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How to Open a Company in Dubai

Starting a Business in Dubai: An Exciting Opportunity

Launching a new business is thrilling but challenging. The dynamic city of Dubai offers tremendous opportunities for ambitious entrepreneurs looking to establish and grow successful companies. Known for its enterprising and business-friendly environment, Dubai is consistently ranked one of the top places in the world to do business. From its world-class infrastructure to its strategic location and extensive government support, Dubai provides an ideal ecosystem for startups and investors alike.

However, while the prospects seem bright, setting up shop in Dubai does come with its own unique set of rules and regulations. Navigating the local laws and requirements can be daunting without the right guidance. A misstep during company formation could lead to frustrating delays and lost revenue down the road. This is why enlisting the services of a reputable business setup company is highly recommended. They have the expertise to steer companies through the process efficiently.

In this guide, we’ll walk through the 7 steps of How To Open a Company in Dubai, for successful establishment. With the right knowledge and preparation, your company can be off to a great start in one of the most promising markets in the Middle East.

 

Step 1: Choose a Business Structure

The first step when setting up a business in Dubai is deciding on the right business structure for your company. There are several options to consider:

Sole Proprietorship

A sole proprietorship is owned and run by one individual. It’s the simplest business structure with minimal legal requirements. However, the owner has unlimited personal liability for all debts and obligations.

Limited Liability Company (LLC)

An LLC is a separate legal entity owned by its shareholders. It provides liability protection for shareholders, who are only liable up to their share amount. LLCs require more startup legal formalities but offer more flexibility in ownership and management.

Branch of Foreign Company

A branch office has the same legal identity as its parent company. The parent company has full responsibility for its branch. Branches are easy to establish but offer no liability protection.

Representative Office

A representative office can promote its parent company’s activities but cannot engage in commercial activities. It offers a simple setup for exploring the Dubai market.

Partnership Firm

A partnership distributes income and liabilities amongst partners, who share management responsibilities. Few formalities are required but partners have unlimited joint liability.

Free Zone Company

Free zone companies can be 100% foreign owned but can only operate within that free zone. They provide tax exemptions and minimal reporting requirements.

The business structure you choose determines registration requirements, fees, ownership rules, taxation, and personal liability. Consider professional advice when deciding on the best structure.

 

Step 2: Obtain Trade License

Obtaining a trade license is a crucial step to open a company in Dubai. The trade license formally registers your company with the Department of Economic Development (DED) and allows you to conduct business activities legally.

The trade licensing process involves submitting an application to the DED along with all required documents, getting approval from relevant authorities, and paying the license fees. Here are some key things to know about obtaining a trade license in Dubai:

  • Decide on the type of legal structure for your company – sole proprietorship, LLC, branch office, etc. The business structure will determine the exact license type.

  • Choose an appropriate business activity to be licensed for. Review the DED’s list of permissible economic activities before applying.

  • For certain business activities, you may need approvals from additional authorities like DHA, Municipality, Civil Defense etc. before the trade license is issued.

  • The DED reviews the application and issues either an initial approval or requests further documents/clarification.

  • Once approved, the trade license fees must be paid within 30 days. Fees depend on factors like business activity, number of partners, shareholders etc.

  • After paying the fees, the original trade license certificate is issued. This must be collected in person or through a authorized representative.

  • The trade license must be renewed annually for the company to legally continue operations in Dubai.

Obtaining a trade license can take 2-4 weeks depending on the business activity. Hiring a business setup consultant can help navigate the licensing process smoothly. With the proper documentation, fees, and approvals, securing a trade license is a major step forward to formally establishing your company in Dubai.

 

Step 3: Find Office Space

One of the most important 7 steps for success is securing office space when setting up your business in Dubai. There are several options to consider:

Rent Office or Coworking Space

The most traditional route is to rent office space in one of Dubai’s many business districts like Downtown Dubai, DIFC, or JLT. Prices vary considerably based on location and building amenities. Expect an average of AED 250 per square foot in premium buildings. Coworking spaces are a flexible, affordable alternative to traditional office rentals. For a monthly fee, you can secure a desk or private office in a shared workspace with amenities like meeting rooms, lounges, event spaces and administrative support.

Whether you’re an entrepreneur, freelancer or seasoned business owner, Flexible CoWork Space Dubai at DBS Corporate Services offers flexible workspace solutions, which is an ideal workspace solution for short or long-term needs.

