Due to its economic stability to the international market, Dubai, a dream country starting to attract the business investors around the worlds. The Business startup has been always encouraged by Dubai.
Current market trends in Dubai offer plenty of opportunities for foreign investors to tap into imports and export of commodities, as well as taking advantage of the growing tourist traffic of the city for an almost unlimited number of potential clients and customers going your way.
If you want to start your new business in Dubai or to start branch office at Dubai, than you must know some plus and minus points before taking decision to start business in Dubai. There is mainly two type of Ownership i.e. 49 % with sponsor & 100% in free zone.
Plus points in business startup in Dubai
1. Select a local sponsor, a UAE national for local business startup.
You need to get acquainted with the various facts associated with business startup in Dubai and avoid the problems encountered while launching a profitable enterprise in the UAE.
There are plenty of business opportunities available in Dubai, as well as in other Emirates of UAE. However, if you really want to start a business which must exploit the potential of Dubai then you need a locally registered LLC business.
A UAE national must be taken as a 51% partner who is called a local ‘sponsor’. A local company provides the freedom to locate the business anywhere in the city. For a business startup in Dubai this is a boon because it affords the best choice of locations to suit your budget.
A sponsor must be paid a yearly fee which can be negotiated. Do develop a rapport with your sponsor so that he is ready to help you in sorting out any problems you may face along the way with authorities.
2. Select a Free Zone if you wish to own your business 100%
Keep in mind that the only way for a business startup in UAE to start without taking a UAE national acting as your partner is to locate your business in one of the Free Zones. This is not practical for businesses that must be in city markets like restaurants and retail stores. Also businesses that work with the government have to be registered with a local sponsor.
Not to mention the fact that purchase or rental in a Free Trade Zone district might be high for your budget to handle.
For a business startup, Free Zones offer three great advantages
- 100% ownership
- Speedy start up
- Duty Free customs boundary.
3. Select a Location that optimizes suitability, convenience and costs
Another important step in planning a business startup in Dubai is to determine the most suitable location for the business. Setting up a profit-based enterprise in the city wouldn’t do you much good despite the growing economy if you’re customers or clients can’t reach you.
You need to set up your business in an area that is most profitable for your business or most convenient to your business. A location in the right city can be selected for a shop or an office most known for the type of product or service you are dealing with.
If you are planning a Free Zone company then you must make the selection based upon the criteria of distance, costs and if it is suitable for your product, business model and trade requirements.
A tenancy contract must be concluded. If you’re aiming to start a small-scale enterprise, then the basic amenities, like telecommunication, storage, and space inside the establishment is the basic concern that must also be satisfied. Other services available in the commercial property can vary greatly.
4. Confirm your Visa eligibility and requirement
For a business startup in the UAE a visa permitting you and employees to live in UAE is essential to run your business.
Visas are allowed for almost all businesses.
However their number varies according to a variety of criteria such as the size of the office, nature of business, category of the employee or the investor.
If your business startup in Dubai is a local company then you definitely need to work with your sponsor to get your visas – at least the first time.
Business visa application in Dubai is not as strict as most would think since the bureaucracy is quite open to foreign investors planning to set up shop in the city — any business is good business is the motto here.
However, you need to have your sponsor apply a visa for you as the investor of your business startup.
Aside from your passport and other legal requirement, a letter is also needed from your sponsor to highlight his or her, or your personal information, reason for the visa application, and the likes before processing.
Subsequently you may be allowed to apply for the visas of your employees if your sponsor agrees to give you the authority.
5. Hire a registration agent to take you through the process of business startup
Hiring a business advisory firm to register your business startup may be your best option.
These consultants will not only hold your hand right through the setting up process but will also actually register the company for you. And will help with opening your bank account, arrange for an auditor, do your renewals and offer you nominee services.
You may find their expertise in dealing with the local government bureaucracy and with Free Zone Authorities to be of great help in planning and itemizing the your business startup costs.
In most cases, these firms offer a team of experts to plan out your company registration from scratch — this includes the strategies you need to follow in order to smoothly set up your business, itemizing potential costs, offering licensing and location options, coming up with solutions for potential business hurdles, and so on.
Also, they will take care of all the necessary requirements to help you to have your business registered legally with minimal problems on your end.
Financing is usually not available to business startups. If you are unable to pay for the start up costs, perhaps you should wait before taking this step.
Minus Points in business startup in Dubai
1. Do not register your company in a Free Zone without taking a look at the available office sizes and preconditions
Often the published information for a Free Zone gives a wide choice of offices. The actual availability keeps changing. A business startup normally looks for the cheapest option.
It is probable that when you actually go for registration of the company you may find that only certain office sizes are available. This will throw your budget into disarray.
It may be too late to change your Free Zone then. Or it may happen that certain offices allow only 1 visa that too only for investor and not for the employees. So do not proceed until all aspects about the office are confirmed.
2. Do not make firm plans based only on published information
Before you finalize the plans for your business startup it is prudent to confirm the validity of the published information.
Rules change in Free Zones and also in the local Department of Economic Development for business registration.
Do not go ahead until you have confirmed your assumptions through a business set up consultant or by actually contacting the relevant authority.
You may discover that some papers may be needed or that some nationalities need special permissions or that some requirements may be waived if you request or negotiate.
3. Do not choose a license category blindly without confirming if it allows your business model
In the UAE, it is not difficult to devise a business model that will not need a change. Very often much change or at least some tweaking is needed.
Make wide possibilities and confirm whether your planned license category allows you all the activities that will be likely in the business model you are planning. Do not choose a license category that is too narrow.
4. Do not open a bank account without confirming the bank charges
Banks levy varying charges. For a business startup these can amount to a substantial sum for a bank dependent operation. Always confirm the requirements and charges beforehand. Do not choose a bank based on only the reputation.
5. Do not sign a sponsorship with local sponsor without a written legal agreement
Do not go ahead with sponsorship until both sides have agreed on what to expect from each other and a written agreement is drawn up and attested in the local court. Do not rely only on verbal understanding.
Rajesh is a Founder and MD of Adroit Corporation Pvt Ltd, Rajkot. His area of expertise is a Income Tax, VAT, Service Tax and Financial Planning. Apart from his passion for Project Finance, he also holds an avid interest in Reading, Technology & Politics.