The UAE is a top destination for investors since it offers several benefits and advantages to grow and obtain excellent revenue. For this reason, many business owners want to know how to start a business in Dubai.
As one of the most cosmopolitan and thriving cities of the Middle East, Dubai looks like a flourishing place to make businesses. If you want to open a headquarters, set up a company or a start up in Dubai, you must know all the stages that you have to go through to be prepared.
In this article, you’re going to learn everything you need to know to start your business in Dubai. In addition, you’re going to gain some understanding on how a service provider can assist you. Let’s observe:
- The complete guide on how to start a small business in Dubai
- Why should you define your business activity beforehand?
- How can you pick the right jurisdiction?
- Which legal form should you select?
- Do you need a local partner?
- How can you register your trade name?
- How can you get your initial approval?
- Which trade license do you need?
- Which documents do you need to start your business?
- How can you get your external approvals?
- Should you rent an office?
- How can you collect your trade license?
- Why is Connect Group your best option to start your business in the UAE?
1. The complete guide on how to start a business in Dubai
Starting a business in the UAE is a great idea since the local government encourages foreign investors by offering excellent benefits. It’s comparatively easy for expats to do business in Dubai, and in addition the procedures to obtain documents and visas it’s also fairly simple.
Therefore, many investors want to know how to start a business in Dubai so they can join the booming economy and take their corporations to a whole new level.
If you need assistance to start your business in Dubai, here in Connect Group we can offer you several options. You’re going to receive help from a team of experts that have been assisting several companies in their objectives to expand to the UAE.
1.1 Who can start a business in the UAE?
Perhaps you’re wondering if you’re eligible to start a business in the UAE. The truth is that almost anyone can do it.
You just have to go through the process and submit the necessary documentation to obtain the approval. It’s important for you to meet the requirements such as the needed capital to set up the company and any other additional request.
Other than that, you’re able to set up your company. Whether you’re planning on expanding your current business or you want to set up a startup, you have the possibility to do it in Dubai.
1.2 What are the main steps to start a business in the UAE?
In this complete guide you’ll find everything you need to know to start your business. You must know that there are several steps you must follow to carry out this process effectively.
It’s best to be informed about all the necessary steps so you can know what to expect. Let’s observe an overview of the several task you must do to start your online business in Dubai as follows:
- Define your business activity
- Select a jurisdiction
- Choose a business legal form
- Get a local partner (if necessary)
- Register your trade name
- Get the initial approval
- Get the external approvals (if necessary)
- Rent an office space, get the tenancy contract
- Get the legal documents for your business
- Apply for the trade license and collect it
Once you have gone through all of these stages, you can begin your operations. With your trade license and company registration you can carry out your business activity to continue growing and thriving.
2. Why should you define your business activity beforehand?
If you want to know how to start a business in Dubai, you must consider all the steps you have to take to reach your goal. The first thing you have to do is select a business activity for your venture.
Most investors don’t know this and it’s important to identify it since not all business activities are allowed in Dubai and in the UAE in general. For this reason, you must determine if your business fits the Dubai standards.
In addition, if you fail on choosing the suitable business activity it could lead you to issues further ahead.
But don’t worry; the best part is that there is a huge amount of potential activities to choose from.
Let’s observe some considerations you must have in this regard as follows:
- Find out which sectors are more popular and what services or products people are looking for
- Your business can have more than one business activity
- You could choose among more than 2000 business activities
- Choose a permitted activity that aligns to your business goals and objectives
- Do some research about feasibility and profitability before choosing the activity
If you feel overwhelmed about this, you have to contact experts that advice you on company formation so you can make the best decision. Keep in mind that it’s crucial for your business to choose the suitable activity, so don’t take this decision for granted.
3. How can you pick the right jurisdiction?
Once you have defined your business activity, the next step should be selecting the jurisdiction. To know how to start a business in Dubai you have to understand about the several economic zones of the UAE market.
In Dubai you can choose from the three main jurisdictions, namely, Mainland, Free Zone, and Offshore. These are known as economic zones and they are divided with the purpose of increasing competence and productivity.
If you want to start a business as a foreign investor, you must know which jurisdiction may suit your needs best. It all depends on your business activity and the nature of the business you’d like to carry out. Each one of them has its advantages and drawbacks so it’s important for you to learn more about them.
