Have you been considering starting a business in the UAE but are unsure of the required investment? The UAE has a strong business community, and many people are interested in beginning their own business, whether they are working in the country and wish to run a business on the side or full-time.
According to Dubai Economy and Tourism, nearly 45,000 new company licenses were issued in Dubai alone during the first half of this year (DET).
There are several ways you can start your path to entrepreneurship, from opening a one-person business to forming a small LLC.
While there are many possibilities for business owners, an LLC or Limited Liability Company on the mainland is a preferred choice in the UAE because it provides greater operational freedom, according to local experts in a business setup.
There is a long list of commercial operations that may be carried out through the license, and it enables the business owner or shareholders to own 100% of the firm. You can also do business anywhere in the United Arab Emirates.
However, if you’re interested in learning more about other business license types, such as a sole proprietorship or a free zone firm.
The factors that can change your business setup costs
To learn the correct and appropriate of forming an LLC on the mainland, Gulf News spoke with UAE business formation experts. You must budget for some charges that are necessary, but there are also some things that can make your overall cost go up.
1. Company’s legal type and shareholders
The type of business you want to start and whether it is being started by an individual or a corporation as a branch are two factors that can influence start-up costs.
The main problem with the complexity of starting a business in the United Arab Emirates is that it depends on the type of business you want to operate and who owns it.
In comparison to when a firm is established by an individual, companies intending to open a branch office in the UAE, for instance, would have to complete much more documentation processes.
The procedure of setting up a business is simpler and less expensive if you are a resident and all of the company’s shareholders will be people as opposed to a corporate entity. As a result, setting up an onshore, individual-owned business is quite simple and involves both fixed and variable costs.
Also Read: How to set up a business in Dubai?
2. Your business activity/activities
The business activity or activities that your business will do are a significant component that influences setup expenses.
You may require particular approvals from relevant authorities, such as the municipality, civil defense, or other entities, depending on your line of work.
For instance, you would want multiple approvals from the educational authorities as well as inspections and audits to make sure you adhere to the infrastructure, health, and safety regulations if you wanted to open a nursery or play school. On the other side, there aren’t many additional approvals required whether you’re opening a clothing store or a content management consulting firm.
3. Jurisdiction
When starting a business, the jurisdiction refers to the location of the firm formation: Will it be in a free zone or special economic zone? Will it take place on land? In which Emirate will you establish yourself?
You would have to abide by the specific economic rules that apply to each Emirate or free zone. Additionally, prices may differ slightly between different free zones and emirates.
For instance, Abu Dhabi grants a two-year license at the moment the business is established, so you won’t have to pay for the license renewal the following year.
Cost of setting up a mainland LLC
Here is a breakdown of some of the necessary and variable fees you will incur while establishing an LLC on the mainland, keeping in mind the factors listed above:
Step 1: Submit your trade name and get an initial approval – Dh1,000
You would first need to go to the economic department of the Emirate in which you desire to launch the business, as an LLC on the mainland would fall within that Emirate’s economic department’s purview. Here is where you will submit your application for the initial business license approvals. This involves submitting your trade name and receiving initial approval. Your trade name must adhere to the rules established by the economic authority. You will be given a provisional trade license number and an approval certificate after the procedure is finished.
Step 2: Get MOA, and other documents notarised and attested – Dh2,000
A Memorandum of Association (MOA), which specifies the business activities you will conduct as well as the shareholders’ agreements, among other aspects of the business operations, is one of the most crucial papers for your company. This form, along with any other documents your business may require, must be notarized and attested. In the UAE, a notary might be used for this. Online submission of this form is another alternative in Abu Dhabi.
Step 3: Find an office location. Ejari – Dh210
Depending on their operational requirements and financial constraints, business owners in the UAE have a variety of options, including launching their enterprise through a “virtual office,” locating a Flexi desk at a business center or opening their own brick and mortar location. No matter which option you select, you must have the Ejari, a registered leasing agreement, in order to finish the setup procedure. This costs roughly 210 Dh.
Step 4: Get any additional approvals needed
This phase can vary greatly based on the type of business you are starting, as was previously indicated. A sports center or club would need additional permits from the Emirate’s sports body; for sectors like education, health, or food, for instance, you would need particular approvals from the municipality or regulatory authority within the industry.
These additional approvals can cost anything between Dh10,000 and Dh30,000.
Step 4: Get your trade license – Dh20,000
Once you have all the necessary documentation, you will need to return to the economic department to submit an application for a trading license. The trading license will then be issued if all the required paperwork is in place.
Step 5: Get your establishment card and immigration card – Dh2,500 + Dh5,500
The next step is to register as an establishment with the General Directorate of Residency and Foreigners Affairs (GDRFA) and the Ministry of Human Resources and Emiratisation (MOHRE).
You would need to apply for the establishment card with MOHRE and the immigration card with GDRFA. With one of these cards, your business will be able to apply for visas and work permits.
The MOHRE establishment card costs Dh2,500 in total, while the immigration card might run you about Dh5,500.
Total cost – Approximately Dh31,000
You would need to set aside at least this much for the formation and registration of a wholly owned LLC on the mainland.
Additional fees to consider
Depending on your operational requirements, you may need to budget for the following additional expenses:
- Additional approvals – Depending on how many authorities you need to obtain approval from, this fee may dramatically increase the amount of money you need. To determine exactly how many approvals you would need for your business idea and how much they would cost, it is advisable to speak with business setup advisors.
- Rent – You would also need to consider the rent, which would depend on the size and location of your workplace.
- Utility deposit – If you are opening your own business, you will also need to give the Emirate’s water and energy administration a one-time security deposit. The estimated value of this refundable deposit is 2,000 Dh. Additionally, you would have to consider the monthly utility costs associated with your business.
- Visa fees – If you intend to apply for an investor visa, you will need to set aside money to cover the about Dh6,000 cost of the visa.
- Business setup fees – Because starting a business involves all of the stages mentioned above, you may want to engage a company formation professional to make sure you have all the necessary paperwork and approvals. You will pay a certain cost to each business setup consultant for their services.
