7 Key Steps for Setting Up a Business in UAE

When you are planning to expand of your businesses and set up your office in the Middle East, the UAE is the location that comes into your mind. Business owners seeking to establish a business in the United Arab Emirates or UAE have access to a plethora of opportunities to explore.  Once you have selected a business setup in UAE, it becomes crucial to ensure no regulation is ignored and the requirement is met. However, the process of setting up a business in Dubai is complicated and requires one to follow the right steps in order to succeed.  If you are among those who are planning to begin your own business in UAE, then you should read this article. In this article, we are going to provide you with 7 key steps for business setup in UAE. Furthermore, we will disclose some useful information that will help you to set up your business in the United Arab Emirates.

Types of Business Entities Permitted in the UAE

When it comes to starting a business in UAE, it is crucial to understand which types of business entities are allowed in the United Arab Emirates.  Let us take a look at the types of businesses that are allowed in the UAE:

• Establishment or Sole Proprietorship: This type of business entity is owned by an individual who makes all the decisions for the business and bears both profit and loss.
• General partnership company: This business entity is owned by two or more partners who hold limitless liabilities. In short, these company partners are responsible for the debts and liabilities of the business.
• Private Joint Stock Company: This business entity is a company where the number of stakeholders is at least two but not more than 200.
• Limited Liability Company: The Limited Liability Company or LLC is a company where the number of partners lies between two and fifty.
• Public Joint Stock Company: The public joint stock company is a company where shareholders are at least 5.
• Limited partnership company: This type of business entity comes with at least one general partner and limited partners.

 We recommend you to consult Flyingcolour Business Setup in order to get more information about legal Business entities in UAE.

Top 7 key steps for setting up a business in Dubai

It is very crucial to follow the right path in order to start a business in UAE. The right direction will ensure a higher chance of success. So, let us take a look at the key steps for business setup in UAE:

1. Choose the Right Business Activity

The first step that you have to take in order to start business in UAE is deciding what type of business you want to conduct in the UAE. The economy of the UAE is varied and a broad range of commercial is allowed in this emirate. However, there are numerous business activities that are restricted and require unique kinds of licenses.  It is very crucial to research the market demand for business activities that you have decided to operate. Furthermore, you should also ensure that you have the required qualifications and experience in order to conduct these activities in the UAE.

2. Select the right legal structure. 

After choosing the activities for your business, you need to remember to select the proper legal structures for your business. The following are 3 legal systems from which you ought to choose:  

• Mainland company: A mainland company is registered with the Department of Economic Development or DED. These companies have the potential to operate anywhere and have interaction in any form of business interest in the UAE. 
• Offshore company: An offshore company is a company registered inside the UAE but does now not have any bodily presence inside the country. These businesses can be used for a number of purposes, like international trade and asset protection.
• Free zone company: A free zone company is an organization that is registered with a free zone authority. These zones are precise economic regions that provide groups with uncountable blessings, like a hundred per cent foreign possession, streamlined visa tactics, and extra.

3. Develop a business plan. 

Creating a reliable business plan is among the crucial key steps for business setup in UAE.  A compelling business plan has to potentially outline elements, like your business goal, financial projection, and advertising strategies. A well-written business plan comes with the ability in order to attract investors and secure funding. Furthermore, it provides your businesses with a roadmap for the success of your business.   

4. Choose a name for the business.

Selecting the name of the business or name of trade is an additional crucial step for business setup in UAE. You should check the trade or business listing on DED’s official website. However, a company in the UAE may not have the same name. Offensive or religious comments should also be avoided.

5. Choose the location 

there are uncountable business districts and free zones in the UAE. The best part about these places is that they provide you with multiple benefits for your business. When selecting a suitable location for your company, you have to consider factors like transportation, availability of staff, and more.  

6. Get the required permits and licenses.

In an effort to legally start a business in UAE,  you have to get the necessary permits and licenses from suitable authorities of the Government. The license process might require extra effort and time. So, it is helpful to contact professional assistance from Flyingcolour to ensure a smooth license process. 

7. Open a bank account.

The final step to begin the operation of your business in UAE is to open a corporate bank account in any bank in the UAE. This bank account will let you manage your company's transactions in a more efficient manner. 

Mainland vs Free Zone vs Offshore: Which Is Right for You?

Choosing where to start a company is one of the most significant decisions in the business setup process as it impacts ownership rules and the place where you can operate. It also affects the type of license you will receive.