The stylish offices, located in the heart of Al Garhoud on the doorstep of Dubai International Airport, are the perfect spot to to to give your business a professional base. Whether you need a desk or a private office, prefer to watch the world as you work or a space free from distractions, you will find the perfect fit for your needs at DBS Corporate Services. Our meeting rooms, offices and co-working spaces are available on a daily, weekly or long-term basis, as you need them, with refreshments readily available. Click here for more.

Buy Commercial Property

If your business has significant capital and you plan to be in Dubai long-term, you may want to purchase commercial real estate. This provides maximum control and stability. Prices vary greatly based on location. Expect to pay AED 2,000 – AED 4,000+ per square foot.

Purchasing commercial property in Dubai requires at least 51% local ownership. You’ll need to partner with a Emirati citizen or company. Consider both the purchase price and ongoing service fees when buying.

Business Center Solutions

Another option is using a business center, which provides built-out office space and administrative services on flexible terms. Business centers allow you to focus on your company while they handle phones, mail, receptionists and meeting rooms.

Some business centers offer both virtual and physical office solutions. This allows you to maintain a prestigious address and meeting/event space without the cost of full-time office space.

DBS Corporate Services
Executive Offices & Co-working Space

Step 4: Hire Employees

One of the most important steps in setting up your business in Dubai is hiring employees. There are several key things you need to know when it comes to hiring in Dubai:

Labor Laws

The UAE has a set of labor laws that govern the employer-employee relationship. Some key aspects include:

  • Minimum wages – There is a government-set minimum wage that must be paid to employees based on their qualifications. This varies but is around AED 2000 per month for unskilled laborers.

  • Working hours – The maximum working hours are 8 hours per day, or 48 hours per week. Employees are entitled to breaks and time off.

  • Leave – Employees are entitled to annual leave, sick leave, maternity leave, etc as per UAE labor laws. The number of leave days depends on factors like years of service.

  • End-of-service benefits – Employers are required to provide end-of-service benefits (similar to severance pay) to employees when their employment ends. This is calculated based on duration of employment.

  • Worker safety – Extensive health and safety rules govern worker safety and workplace conditions. Employers must comply with all requirements.

 

Visas

To legally work in Dubai, expats require an employment visa sponsored by their employer. Key aspects:

  • The employer is responsible for visa costs, medical insurance, etc. This cannot be passed to the employee.

  • Work permits must be obtained from the Ministry of Human Resources & Emiratisation.

  • The visa process can take 2-4 weeks and requires extensive documentation, including educational certificates, medical tests, Emirates ID registration, etc.

  • Visa rules differ for certain jobs and nationalities. Free zone companies have separate visa quota requirements.

 

Hiring Process

When hiring in Dubai, follow these best practices:

  • Define the job role, qualifications, compensation, etc clearly.

  • Advertise on relevant platforms to source candidates locally and globally.

  • Screen applicants carefully based on credentials and conduct interviews.

  • Be thorough in background verification before making offers.

  • Ensure all paperwork (offer letter, contract, etc) complies with UAE Labor Law.

  • Coordinate with PRO to complete visa formalities and paperwork.

  • Conduct new employee orientation on policies, benefits, etc.

With the right hiring process, you can build an excellent team to drive your business success in Dubai.

 

Step 5: Open a Bank Account

Opening a business bank account is a crucial step when setting up a company in Dubai. The process can vary depending on the type of legal structure you choose and the requirements of each bank. Here are the key steps to open a business bank account in Dubai:

Choose a Bank

Research different banks in Dubai to compare account features, fees, and options. Popular choices include Emirates NBD, Mashreq Bank, HSBC, and Commercial Bank of Dubai. Consider a bank’s reputation, services, and branch locations when deciding.

Gather Required Documents

Banks will require documents such as your business license, Memorandum of Association, passport copies of owners/partners, proof of address, and more. Requirements can vary, so check with the bank first.

Complete Account Application

Fill out the business account application form either online or at a branch. You’ll need to provide details about your company, owners, expected transactions, and more.

Make a Minimum Deposit

Most banks require a minimum deposit to open the account. This can range from AED 10,000-50,000 depending on the bank. Ensure funds are available for the initial deposit.

Finish Account Set-Up

After submitting all documents and making the deposit, the bank will finalize the account opening. This may take a few days. You’ll receive account numbers, cards, checks, online banking credentials, etc.

