The UAE has emerged as one of the best places in the world to establish a business. Depending on their business activities, investors in the region have the option of establishing their company on the Mainland, in a Free Zone, or offshore. Similarily, entrepreneurs usually intend to establish the most common business structure, known as Limited Liability Company.
In this article, you will learn about how to set up a LLC in Dubai. The LLC company structure has gained popularity in recent years as a result of favorable laws enacted by the UAE government. The advantages of a corporate structure combined with a hassle.
- What exactly is a Limited Liability Company (LLC)?
- Steps to forming an LLC in Dubai and the UAE
- Why should you invest in a Dubai-based LLC?
- Investing in Dubai
- Frequently asked questions about Dubai Limited Liability Companies
- How can Connect Group help you?
1. What exactly is a Limited Liability Company (LLC)?
The most common type of business in the UAE is the Limited Liability Company (LLC). This model can be formed by as few as two and as many as fifty shareholders; with liability limited to their shares in the company’s capital. As a result, the business laws in Dubai provide shareholders with complete personal liability protection.
Under an LLC structure, you have a broader business domain, i.e. a larger pool of business activities for company formation. When forming a Limited Liability Company in Dubai, you must partner with a local sponsor (UAE national); he will own 51 percent of the company.
In this case, the expatriate would have control over the remaining 49 percent. Reliable local sponsors act as silent partners for your company, allowing you to retain complete operational control.
2. Steps to forming an LLC in Dubai and the UAE
To establish a Limited Liability Company in the UAE, follow the steps outlined below. Before, during, and after the formation of your company, ensure that you adhere to all legal frameworks and business guidelines established by the UAE’s government. So, here is how to form an LLC:
- Firstly, understand to the core all business activities involved in your venture and carefully select them from the list maintained by DED and other authorities.
- Also, set a trading name for your company. Make sure that it does not violate any naming convention laws enforced by the government.
- Next, complete the business location and obtain the DED’s initial approval certificate. If they reject your trade name, you will not be able to obtain this certificate.
- Then, complete all required documentation, including MoAs and LSAs. Collaborate with a dependable local sponsor who can assist you with legal compliance.
- Obtain a trading license for your company. You will receive the same if all of the documents you submitted to the authority are successfully verified.
- Finally, apply to the labor registry to obtain labor cards and manage your visa alongside your partners’ visas. After that, you will be able to run a legal LLC company in Dubai.
3. Why should you invest in a Dubai-based LLC?
New-age investors and aspiring entrepreneurs want to feel confident in their investment decisions. A single blunder can result in unneeded waste of resources and time. As a result, we have compiled a list that walks you through the benefits of LLC formation and why you should invest in it:
3.1. Cost-effective company formation
Firstly, when most people think of starting a business in Dubai, the word “affordable” does not come to mind. However, it is only after you understand the region’s business dynamics and jurisdiction that you will be able to accept the cost-effective company formation model in Dubai.
Hence, an LLC company formation in Dubai is inexpensive because there are no application fees, and you can avoid double taxation. Furthermore, the governing authorities never impose hidden fees, and you are not required to pay anything extra when forming an LLC here.
They estimate the cost of forming a Dubai LLC is around AED 28,000, but this depends on the nature of your business. Some business activities require special government approvals and certificates, which raises the setup cost.
3.2. Liability protection is limited
Secondly, an LLC is always treated as a distinct legal entity. This business structure keeps the finances of the business partners separate from the finances of the company. As a result, no shareholder can be held personally liable for the LLC’s losses.
It all comes down to the total capital invested in the business, and no shareholder’s personal assets can be seized under the LLC agreement. This protection for business partners has aided the expansion of LLC business formation in the UAE.
When forming a business, many entrepreneurs prefer to have limited liability protection, which an LLC formation provides. As a result, the shareholders are only liable to the extent of their investment in the company.
3.3. A wide range of legal business activities are permitted
Unlike other company structures, an LLC allows you to select from a wide range of legal business activities in the UAE. The Department of Economic Development (DED) keeps a list of over 2,000 legal business activities that can be conducted through an LLC formation. The nature and jurisdiction of the activities may differ depending on the company’s business location.
You can form a Limited Liability Company in a variety of industries, including agriculture, finance, and technology. In the UAE, the registration process for forming an LLC is more efficient than ever.
When you submit the necessary documentation to the appropriate departments, you can obtain a trade license for your business activity in a very short period.
3.4. The ability to select your preferred business location
A Dubai LLC company formation allows you to choose any legal location for your business. If your business requires access to the local market in Dubai, consider forming a mainland company. You can compare different office spaces and select the best ones for your company.