3.1 Should you choose Mainland?
A Mainland business has great advantages and it may be the best for a business that is looking to expand operations to the Middle East. Let’s observe the following advantages:
- Trade directly within the UAE
- Take advantage of potentially lucrative contracts with the government
Do you want to set up a company in a UAE Mainland?
3.2 Should you choose a Free Zone to start a Business ?
Unlike a Mainland business, a Free Zone company can only conduct business within said Free Zone. Among the top advantages of a company in a Free Zone are the following:
- Fast and easy incorporation process
- 100% ownership i.e. you don’t need a business partner
- Ongoing business support
- Financial incentives such as tax exemptions and zero currency restrictions
Do you want to set up a company in a Free Zone?
4. Which legal form should you select?
After deciding your preferred jurisdiction, the next step on how to start a business in Dubai, UAE is to choose the legal form for your company. It depends mainly on the requirements and this step is crucial for identifying applicable regulations.
The legal form is also known as the shareholding structure, so don’t get confused if you see these two terms since both mean the same. In other words, selecting the legal form means the type of company you’ll have.
There are several legal corporate structures in the UAE, just like in any other country. Some of the most common are the following:
- Limited Liability Company (LLC): it allows between two and fifty shareholders. In this legal form, each one is liable based on their shares percentage. However, as a foreign investor you can only own 49% of the company. The remaining 51% should be owned by a UAE national.
- Sole proprietorship: it allows 100% ownership by one individual. It means you’ll have complete control over everything, including profits. But, only UAE nationals can create this type of company.
- Civil company: a civil company business it’s aimed to doctors, lawyers, and any other professional. However, an UAE national should own 51% of the company.
- Foreign company branch: with a foreign company you can establish your branch in the UAE. However, you should use a local trading firm when it comes to importing goods.
Some of the other legal forms your business could take are the following:
- Limited partnership
- Public joint stock company
- Private joint stock company
- GCC Company branch
- Representative offices
- General partnership
- Joint Venture
5. Do you need a local partner?
As you may have noted, some businesses require a local partner. An important part on knowing how to start a business in Dubai relates to knowing how to select the UAE national that will be your partner.
However, in some cases you won’t need a partner, such as with a Free Zone company. But, if you opt for an LLC or any other that requires a local sponsor, you must find a UAE national to be your partner.
It may seem like a tiring task, but you need to find a trustworthy sponsor if you want to carry out business in Dubai.
5.1 How can you partner with a reliable UAE national?
Finding a reliable UAE national to be your partner could be challenging. Remember that the local partner will own 51% of your business so it should be a wise decision.
A great solution for this issue is contacting a business setup consultant that helps you by becoming your local sponsor or connecting you with agencies that offer corporate sponsorship.
You can enter into an agreement with a silent partner so you can have total control of your business. Here in Connect Group we have several options where you can choose the best one based on your needs.
6. How can you register your trade name?
The next step on how to start a business in Dubai, UAE is registering your trade name. A trade name is the one that will distinguish your business from another one. Therefore, you should select one that matches the form of business and reflects your business nature.
It’s important to know the provisions for the trade name, since this will ensure its approval. Let’s observe the following:
- It should not violate the public morals (avoid offensive language)
- The trade name must be compatible with your business activity and legal form
- It should not make any reference to religion or the government
- It has to be unique (not previously registered)
6.1 What are the steps to register the trade name?
Once you have selected the best trade name for your business, you must have to go through the following steps:
- Apply for the trade name by the website or mobile application of the economic department of the desired Emirate. In this case, it should be the DED.
- Submit any necessary documents to register the name
- The DED will approve the name and it will register it
After receiving the approval, you can now apply for the trade license.
7. How can you get your initial approval?
One of the main steps on knowing how to start a business in Dubai relates to getting the initial approval.
Keep in mind that it’s essential to get it because this allows you to conduct business without any issues.
The DED is in charge of approving your business activity, so you should know what you must submit to get the approval.
7.1 What is the initial approval?
The initial approval is the main requirement to obtain your business license.
The DED will issue the initial approval, and it means that you can carry out your business activity in the UAE without any objections from the government.