Register for VAT

If your business exceeds the VAT registration threshold, register for VAT with the Federal Tax Authority and provide details to the bank.

Link with Payment Systems

Connect your account to payment services you plan to use like merchant accounts, PayPal, credit card processing, etc.

With the proper paperwork and preparation, opening a business bank account in Dubai can be straightforward. Choosing the right bank and account to suit your business needs is key.

 

Step 6: Finalize Legal Paperwork

Finalizing the legal paperwork is a crucial step in setting up your business in Dubai. This involves drafting key business contracts, establishing shareholder agreements, and other formal documents.

Some of the key legal documents you’ll need include:

  • Shareholder Agreement – If you have business partners, a shareholder agreement is essential to define ownership stakes, voting rights, profit/loss distribution, roles and responsibilities. Make sure to work with a lawyer to ensure agreement meets all legal requirements in Dubai.

  • Partnership Agreement – For partnerships and limited liability companies (LLCs), a partnership agreement is required. This will outline ownership percentages, distribution of profits/losses, partner roles, decision making, etc.

  • Leases – If renting office space or equipment, be sure to have thorough lease agreements reviewed by legal counsel. Define terms like duration, rent fees/increases, security deposit, maintenance, etc.

  • Employment Contracts – Even if hiring just one employee, have an employment contract template prepared. Outline compensation, benefits, policies, grounds for termination, confidentiality clause, and more.

  • Vendor, Supplier, & Service Agreements – Draft agreements with vendors, suppliers, service providers and any external parties you’ll do business with. Detail payment timelines, service levels, quality control, and other expectations.

  • Non-Disclosure & Confidentiality Agreements – For any partners, employees, or external parties privy to sensitive company information, have NDAs and confidentiality agreements signed. This protects your intellectual property and trade secrets.

Don’t forget ancillary documents like company bylaws, operating agreement, and articles of incorporation or formation. Be sure all paperwork complies with Dubai legal requirements. Work closely with a reputable attorney to finalize legal paperwork and protect your business interests in Dubai.

 

Step 7: Obtain Certificates & Permits

After securing your trade license and establishing a legal business entity in Dubai, there are a few additional certifications and permits you may need depending on your specific business activities.

  • If you plan to import or export any goods, you’ll need to register for an Import/Export Code (IEC) from Dubai Customs. This allows you to import raw materials and export your finished products.

  • For businesses in certain regulated sectors like healthcare, education, tourism, and transportation, you may need additional permits and qualifications. Make sure to check with your local Dubai authorities on any industry-specific requirements.

  • If your business has a physical retail or office location that will host customers or employees, you must obtain a Public Health & Safety Certificate. This ensures your premise meets occupational health and safety standards.

  • You may also need various other operational permits depending on your business activities, such as food handling permits if you’ll be preparing or serving food on-site. Your business setup consultants can advise you on any additional certificates needed.

The final step is obtaining all legally required permissions so your new company can operate fully compliant in its industry. With the proper certificates and permits in place, you’ll be ready for a successful commercial launch in Dubai!

 

Key Takeaways for the 7 Steps for Success

To open a company in Dubai, requires careful planning and preparation. Here are some of the key takeaways:

  • Choose the right business structure for your needs – sole proprietorship, LLC, branch office, etc. Consider implications for ownership, liability, taxation, and setup processes.

  • Obtaining a trade license and registering with DED is essential. Work with a setup company or consultant to navigate requirements.

  • Secure office space before finalizing registration. Lease or purchase suitable premises for your business activities.

  • Hiring employees requires sponsorship, visas, contracts, and more. Consult resources like the DED to ensure full compliance.

  • Open a business bank account to keep your finances separate. Comparison shop to find an account with favorable terms.

  • Finalize all legal paperwork for your business structure. Record articles of incorporation, memorandums, shareholder agreements, etc.

  • Acquire certificates, permits, and memberships relevant for your industry and business activities. This may include municipal certificates, trade permits, chamber of commerce membership.

  • Allow plenty of time for the multiple steps involved. Be prepared for back and forth with government departments. Seek expert guidance to avoid pitfalls.

With proper planning and preparation, the business setup process in Dubai can successfully position your company for the future. Partnering with an experienced consultant eases the journey.

Find out how to open a company in Dubai with our Company Formation Service. We will set up your new company quickly so that you can start doing what you love most – running your own business!

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