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Ways of doing business in Dubai Mainland
Hey, what's up to you - the future businesswoman? As far as I can see, you are also one of the people who want to become a business owner in Dubai. And you are in the very place you wanted to be! In this article, I will guide you through how to set up a business in Dubai’s mainland step by step. Believe me, I have been through this same process myself and I am looking forward to sharing with you what I have learned along the way.
To begin with, let us now and then try to understand what is the reason why Dubai holds a lot of hot climate with regards to businesses.
1.1 Overview of Dubai’s Business Environment
Dubai is not only about gorgeous architecture and expensive brands, although these are indeed great points as well. The city is an ever expanding business center. I remember when I came here for the first time, I was shocked with the prospects. It is multi sector economy city with tourism, real estate, and technology industries all taking center stage.
Did you know, for instance, that the GDP growth of Dubai while setting a budget for ideal and ostentatious styles in 2022 was 4.6%? That is some serious Rak Investment.
1.2 Advantages of Setting Up in Dubai Mainland vs Free Zones
At this junction, you are possibly asking, “What is the difference between mainland and free zones?” In that case, allow me to explain.
To establish a business in the mainland jurisdiction allows you to interact with the local UAE market without any mediation. It's like having a VIP pass to all the countries! Plus, you are the full owner (yes, indeed). This was at the very beginning a very decisive aspect for me when I got down to business. On the other hand, free zones are also not so bad because of the tax advantages. However, in case you wish to penetrate the local market, mainland is the best choice. Then you have to decide which legal structure is best? There are some legal structures that I have titled, now let me give you the fundamentals.
2.1 Limited Liability Company (LLC)
This company considers the maximum activity of mainland companies. To put it this way:
- You require a local sponsor (more on that later)
- Your liability is limited to your ownership interest
- Fully applicable for majority of business activities
There is no doubt that marketing of local companies is made easier if the right local sponsor is found for the LLC. But once that was organized then all was plain sailing.
2.2 Sole proprietorship
If you are flying solo, that may be the option for you. It is basic, however, keep in mind that all debts are your responsibility. I have a friend who went this way for her consultancy business, and it was a win-win for her.
2.3 Civil Company
So do you have a professional service in mind? Like law firms, accounting companies, or medical centers. This structure is designed up to suit you.
2.4 Branch Offices
And for my international friends out there – if you have a company abroad and want to transfer it to Dubai, that’s the entry ticket for you.
Step By Step Guide For Registration of A Mainland Business
Alright, a step forward and we now dive into the thick of things. Fasten your seat belts.
3.1 Selecting A Business Activity
Deciding what your business is going to do first. The jurisdiction of Dubai, for example, has a list of activities one can do and each one has a code. When I was doing the setting up I spent quite a fair bit of time going through this list. Pro tips: Mention deliberately but do also consider the idea of diversification in the long term.
3.2 Selecting and Obtaining Company Name Registration
It is the time to think outside the box. But wait there are some dos and don’ts.
- Swear words are not acceptable
- Should represent your nature of work
- Can’t contain Allah or God’s image.
Especially when I think back to family dinners with my parents where I was suggesting names. It was fun, but somehow rather stressful – after all, we are discussing a product that belongs to you!
3.3 Providing Required Documentation
Prepare yourself: there will be some documents to sign.
- Memorandum of Association (MOA)
- Shareholders Agreement
- Passport copies, visa copies, etc
Okay, I won’t sugarcoat it: this section can be slightly irritating. But just have everything in order and you should be right.
3.4 How to Get Preliminary Approvals from DED
At this stage, the Department of Economic Development (DED) becomes your best companion. Because you will have to get this document first before going any further. When I was going through it, I rapidly discovered that the DED personnel were quite helpful.
3.5 Finding an Office Space
Yes, an office is a must- in person. No, no working from your favorite café (however appealing this may sound) The size requirements depend on your business activity. I remember how happy I was when I was selecting my first office space- everything seemed to be coming into place!
3.6 Completing Registration with the Authorities and Acquiring the Trade License
It is time to celebrate! You have almost reached the finish line. Sit back and submit your final documents, pay the fees, and voila - trade license ready. In my life, I never thought I would have such feelings, the trade license in my hands. I truly felt proud of myself.
Business Licenses and Permits
Different types of businesses possess different licenses. Here comes a small summary:
4.1 Nature of Trade Licenses
- Commercial License: For carrying on any trading activity
- Professional License: For Providers of services
- Industrial License: Pertains to manufacturing entities
4.2 Business Activity Based Specific Permits
Certain sectors require extra permits. Like for example, if you are in the food and drinks business, you will need to seek further approvals from the Food Safety Department. Always double-check about what is needed for your particular business.
Financial Considerations and Costs
Let’s cut right to the chase: how much does it cost, baby?