Keep in mind that if you don’t receive the initial approval you won’t be able to continue with the process and thus you can’t conduct business in the UAE.
7.2 Can you start your business with your initial approval?
Once you get the initial approval it means that the DED accredites your business to start. So, you can begin your operations and focusing on your core activities while you get your trade license.
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You can continue with the process of obtaining the license so you can conduct your business legally. But don’t worry, the process may take up to three weeks so it’s relatively quick.
8. Which trade license do you need?
After getting your initial approval means that your business can apply for the trade license. To know how to start a business in Dubai you must learn about the business licenses available in this place.
The trade license you need depends on your business activity, so you should choose the one that suits the way you’re going to carry out your operations. In addition, it should also match your business’ legal form. For example, if you’re planning on creating a civil company, perhaps a professional license may be best for you.
In Dubai, you can apply for any of the four types of trade license available, which are the following:
- Commercial license
- Professional license
- Industrial license
- Tourism license
You must know that one of the essentials requirements for a business in Dubai is a business license. Therefore, if you don’t know how to do this paperwork it’s best to contact a third-party that can help you.
8.1 What is the process for licensing?
To apply for the business license you just have to follow some simple steps. However, it’s important to note that the licensing is done at the same time as the registration. So you should be prepared to carry out both activities.
- Apply the registration to the relevant local authority (DED)
- Provide the necessary documents
- Once the company is registered, the DED will process the license
It usually takes one to three weeks to get the license, and you’ll be notified when it’s ready so you can submit the additional documentation to collect it.
9. Which documents do you need to start your business?
A crucial aspect on knowing how to start a business in Dubai relates to the fact that you should prepare all the necessary documentation and paperwork to submit it to the relevant authorities.
All of these documents are necessary to get the initial approval.
Keep in mind that depending on your business legal form you may need additional documents or approvals.
Let’s observe some of the most common documents you must have as follows:
- Memorandum of Association (MOA)
- Trade name reservation
- Initial approval
- Tenancy contract
- Partners’ passport copies
- External approvals (if any)
- Trade license application
- Ejari registration certificate
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9.1 How can you draft your MOA/LSA?
The MOA (Memorandum of Association) and the LSA (Local Service Agent) agreement are crucial for creating your business. For this reason, it’s important to know how you can draft them properly so you don’t have any issues when you submit your documents to the DED.
It’s important to note that these are legal documents and thus you need a legal advisor to help you draft them. Therefore, you may request help from a third-party that helps you in this process.
Let’s observe the definition of both documents as follows:
- MOA: in this document it’s specified the share of limitations of every partner as well as the liberty each one has within the company.
- LSA: since some businesses require having a local agent, in this document it’s established its role and fulfills the compliance.
Keep in mind that both documents need to be translated to Arabic by a Certified Translator. So, consider it when you are planning your expenses.
9.2 Which businesses need a MOA?
Some business legal forms don’t need a MOA. However, you should know if your chosen legal form needs it so you can start preparing everything you need to draft it. Let’s observe the businesses that require this document as follows:
- LLC (Limited Liability Company)
- Limited partnership
- PJSC (Public joint stock company)
- PrJSC (Private joint stock company)
You can request a UAE-based law firm, court or notary public to draft the MOA and agreements for your business. However, it may be easier and faster to have a third-party that offers this service so you don’t have to worry about this matter.
10. How can you get your external approvals?
When you’re learning how to start a business in Dubai you must also be aware of the additional approvals you have to get to start your operations.
Depending on the type of business you want to conduct, you may need external approvals. As you may know, you must submit your application to the DED, but in some cases it may be necessary to submit additional documents.
You can get these documents from other additional government entities. This depends on the nature of your business, and you must know beforehand if you’re going to need additional approvals so you can process them timely.
For example, if you’re planning on opening a business of legal consultancy, you need an external approval from the Ministry of Justice.
Let’s observe the following examples of the government entities that can issue additional approvals depending on your business activity:
- Ministry of Interior: activities related to general transport.
- Ministry of Justice: legal activities
- Local municipal department: architecture and engineering activities
- TDRA: Telecommunication activities
- Ministry of Economy: insurance activities
- Local health departments: activities related to health
- Supreme Petroleum Council: gas and oil-field services, drilling operations.
