Dubai is a popular destination for overseas entrepreneurs and investors looking to expand their businesses because of its favorable business climate and low tax rates. However, the procedure is difficult and takes considerable preparation, leaving many people asking how to start a business in Dubai. If you’re one of them, this guide is here to assist.
In this post, we’ll walk you through the whole process of starting a business in Dubai from the UK, from choosing the right business activity to opening a business bank account and obtaining visas.
Things to Know Before Setting Up Your Business in Dubai from the UK
Economic Zone: Free Zones vs Offshore
Dubai has over 30 Free Zones offering various benefits, including tax exemptions and 100% ownership. Offshore setups, on the other hand, are mainly for businesses looking to operate internationally.
Types of Licenses
Licenses in Dubai are generally categorized into commercial, industrial, and professional. The type of license you need depends on your business activity.
Sponsorship
Most businesses in Dubai require a local sponsor who holds 51% of the business. Free Zones allow for complete foreign ownership, eliminating the need for a local sponsor.
Process for Starting a Business in Dubai, UAE from the UK
The process for starting a business in Dubai, UAE from the UK required several steps. From selecting the right business activity according to your niche to the licenses required. The following steps are:
Selecting your business activity
Although it may seem like a simple initial step, the UAE has a little more nuanced consequences for this. Your business license must have a certain pre-defined Activity or Activity Category when establishing your company in the United Arab Emirates. The appropriate business registration authority provides a list of business activities from which this is selected. As a result, effectively establishing your firm depends on understanding which business activity is pertinent to your business plan.
Selecting the right jurisdiction for your business
There are 3 types of jurisdiction for your business in Dubai or in the UAE.
- Mainland
- FreeZone
- Offshore
As the names imply, free zones are areas under the jurisdiction of particular agencies inside an emirate that provide commercial privileges unique to certain activities, whereas mainland enterprises register directly with the economic development authority of an emirate. Economic activity by an offshore firm is prohibited within the United Arab Emirates.
Selecting the appropriate jurisdiction can have several advantages for your company. Some free zones, like the Jebel Ali Free Zone, provide infrastructure and tax advantages for importing commodities, while others offer unique incentives for particular kinds of businesses. However, a mainland corporation is the best option if you want to conduct business freely within the United Arab Emirates.
Keep in mind that not every free zone choice offers access to every activity. Free zones provide customized versions of the roughly 1500 – 2000 activities available to mainland enterprises.
Choose a business name
Naming a business in Dubai is a nuanced part of the setup process due to strict UAE guidelines. The business name must be unique and not resemble any existing company names in the UAE. It should align with the country’s cultural and religious values, avoiding offensive or inappropriate words. The name must be relevant to the chosen business activity and include an abbreviation of the legal structure (e.g., LLC, PJSC). When submitting a name for approval, it is advisable to have three options prepared.
Collect necessary documents to register your business
The process of setting up a business in Dubai varies by jurisdiction. For mainland businesses, Emerhub completes necessary forms from the Department of Economic Development and submits shareholder passport copies. Office space is crucial; most companies need a tenancy contract or “Ejari,” which designates the official office location. Alternatively, a virtual office can be arranged. OnDemand International helps secure either option based on business needs. In some free zones, additional documents like NOCs or a business plan may be required, and documents often need translation into Arabic. OnDemand International assists entrepreneurs worldwide with precise document submissions, ensuring a smooth setup process. Contact OnDemand International to avoid errors and save time and resources.
Apply for your business license
Once your papers have been properly submitted, the appropriate authorities will assess and approve your application. Should there be any objections, which are extremely unusual, Emerhub will submit further clarifying documentation on your behalf. Under ideal circumstances, registering a corporation takes four to six working days.