Cost to Establish a Company in the UAE

One of the most asked questions from investors who are looking for steps on how to establish a company is what it will actually cost. While exact fees differ by jurisdiction and office type, the general cost components are constant across all setups:

• Trade license fee: usually begins from around AED 5750* to AED 15000*+ based on the jurisdiction and activity type.
• Initial approval and name reservation fees: usually a few hundred AED.
• Office or flexi-desk rental: It usually ranges from AED 6000 for a flexi desk in a free zone to essentially high for physical mainland office space.
• Visa costs: Approximately AED 3000 to AED 7000 per visa that includes entry permit a status change along with medical test and Emirates ID.
• Memorandum of Association (MoA) or Local Service Agent (LSA) drafting and notarisation fees.
• Bank account opening: usually free though minimum balance need vary by bank.

How Long Does It Take to Establish a Company in the UAE?

Timelines differ based on jurisdiction and business activity but most of the business setups follow a similar pattern:

• Business activity and name approval: 1 to 2 working days
• Initial approval from the relevant authority: 1 to 3 working days
• MoA/LSA drafting and notarisation: 1 to 2 working days
• Trade licence issuance: 1 to 5 working days after documents are submitted
• Visa processing (if required): an additional 1 to 3 weeks
• Corporate bank account opening: typically 2 to 6 weeks depending on the bank and business activity

Overall a lot of free zone companies can be licensed within a week whereas the full procedure that includes visas and banking usually takes 3 to 6 weeks from beginning to end.

Documents Required to Establish a Company in the UAE

While the documents required differ by jurisdiction and legal structure, a lot of applications need the following:

• Passport copies of all shareholders and managers
• Passport size photographs
• Proof of residential address
• A completed application form and business plan (for a few activities)
• No Objection Certificate from a current UAE sponsor if needed
• Memorandum of Association (MoA) or Local Service Agent (LSA) agreement
• Tenancy contract or Ejari for office space (mainland setups)
• Board resolution and Certificate of Incorporation if the shareholder is a corporate entity

Common Mistakes to Avoid When Establishing a Company

• Choosing the wrong business activity can impact on the cost of licensing and banking approval along with future growth.
• Selecting a jurisdiction depending on cost alone instead of long term business goals and visa needs
• Not keeping the track of time and documents needed for corporate bank account approval
• Not paying attention to ongoing obligations such as license renewal and corporate tax registration along with VAT filing
• Not able to plan for future growth like expansion into new activities

Why You Should Choose Flyingcolour Business Setup?

Flyingcolour Business Setup comes with a team of experts to provide you with help in setting up your business. Furthermore, they can help you in completing all legal requirements more efficiently. 

Frequently Asked Questions

How do I establish a company in the UAE as a foreign investor?

A lot of foreign investors can now own their company in UAE fully by selecting the right jurisdiction and activity. This includes -

• Choosing a business activity
• Selecting a legal structure and jurisdiction
• Reserving a trade name
• Submitting the needed documents
• Getting your trade license
• Opening a corporate bank account

What is the cheapest way to establish a company in the UAE?

A free zone company with a flexi desk and no visa requirement is usually the most affordable option. It usually starts from approximately AED 15000 in the initial year but the costs differ by free zone and business activity.

Do I need a local sponsor to establish a company in the UAE?

For a lot of mainland activities, full foreign ownership is now allowed without a local Emirati sponsor. But a few regulated activities need a local service agent or specific approvals.

How long does it take to establish a company in the UAE?

Many free zone companies can obtain a trade license within about a week, while the complete process including visa processing and bank account opening typically takes 3 to 6 weeks.

Can I establish a company in the UAE without visiting in person?

Yes, in many cases. Digital platforms allow eligible investors to complete company registration entirely online. However, opening a corporate bank account often still requires an in-person visit, depending on the bank's requirements.

What taxes apply after I establish a company in the UAE?

Most UAE companies are subject to a 9% corporate tax rate on taxable income above AED 375000 with 0% tax below that threshold. Businesses meeting the VAT registration threshold must also register for and file VAT returns.

Which is better for establishing a company: mainland or free zone?

It depends on your business goals. Mainland companies suit businesses that want to trade directly across the UAE market and work with government entities, while free zone companies are often preferred by startups, consultancies, and international trading businesses seeking 100% ownership and simplified setup.

To learn more about 7 Key Steps for Setting Up a Business in UAE, book a free consultation with one of the Flyingcolour team advisors, Simply call  +97144542366 or send WhatsApp messages to +971554413566. you can also drop an email to info(at)flyingcolour(dot)com. *Please note that this article has been published on 20/12/2023 in accordance with the federal policies and updates at the time of writing. For the latest info please talk to our consultant.