Business Setup in Dubai and UAE

UAE is the fastest-growing region of the world and becomes a hub of travel and tourism, entertainment, education, business, and job opportunities. The booming economy of the UAE and Dubai specifically, is attracting more and more people across the globe to expand their businesses and reach to the masses. In addition to the conventional businessmen, the region is also attracting passionate technology entrepreneurs to bring their ideas into reality and shape their dreams in a booming industry. One of the major reasons for their attraction is the lowest business tax rate.

The government is facilitating people who aspire to have a business startup in Dubai that's why the tax rates are kept low. They are unveiling the countless possibilities of doing business, but they are not aware of How to Start a Business in Dubai. Dubai is a city that caters to the varying needs of its permanent residents, tourists, and a greater community of professionals and job seekers.

The creation of a global space has already attracted citizens from different races and ethnicities, which has transformed it into a multicultural cosmopolitan. If you are also aspiring to start with a small business and turn it into a large enterprise or corporate entity, then this post addresses the right issues you must know and tackle.

A short Overview

Before we go into the details below is a brief overview of the steps to get a company registration in Dubai .

Step 1: Do extensive research

To start a business in UAE, you must research the market you aim to reach out to. It may be new for you with a different language, people, and culture. Dubai and its neighboring states offer a variety of business models for investors, whereas they have complex legal procedures and rules for setting up a business in UAE. You can read a detailed tax and legal guide prepared by PWC.

Most of the businessmen blindly follow the trend of starting a venture in the UAE but end up with closure because of the uncertain rules they are not aware of. So, carry extensive research about the market, product selection, and services, and plan a target audience and their behavior. It will help you to decide the nature and type of industry you need to invest in.

Step 2: Select a business activity

Dubai and other states of the UAE have endless opportunities for investors. There are more than 2000 choices an individual can decide as to how to start a small business in Dubai, incorporate a mega business, have an international franchise, or innovate a brilliant IT solution for routine activities. Select the one you are most comfortable with and get it approved by the DED (Department of Economic Development.)

An enormous list of business activities is made available to ease individuals in adopting a business model. It may include import or export, rendering consultancy services, building an eCommerce website, or opening a confectionery outlet. You can unleash a profitable market once you complete your research about the region, and evaluate and fulfill their needs with innovative solutions. Doing a SWOT analysis for each of your strategies will greatly help you in making a decision.

Step 3: Look for a local sponsor

To start a business in UAE, you will need a local sponsor as a partner who will own 51% shares of your company and practice managerial powers in company decisions. The sponsor is not required to invest in your venture so you have to manage all the finances on your own and negotiate the amount of money paid to the sponsor annually for the partnership. The sponsor can be an individual or a company. You can find more about the role of a local sponsor to get a clear idea of why they are important.

Step 4: Consider a Free zone for 100% company ownership

If you aim to do business in the hub of the UAE or the core cities, it is mandatory to onboard a native person as a local sponsor. The sponsor owns the majority shares and dominates the managerial decisions as well. However, if you want to eliminate the contribution of a local partner and own 100% shares of your company, you must consider setting up a company in any of the free zones.

Choose a free zone for Dubai company registration and you avail lots of benefits. First of all, it wipes out the need for sharing the company ownership and a large part of revenues. Secondly, it saves you money in duty-free customs. You can plan to set up a company in any of the 45 Free Zones in the UAE. If you want to see all the free zones on Google maps here is a link for that as well. All the free zones are bookmarked and you just need to click on the name of anyone to see more details.

Step 5: Sign MOA (Memorandum of Association)

The memorandum of association is a form of legal document that narrates the external activities of a business with different vendors, service providers, and stakeholders. It states the complete details about a business, its name and activity, and physical address. The shareholders are also listed in this document along with their contribution and limited liability. Preparing and signing an MOA is a compulsion for company registration in Dubai, whereas if you wish to set up a business in any of the free zones, you will be required to sign a local service-agency agreement with a native person.

Usually following details are required in an MOA

1. Name of the company, its objectives, and registered office address.
2. Name of the partners, their nationalities, place of residence, and residential addresses.
3. Amount of the share capital, share of each partner, and value of each share.
4. Names of the partners and method of capital contribution by the partners.
5. Names of the directors and their nationalities.
6. Date of commencement and period of contract.
7. Method of profits or losses distribution and share of the partners in the profits or losses.
8. The procedure to be adopted for sending notices to the partners.

Step 6: Select an easily accessible business location

The location of a business matters the most. It also depends on the nature of your business. If it includes frequent meetings with clients, then select a central location within the city so that everyone can easily reach your office. It is not only beneficial for the clients and customers but the workers as well. There are a lot of communities who like to travel by metro, so they are looking for an office that is located at the nearest metro station.

Step 7: Secure a business license

The tutorial of how to start a business in Dubai is incomplete without mentioning the trade certificates and licenses you may need for operating your specific business type. Several licenses are available for a person to acquire if he/she wants to set up a business. The details of which are as follows:
The planning, research, and business development are followed by securing a license. This is about documenting your business legally with the UAE authorities and getting a certificate to carry on business activities without any objection. One can seek the assistance of local registration agents who are well versed with the business registration laws. These business advisory firms have a complete plan for setting up a company in Dubai. It may include selecting a location, opening an account in a local bank, hiring top management, tax consultants, and managers, and budgeting the entire company set up expense. Here is an official link to brief you more on how to set up business in Dubai.

A local business in Dubai is registered as LLC (Limited Liability Company) which requires two or more shareholders, and the one among them needs to be necessarily a UAE national whereas, investors can work as service agents in the 26 free zones of UAE to own the complete shares.

Conclusion

Securing a license is your key to success in establishing a small business in the UAE or the beautiful city of Dubai. This article addresses some of the obstacles you may face as most of the people are still wondering how to start a business in UAE. The procedure is complex as there are certain restrictions in setting up a business, but hiring the services of a lawyer or registration agent can remove all the hurdles. Be determined towards your dreams, and you will easily set up a company in the region you want.