Setting up a new business in UAE offers a wealthy benefits for organizations and entrepreneurs looking to thrive and succeed in international market. Businesses in UAE gets some exclusive perks including Tax exemptions, quick procedures, one of the fastest growing economies, ease of doing business and political stability. Uninterrupted growth of economy in UAE, despite the global pandemic and recession has attracted a lot of entrepreneurs in the region.
When you start a business in UAE, some key factors must be considered to ensure the seamless and successful procedure.
Tweak Your Business Plan
Having a complete, unique and effective business idea is a must prerequisite of starting any business. An insufficient idea will never bring you to your goals of establishing the business. Following aspects must be ensured into nurture your business idea.
- Venture beginning
- Targeted demographics
- Several types of services or products
- Availability of services or products
- Demand/usage of services or products
Understand the Corporate Structure of UAE
After preparing a refined business plan, the first thing to confirm for foreigners is to understand the corporate structure of UAE and the types of companies that can be established.
The most frequent company types in the corporate sector of UAE are
- Sole Proprietorship
- Limited Liability Company (LLC)
Some rarely used types of companies include brand companies, private shareholding companies etc. You must evaluate your own business conditions and goals to confirm which type of company is better for your new business in UAE.
Limited Liability Company (LLC) in UAE
LLC are the companies in UAE which are having minimum 1 and maximum 9 shareholders are placed in LLC companies. Each shareholder’s authority in terms of profit and loss is limited to their shares.
In the past, it was possible to be the only owner with the partnership of an Emirati shareholder who owns 51% of the shares. But, after the new legislation, a foreigner can now start the new Business in UAE without the sponsorship of any Emirati and can be 100% single owner of the company.
Sole Proprietorship Company in UAE
Companies in UAE which are solely 100% owned by a single shareholder is called sole proprietorship company or sole establishment company.
If the new business is going to provide the professional services then it can be owned completely by a single foreigner; however, for industrial and commercial activities of the company, a Local Service Agent (LSA) must be appointed in the company.
Understand the Jurisdiction in UAE while Establishing a Business
After finalizing the company type, the major step is to select a jurisdiction. Entrepreneurs can go ahead with either the UAE mainland or in the Free Zone. Both has its own pros and cons. The third option for new business to go for offshore company setup in UAE if you already have an established business somewhere in the world.
UAE Free Zone Business Setup
Companies in UAE Free Zone are registered by the authority of each zone. Free Zone companies can operate within the Free Zones and also outside the UAE. UAE Free Zones are cost efficient and faces lesser regulations as compared to the companies in UAE Mainland
UAE Mainland Business Setup
Companies in UAE Mainland are registered by the Department of Economic Development. Entrepreneurs can select any state of UAE to set up a business there. UAE Mainland companies have no boundaries of operations; one can conduct business and trade within the UAE. It can operate in both Free Zones and Globally.
Step 1:- Decide a Name of the Company
Hard naming conventions provided by the UAE’s government must be ensured while choosing the name of the company. Strictly prohibited names include the use of offensive language, can act as offensive to religion, or referring to any mafia or political group.
If any entrepreneur is willing to name the business after a person, the ownership or partnership of that person in said business must be proved.
Step 2:- Apply for the Approval of Business
The next step is to apply at Department of Economic Development initially to ensure that they don’t have any objection. After that, the license approval procedure begins.
Step 3:- Open a Corporate Bank Account in UAE
Once license is issued, customer can open a corporate bank account in UAE. A wide range of banks in all states of UAE provide the opportunity.
Step 4:- Finalize an Office Space or a Virtual Office
An office space, either a physical or a virtual office in UAE, is compulsory for all businesses. Two ways to establish an office in UAE are either virtually or physically, depending on the nature of business. After finalizing the required office space, a mandatory contract called ‘Ejari” (my rent”) must be signed.