Open your corporate bank account
Your business license is essential for accessing services in the UAE, starting with a bank account. You have multiple banking options, including Emirates NBD, Commercial Bank of Dubai, Mashreq Bank, and Abu Dhabi Commercial Bank. However, opening and managing a bank account requires compliance with strict government and bank regulations. Non-compliance, such as six months of inactivity, can lead to account closure. Partnering with a local expert like OnDemand International can help foreign entrepreneurs navigate these regulations, avoiding potential financial or time losses.
Document Required to Register a Business in Dubai from the UK
Before starting any business in Dubai, UAE, you need to register your business with official authorities and get necessary approvals. So, the essential documents require includes:
- Completed application form
- MOA (Memorandum of Association)
- Passports of your shareholders with at least 6 months of validity.
- Trade name approval
- Business Plan
- Office contract also known as Ejari in the UAE
Choosing the Right Business Structure
Sole Proprietorship
This structure is best for individual entrepreneurs looking to have complete control over their business. However, it also means you bear full liability.
Partnership Company
Ideal for businesses set up by two or more individuals. The profit and loss are shared according to the partnership agreement, and both parties share liabilities.
Limited Liability Company (LLC)
LLCs are suitable for businesses with at least two shareholders. Liability is limited to the amount of capital invested, offering protection to the owners’ personal assets.
Private Shareholding Company
This is a closed company where shares are not offered to the public. It is often considered by family businesses or closely-knit partnerships.
Public Shareholding Company
Commonly referred to as a corporation, this structure allows shares to be publicly traded. It is suitable for large-scale businesses looking to raise capital through public offerings.
Civil Company
A Civil Company is formed by professionals such as doctors, lawyers, and engineers. Ownership is 100% with the professional partners, although a local service agent is required.
Branch of a Foreign Company
This structure allows a foreign company to establish an office in Dubai to promote and market its parent company’s products and services.
Costs and Fees Relevant to Starting a Business in Dubai from the UK
Initial Setup Costs
The initial costs include licensing fees, registration costs, and initial capital requirements. These expenses can vary depending on the business activity and jurisdiction.
Operational Expenses
These include rent, utilities, payroll, and other day-to-day expenses essential for running your business smoothly.
Miscellaneous Fees
Additional costs such as visa fees, legal fees, and administrative charges should also be planned for in your initial budget.
Common FAQs about Starting a Business in Dubai
How much does it cost to start a business in Dubai?
The cost can vary greatly depending on factors such as business activity, location, and license type. On average, initial setup costs can range from AED 15,000 to AED 50,000.
Is it easy to start a business in Dubai?
Dubai has streamlined many of its processes to make it easier for entrepreneurs to start a business. However, it still requires detailed planning and adherence to local regulations.
Is Dubai startup friendly?
Yes, Dubai offers numerous initiatives, incubators, and funding options to support startups. The city actively fosters an environment of innovation and entrepreneurship.
How to start a business in Dubai as a foreigner?
Foreigners can start a business in Dubai by either partnering with a local sponsor for a mainland business or opting for a Free Zone setup which allows 100% foreign ownership.
Partner with OnDemand International to Start Your Business in Dubai and the UAE
OnDemand International Services Overview
OnDemand International offers comprehensive business solutions including company registration, visa processing, and HR services to make your business setup process seamless and efficient.
Success Stories
OnDemand International has helped numerous businesses successfully establish their presence in Dubai and the UAE, turning entrepreneurial visions into reality.
Why Choose OnDemand International?
With a team of experienced professionals, OnDemand International offers tailored advice and support, ensuring you navigate the complexities of starting a business in Dubai with ease.
Conclusion
Key Takeaways
Dubai offers a vibrant and supportive environment for business startups. Understanding the documents required, different economic zones, business structures, and costs is essential.
Final Thoughts
Taking the necessary steps and understanding the legal requirements will set a strong foundation for your business in Dubai. Partnering with experts like OnDemand International can make the process more efficient.
Next Steps
Contact OnDemand International for a consultation to discuss your business needs and get started on your journey to establishing a successful venture in Dubai.