An experienced business advisor in Dubai can assist you in locating the best location for your business in the UAE. Choosing the right location is critical to avoiding overhead costs associated with your business activity and the jurisdiction applicable to your venture.
3.5. Applying for multiple visas
When you establish an LLC in Dubai, you qualify for an investor visa. You are granted investor status in the UAE, which allows you to stay in the country as a resident for a period of three years. You may apply for multiple visas for family members, employees, and so on.
For each visa application, you must have a minimum of 100 square feet of business space. If you are applying for multiple visas, we recommend you to consult with DED, and the department will not let you down. As a result, you can stabilize your work and personal lives in the UAE by obtaining visas for employees and family members.
4. Investing in Dubai
When it comes to foreign investment, the UAE is a top destination, with Dubai being the most prolific. The UAE offers numerous business opportunities, and foreigners are already aware of the country’s benefits. A stable and profitable business climate, largely sustained by massive government support in various forms and sectors; a well-developed infrastructure, openness to major international markets, and numerous business opportunities in finance are just some of the benefits available to foreign investors in the UAE.
Hence, here are some data and statistical figures that highlight the UAE’s economic direction:
- Firstly, in 2019, the UAE received approximately USD 154 billion in total FDI.
- Also, in the same year, the value of greenfield investments in the UAE was approximately USD 14 billion.
- In addition, several business sectors were approved for foreigners seeking 100 percent ownership in 2020. Renewable energy, construction, manufacturing, agriculture, healthcare, educational activities, ICT, hospitality, and food services are examples of these.
- Further, in terms of business simplification and conditions, the UAE ranked 16th out of 190 global economies in the 2020 Doing Business report.
- Lastly, according to West Asia data for 2019, the UAE has received the most foreign investment. The majority of FDIs were absorbed by the oil and gas sector, which is the most prolific in the country.
5. Frequently asked questions about Dubai Limited Liability Companies
A Limited Liability Company is one of the most common business forms both local and foreign investors in Dubai use. However, it raises many questions, particularly from foreign entrepreneurs. Some of these questions have been answered below by our Dubai company registration agents:
5.1. What is the minimum of shareholders for a Dubai Limited Liability Company? What about in a Dubai Free Zone?
The minimum number of shareholders for a Limited Liability Company in Dubai is two. It does not matter if a single shareholder can be legal in a free zone.
5.2. What is the cost of forming an LLC in Dubai?
A Limited Liability Company registration takes a few days to complete.
5.3. Is it difficult for a foreigner to register a Limited Liability Company?
No, even if you are a foreigner, the Dubai company formation of this type of company is quite simple.
5.4. What is the cost of forming an LLC Dubai?
The company registration fee for a Limited Liability Company in Dubai is determined by the industry. Therefore, it does not matter if you established the company in a free zone or in the Mainland.
5.5. Do I need to hire a local agent to form a Limited Liability Company?
This requirement is applicable to foreign investors who want to establish a Limited Liability Company in Dubai. Also, our agents provide these services.
5.6. Is a corporate tax levied on LLCs in Dubai?
As is well known, the UAE has an appealing tax system that draws a large number of entrepreneurs each year. In Dubai, there is no corporate tax on Limited Liability Companies, which is a significant benefit for international investors. Our experts can provide you with more information on LLC company formation in Dubai.
5.7. What is the correct business structure for a startup in the UAE?
A Limited Liability Company is the most common type of business structure in the UAE. By using this type of entity, you can easily manage your business. Hence, our experts in the field can provide more information on how to open an LLC in the UAE.
5.8. Can I get help with tax registration in Dubai?
Yes, one of our company formation agents in Dubai can assist you with registering for tax purposes in the UAE. We have subject matter experts who can tell you more about the tax system and the requirements in this area.
5.9. Do I have complete ownership of an LLC in the UAE?
If you want to establish an LLC in the UAE, you should look into Dubai’s free trade zones. Here, you can benefit from low taxes and full ownership of your company. Please feel free to contact one of our Dubai company incorporation specialists with any questions.
6. How can Connect Group help you?
Although starting a business in the UAE is a relatively simple process, certain formalities may be a barrier for foreign investors. Hence, the specialized assistance of our team of company formation agents in Dubai with experience in this area can be highly helpful. Foreign businessmen who want to register a company in Dubai, can count on our full support and professionalism.
When we begin a collaboration, we pay close attention to our clients’ needs and rely on transparency and efficiency. Before registering a company, applicants must also confirm the fees associated with each step of the process.
Would you like to contact us to obtain more information about business setup processes in the UAE? Let us know if you have any questions by calling us at +971 43 316 688. You can also email us at firstname.lastname@example.org. Our representatives are more than ready to assist you with any inquiries you may have.
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