Dubai is one of the most popular and attractive destinations of the world. It mainly attracts startups, investors, entrepreneurs as well as international businesses. Due to the modern infrastructure and business friendly location, Dubai has become an ideal place to establish and grow a company.
If you are also planning to start a small business, launch a startup, open a consultancy or expand the existing setup then it is essential to understand the business setup process in Dubai.
In this guide, you will find details about how to setup a business, company structure types, licensing options, costing for setup, essential documents etc. So, what are you waiting for, read the article carefully to know about Business Setup in Dubai.
Why you should Setup a Business in Dubai?
You need to know that Dubai provides several benefits for entrepreneurs as well as international investors. This city makes a convenient base for business operations and international trade as it is located between Asia, Africa, Middle East and Europe markets. There are many reasons for choosing Dubai for business setup. Some of the important advantages are mentioned below:
- Provides access to international markets
- Several business facilities and modern infrastructure
- Provides international and diverse customer base
- Several options are available for business setup
- Supported by well-developed banking services
- Several free zones for specialized industries
- Provides opportunities to hire international talent
- Has strong infrastructure for digital and technology
As you know, there are several types of industries are available in Dubai such as logistics, consulting, e-commerce, technology, finance, education, tourism, healthcare and many more.
What are the Types of Business Setup in Dubai?
Before setup of a company, entrepreneurs are required to choose the structure which will match their target market as well as business activities
Mainland Business Setup
You should know that a mainland company has license to operate in the local market of Dubai. This type of company can provide trade or services and conduct the business within the UAE.
Generally, a mainland setup is suitable for the business who wants to work with the local customers, companies or even Government entities within the UAE.
However, the exact ownership and licensing requirements will depend on the business activities and the regulations of UAE.
Free Zone Business Setup
You should know that there are several free zones in Dubai which has been designed for different types of businesses and specific industries.
It mainly attracts the entrepreneurs who are looking for business environment, specialized infrastructure, procedures for streamlines company formation focused on particular sectors.
Different free zones have different packages, licensing options and office requirements. So, you should choose the free zone which will match the nature of your business instead of just choosing the cheapest package.
Branch and Representative Offices
There are many established companies which are working outside the UAE and wants to open a brand or representative office in Dubai.
It is suitable for the businesses which are operating in different countries and wants to establish their presence in Dubai without creating a separate business.
However, the requirement will vary on the structure of company and their intended activities.
How to Choose the Right Business Activity?
At the time of forming company, the most important decision is choosing the right business activity.
In Dubai, you will get license for a wide range of industrial, professional, commercial, technology or service activities.
There are different areas in which you can establish a business. Some of the popular ones are mentioned below:
- Digital Marketing
- Information Technology
- Consultancy
- E-Commerce
- Tourism
- Healthcare
- Logistics
- Trading
- Professional services
- Food and beverages
- Education
It is extremely essential for the entrepreneurs to choose their business activity before applying for a license. Every activity has different type of license, approvals, regulatory permissions as well as office requirements.
What are the types of Business Licenses in Dubai?
For Business Setup in Dubai, the license will depend mainly in the business activity. The different types of licensed are mentioned below:
Commercial License
You will get commercial license for the business which is involved in commercial activities and trading.
Professional License
You should know that professional license will be given to the companies who are associated with professional or service based activities. The common examples are consultancy or other specialized services.
Industrial License
If your business is involved in manufacturing then you will require industrial license along with several approvals.
Tourism License
If you want to operate a business related to tourism activities then you will require the specific license from the relevant authorities.
However, the exact requirements for license can vary. So, entrepreneurs can verify the requirements which are applicable on their company.
What are the common steps for Business Setup in Dubai?
The exact procedure can vary depending on the business type as well as jurisdiction. The general process may involve some stages which are mentioned below:
Step 1: Decide the Business Activity
Firstly, entrepreneurs should identify what product or services your company will provide.
By deciding business activity, you will be able to apply for license and approvals for the formation of company.
Step 2: Select the Business Structure
Now, you have to decide the type of company i.e. mainland, free zone, branch or any other structure for your business.
You need to consider about your customers, operating location, expansion plan, ownership requirements, business activity and ownership requirements before making any decision.
Step 3: Choose a Company name
You need to select a suitable name of your company which complies with the naming rules of UAE.
It is essential for the proposed name to meet with the applicable requirements. It should not conflict with any other name, trademark or registered companies.
Step 4: Obtain the Initial Approval
You need to take initial approval from the relevant authority depending on the business activity and structure.
For some activities, you may require additional approvals from the department of Government or specialized regulators.
Step 5: Complete the Required Documents
You need to provide the required documents depending on the type of company as well as well as ownership structure. The common documents may include:
- Application form
- Passport copies of partners and shareholders
- Passport sized photograph
- Proof of address or related documents
- Corporate documents for existing companies
- Business plan if applicable
- For certain regulated activities, you may also require to provide additional documents.
Step 6: Find an Office or Business address
Entrepreneurs are advised to find an office or business address. So, depending on the licensed and jurisdiction, a physical office or workspace will be required.
Free zones will require different workspace and office packages whereas mainland business will have their own requirement.
Step 7: Obtain the Business License
Once you complete all the procedure and approvals, you will get business licensed from the authorized authority.
The entrepreneurs can proceed with the next stage of business after obtaining the proper license.
How much it cost for Business Setup in Dubai?
The most common question which entrepreneurs ask is “How much it cost to start a business in Dubai”?
You should know that there is no any fixed price as the total cost will depend on various factors which are mentioned below:
- Business activity
- Type of license
- Setup for mainland or free zone
- Number of shareholders
- Visa requirements
- Requirement for office and workspace
- Registration fees
- External approvals from authorized activity
- Expenses on banking and administration
The setup cost of a small company will be different from a trading or industrial company.
So, it is advised to the entrepreneurs to calculate the cost of first year instead of focusing on the initial fee.
How to Open a Business Bank Account?
Once the entrepreneurs establish a company, they will need a corporate back account in order to manage their business transaction.
Before opening a account, bank will conduct their own compliance and the due diligence checks. The bank will also request various documents which are mentioned below:
- Documents of company incorporation
- Business license
- Information of shareholder
- Identification documents
- Business plan as well as company profile
- Expected transaction details
The exact requirement will vary from one bank and business profile to another.
Frequently Asked Questions:
Q: Can foreigners start a business in Dubai?
A: Under the applicable UAE laws and regulations, foreigners can also establish a business in Dubai. They will have to follow the appropriate rules for licensing, business activities and jurisdiction.
Q: What is the first step for Business Setup in Dubai?
A: The first step is to identify the business activity. Determine the company structure and licensing jurisdiction.
Q: Which is better: Free zone or Mainland Company?
A: Neither is universally better. The right option will depend on the business activity, targeted customers, expansion plans as well as operational requirements.
Final Thoughts:
Business Setup in Dubai provides an opportunity to operate a business in a highly developed environment. Dubai has a wide range of formation options which ranges from small professional firms to international trading companies as well as startups.
Entrepreneurs are advised to choose the right business activity, company structure as well as jurisdiction for the specific goals. It is also essential to consider the licensing, requirements for office, banking before starting the operations.
By conducting a proper research and planning, you can setup a business in Dubai. It will be a practical step to build a strong presence in UAE and expansion to international markets.