisions do not apply to FTZs
• Exclusion from import and export duties

Time required to register a business in Dubai

Business registration in Dubai can be done within seven working days.

Check the status of company registration in Dubai

You can check if a company is registered in Dubai by visiting the Department of Economy & Tourism’s website in Dubai and clicking on “ Search License Information”