Business Setup

What are the basic steps to start a business in Dubai?

Starting a new business anywhere around the world can be a risky venture. However, with the right preparation, it is achievable with minimum risk. Today we are going to look at how to start a business in Dubai. It does not matter if it is a startup or just an offshore company. There are certain steps you need to follow to start a business in Dubai without any problems.

Dubai has become a hub for investors and entrepreneurs alike thanks to its lenient laws and tax policies. Some recent changes have made the UAE, and Dubai in particular, even more, attractive to entrepreneurs. The ease of doing business has always played a huge part in developing a nation’s economy. And it is quite easy to start a new business in Dubai.

Dubai business setup

Steps to start a business in Dubai

In the UAE, the Department of Economic Development in Dubai is responsible for handling the procedures an entrepreneur needs to follow to establish his business. There will be several mentions of the Department of Economic Development, also known as DED for short, in the steps. Here are the steps you need to follow to start a business in Dubai:

Select your business activities
The business activities you plan to perform will determine the type of trade license your business will require. Other than that, you should check whether the business activities mean to perform are allowed in the UAE and Dubai. After that, you need to research thoroughly how feasible those business activities are and if they are profitable or not in Dubai.

Select an economic zone
Dubai has three economic zones where you can set up your business. These economic zones are also known as jurisdictions. These three jurisdictions include the mainland, free zones, and offshore. Each of these jurisdictions has its advantages and disadvantages. Each is beneficial for different types of businesses. You need to mix and match these advantages and disadvantages with your business activities to find the economic zone that best fits your needs.

Select the legal structure
The legal form that your business entity will take determines a lot of important factors for your business’s future. For example, the legal structure of your business will determine the rules and regulations the business is subjected to. Here are some of the legal forms of businesses that you choose from in Dubai:

  1. Sole Proprietorship
  2. General Partnership
  3. Joint Venture
  4. Limited Liability Company
  5. Public Shareholding Company
  6. Private Shareholding Company
  7. Professional Company
  8. Civil Company

Previously, foreigners could not own more than 49% of a company in the UAE mainland. Even if a foreign entrepreneur founded a company in Dubai, he/she could not own more than 49% of his own company. The other 51% had to be owned by a local sponsor/partner. That means the option of sole proprietorship was not available in Dubai mainland for foreigners. However, from December 2020, this law was amended and now foreigners can also own 100% of a company in Dubai mainland.

Select a trading name
You need to select a name for your business that is unique. It cannot match with the name of any other business existing in the UAE. You need to register the name from the Department of Economic Development (DED) in Dubai. The DED takes approximately three days to register the trade name for you. The trade name you choose will remain valid for six months.

Select a trade license
The trade license that you need to apply for will depend on the type of business activities that you chose in the first step. There are four types of trade licenses in the UAE. They are:

  1. Commercial Trade License
  2. Industrial Trade License
  3. Professional Trade License
  4. Tourism Trade License

The name of these trade licenses themselves explains what kind of business activities you can perform with each of them. The authorities have identified thousands of business activities in the UAE. But these four licenses cover all of them.

Rent an office space
Since a tenancy agreement, EJARI, and other Real Estate Regulation Authority (RERA) documents must be submitted to the Department of Economic Development (DED). You must rent office premises to set up a business in Dubai. The size of your leased office quarter will determine the number of visas you can request from the DED.

Get the initial approval
Before proceeding any further, you need to submit an application with all this selected information to the DED. They will determine the validity of your application and give you the initial approval certificate if everything is alright. They may reject the application if your business does not agree with the rules and regulations of the UAE. That is why it is suggested to seek professional counseling before undertaking these important steps.

Get the external approvals
The Department of Economic Development will require additional approvals based on the business activities you mean to perform. You will need to acquire these approvals from other governmental and non-governmental agencies like the embassy or banks.

Draft a Memorandum of Association
The Memorandum of Association (MOA) is an important document and drafting it another important step in the process. The MOA needs to be drafted in accordance with the mandates by the government. That is why it is suggested that you get the professionals, who have drafted MOAs before, to do it for you.

Pay the fees
After all, this is said and done, you need to send all the documents to the DED. When collecting your business trade license, you need to make the final payment to the DED.

Summary of the things to need
Here is the final list of everything you need to start a business in Dubai:

  • Passport copies of all the partners
  • Trade name reservation certificate
  • Initial approval certificate
  • External approval certificates should the DED require any.
  • Tenancy contract
  • EJARI registration certificate
  • Trade license application
  • DED registration

Finally, as we said before, it is suggested that you take help from company setup professionals when you want to start a business in Dubai. They have done all these processes before and have the necessary connections.

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