Setting up a business is a decision that will transform an individual into a full-fledged entrepreneur. The individual can have full control of their business and channel investments to grow the business. Depending on the nature of the business activity, the budget and capital investment will vary. Also, many factors will determine how to setup a business in UAE.
Additionally, setting up a business in UAE includes many procedures to follow for the investor. In general, to set up a business the investor can choose two business jurisdictions in UAE. It is the mainland and Free Zone that provides the necessary infrastructure and platform to successfully setup and scale up a business in UAE.
Setting up a Business – Free Trade Zone vs. Mainland Companies
Setting up a Business globally has almost similar procedures. The business licensing authority across countries will vary. Most of the countries have two major business jurisdictions.
One is the Mainland which is directly governed by the Ministry of Finance or the Ministry of Economy of the particular country. Second, is the Special Economic Zone or the Free Trade Zone.
There are differences between a Mainland and a Free Zone company. The differences are in governance, taxation policies, ownership, visa quota & and office space availability, infrastructure, etc.
The Free Zones and Mainland Companies in UAE have distinct advantages for investors. Depending on their business requirements, the investor must choose the right business jurisdiction for their business.
Setting up a Business – Procedures to Follow
Setting up a business in UAE follows certain procedures starting with selecting the right business jurisdictions for the new company. Then, choose the right business activities for the new company.
1. Select the Right Business Activity
Choosing the right business activity is an important aspect of setting up a new business in UAE. These activities will appear in the trade license of the company. The company can only conduct business related to the activities chosen while setting up the company.
Based on the business license chosen, the investor will have a wide range of business activities to select for adding them to the trade license. So, for setting up a business in UAE selection of the right business activity is a vital aspect.
2. Submit the Documents for Review
The investor must submit certain documents to the licensing authority for setting up a business in the desired business jurisdiction. The documents required include the application form, investor details, photograph, passport copy, etc. The business activity must be entered correctly in the application form.
Along with the documents, provide a signed copy of the draft for processing the share certificate, Memorandum of Association, Article of Association, etc. For setting up a business and running it successfully, there are few company documents required.
The draft for the Share Holder Certificate, Memorandum of Association, and Article of Association must be signed by all the shareholders. The draft must be submitted to the licensing authority for review and approval from the specific authority.
The Licensing Authority will process the company documents and the Trade License for the investor. After making the necessary fee payment, the company documents will be made available to the investor.
3. Choose the Office Space
The UAE Free Zones and the Mainland will have a variety of office spaces and types. It will range from co-working, flexi-desk, to executive offices and fully-furnished offices. The Free Zones have special packages with license and office space together. So, it is easier for the investor to set up their company in UAE and start the business operations.
For some business activities such as marketing consultancy, accounting services, IT Consulting, etc., there is no requirement to have a physical office space. However, investors can have a physical office space to add credibility to the clients and to effectively organize their business operations.
4. Make the Fee Payment and choose the right Business Setup Package
Most of the Free Trade Zones in UAE have customized business setup packages with varying offerings. It ranges from co-working spaces to fully furnished office space, multiple visa quotas, all-inclusive business setup etc.
The investor can choose from the wide range of business setup packages available from the Free Trade Zones in UAE. Similarly, on the mainland, there are attractive offers for office and warehouse space.
5. Obtain the Trade License and Company Documents
After submitting the documents for review and making the fee payment for the trade license and office space rent. The licensing authority will issue the Trade License and other company documents to the investor.
Along with the company’s Trade License, a Memorandum of Association, Shareholder Certificate, and Article of Association will be provided to the investor.
After receiving the company documents and the trade license, the investor can proceed to open a business bank account. The investor can also apply for resident visas for them and the employees.
Setting up a business – Benefits for the Investors
There are many benefits of setting up a business in UAE for the investor. They can have complete control of the work they do. Also, for the investor, there are many advantages in setting up a business in the short term and long term.
The initial years of the business would be challenging mostly when it comes to the cash flow, operational abilities, employee hiring, technology investment, etc.
As business picks up momentum, the investor will be able to invest more in building business systems, and technology, hiring talented staff, diversifying portfolio of services, and more.
There are multiple ways to fund the business starting from the initial stage onwards. The business can be completely bootstrapped by the investor itself, or funded by a bank loan. It can also be funded by an angel investor or by a venture capitalist. So, there are many options for funding your business initiative and keeping it running.
Hence, once the business reaches a level of operations, it will start generating revenue with minimal intervention from the investor. The system will evolve and start operating in full swing making the business venture a profitable establishment.
To know more about setting up a Business in UAE and starting a business, talk to our team of expert Business Setup Consultants right away!