It’s important for you to understand if your business will need any additional approval. A service provider can assist you in this matter in case you feel confused or you don’t know what to do.
11. Should you rent an office?
Depending on the type of business and the activities you’re going to carry out, you may need to rent an office or a warehouse.
For this reason, to know how to start a business in Dubai you must know how to find an physical space to conduct your business activity.
It’s necessary to have the tenancy contract since it’s a mandatory requirement to register the business. There are several options to choose from, and once you have your tenancy agreement you must apply for the Ejari certificate.
11.1 Which options do you have for office space?
In Dubai there are several options available for you to find an office space. Let’s observe some of the most common ones as follows:
- Co-working spaces: if you’re just starting your small business, you could take advantage of the several co-working spaces in Dubai. You could find several ones, even co-working brands. It’s a great option because allows flexibility and access to some business functions like printing.
- Serviced offices: in the Free Zones there is a popular option called serviced offices. They have many perks such as a receptionist and a traditional office space.
- Service provider: if on the other hand you’re just trying to test the UAE Market and you won’t want to rent an office, you can contact a service provider that helps you with this matter.
If you’re trying to find a space for your employees to work but you’re unable to do it, you may want to get assistance from a service provider.
11.2 How are visas related to your office space?
Another important aspect regarding renting an office is that you should know that the number of visas you can request is related to the office space.
In the UAE, there’s a regulation for visas called quota, and you have a limit for the number of foreign employees you can have in your business.
The office size is also related with your quota, so if you’re considering relocating employees to Dubai, you must learn everything you can about this.
However, there’s a solution for this matter. If you get services from a third-party, you won’t have to worry about the quota restrictions. As you can see, it’s a great choice if you’re considering having foreign employees.
You can even have employees, get visas, and run your business without an office space, so it’s a choice you should consider if you want to enter the UAE market and test it.
11.3 How to get the tenancy contract and Ejari?
You can get the tenancy contract once you rent the space office you need. It’s a document that certifies the agreement between you and the real estate agency.
In some cases, you must need to submit the Ejari. It’s a system that ensures there’s fairness between the two parties that enter the tenancy contract.
Let’s observe how you can get both as follows:
- Get the tenancy contract with your real estate agency
- Submit the tenancy contract along with other requirements to the Real Estate Regulatory Agency (RERA)
- Get the activation of your Ejari Account
- Obtain your Ejari registration certificate
12. How can you collect your trade license?
The final step on how to start a business in Dubai is collecting your business license. As you may remember, you have to apply for the trade license but you have to wait for a specific period to get it.
When you submit your documents to the DED, you receive a transaction number. Now you must make the final payment so you can collect your license and begin your operations.
Once you have your trade license, you’re a full-fledged business entity. It’s great news since you’ll be able to work within the UAE or the preferred jurisdiction and start receiving all the benefits of this thriving economy.
12.1 Which documents do you need to collect the business license?
For all legal forms, you’ll need the following documents:
- Initial approval
- Previously-submitted documents
- Copy of lease contract
- MOA (Duly attested)
- External approvals
- Service agent contract (duly attested)
Keep in mind that you must make the payment for your trade license within 30 days of receiving the voucher. If you fail to pay within that period, your application will be cancelled, so be sure to have everything ready.
12.2 What other additional tasks you should do?
Collecting your business license is the final step for creating your company, but there are some additional tasks you have to consider.
Let’s observe the best recommendations to make your business to start working correctly as follows:
- Apply for visas: you have to apply for your employees’ visa. Since you have a business license, you’re able to sponsor others such as your spouse or children.
- Open a bank account: your business needs a corporate bank account. Choose the proper financial institution so you can get the solution to your particular requirements in terms of banking.
- Learn how to administrate your business: learn how to keep records of your company since they’re necessary.
- Learn about taxation: learn about the tax system in the UAE and how to register for tax. Depending on your chosen jurisdiction there may be some variations in terms of taxation.
13. Why is Connect Group your best option to start your business in the UAE?
Here in Connect Group we have all the solutions you need to know how to start a business in Dubai. You can register your business fairly easy and start receiving all the benefits of having a thriving corporation in the UAE.
To avoid facing issues and challenges with your company formation, you can get assistance by specialists and experts that will make the process smooth so you can enter the UAE market successfully.