5.1 Breakdown of Setup Costs
Be ready to incur the following:
- Costs of License acquisition
- Cost of Registration
- Rent and other bills where we sit
- Sponsorship (if any)
While preparing a budget, I included a cushion for unforeseen expenditure. Believe me, something always comes up!
5.2 Capital Requirements
The minimum capital always depends on the type of business entity you want to take up. Most of limited liability companies do not have any minimum capital requirement; however it is prudent to have adequate capital to demonstrate your seriousness in the business.
Local Sponsorship and Partnerships
This is a crucial factor for many expatriates who are venturing into business in Dubai.
6.1 Role and Responsibilities of a Local Sponsor
For most operations based outside freezones, legal ownership papers will state that you require an additional shareholder who is a local resident clear in the structure; he must hold at least 51% of the shares as a local sponsor. Don’t panic – there are ways to manage to safeguard your interests.
6.2 Finding and Vetting a Reliable Sponsor
This is important. Breathe slowly, and do not rush things. I was somehow fortunate as I found my sponsor in one of the business networks whom I trusted.
6.3 Legal Agreements and Protections
Put it down in writing. This is where a good shareholders agreement would come in handy as your greatest ally.
Visa and immigration requirements
7.1 Business owner visa
Once you have got your business set up, you can sponsor yourself for a visa. It feels good!
7.2 Employee visas and sponsorship
As your business increases, you will have to sponsor visas for your employees. This is a simple thing, but there are limits based on how big your office is.
7.3 Family visas
Yes. You can take your family with you on this journey! I took my spouse and kids over, it was the best decision.
8. Compliance and regulatory requirements
Keep going on these if you want your business to be running smoothly.
8.1 Annual renewals and fees
Yes and make sure you include this on your calendar – you will have to renew your trade license year after the issuance. This is quite simple but please do not skip it.
8.2 Accounting and auditing standards
Yes. Please maintain orderly books of accounts. Audited reporting of financial statements may be required depending on the scale of your business.
8.3 Tax obligations
While it is quite obvious that one of the benefits of the UAE is the absence of tax, it is essential to note VAT. Make sure you are okay with the newest taxation policies.
Choosing the Perfect Position in Dubai Mainland regards the place
Location, location, location!
9.1 Commercial Regions Seeking the City
Whether it is the crowded streets of Deira, or the modern towers on the horizon of Dubai Marina, get a location that is suitable for your business.
9.2 Effects of the Location on the Operational Scope of the Business
Look at how tight a particular location would be for clients and even suppliers as well as the cost involved.
Dealing with Common Problems
10.1 Bureaucracy as a Hurdle to Operating Successful Businesses
You have to keep reminding yourself that many things are easier when one is constantly grateful. It can sometimes be difficult to stay the course.
10.2 Cultural Differences and Their Impact on Business
Dare to hop in — Dubai is a culture shock. Furthermore, knowing a culture’s social and business customs is extremely beneficial.
10.3 Cost-Control and Budgeting Skills
Do not let your expenditure balloon without cuts within the initial days. Believe me, I had to learn the hard way!
Using the Resources and The Support Services
Here is another one – use resources available – there is no need to walk alone!
11.1 Consultant Firms on Business as Well as Setup
If you are a newcomer to Dubai, these ones will be worth the effort to look for them.
11.2 Literally, Accounting & Legal Firms
Only venture into the advanced aspects of it when it is absolutely necessary and pay for it. It is really worth the money.
11.3 Fundraising Bodies and Chambers of Commerce
Become a member of the Dubai Chamber of Commerce & Industry. The passage has great opportunities in networking.
Important Terms and Definitions
In this section, let us now look at some useful terms that will be emphasized in this module:
- Trade License - Your official document in accordance with which you conduct business
- DED – Department of Economic Development
- Local Sponsor – Your Emirati partner (for most businesses)
- MOA - Memorandum of Association
- CR – Commercial Registration Department
- PRO Services - Made easy with government processes.
- Emirates ID – Your identification card
General Conclusion
Whew! So we have come this far, and it looking at business in last week we have seen and tackled student break in my in fifth country and it was so exciting starting a company. Well, there are challenges, however the scope is really wide. There are lots of people who have helped me in interesting aspects of business, including the time I remember the doors opened officially for my business – it was a mixture of thrill and anticipation and more of how on earth did I get myself into this? However, and this might be surprising, have found it is one of the most fulfilling things I have done.
So, what is holding you back from taking the first step? Everything in Dubai is anticipating you and will open up its doors for you having inside plenty of out of the ordinary opportunities. Please leave your comments if you have any. But who knows, it could be me who attends such occasions in the coming future in Dubai.
Good luck wishing the best in the land of opportunities and everything good in all endeavors ‘City of Gold’!