Along with low taxes and a thriving business environment, Dubai’s straightforward company formation process is a major reason why so many international entrepreneurs flock to do business here.
The business license application process is both fast and affordable and there are many great benefits to doing business in this part of the world. As well as a favourable tax environment – on both personal and corporate incomes – the UAE also boasts a strategic global location and a thriving community of business savvy entrepreneurs.
If this sounds appealing, there are a few things you need to know before you start your business here. For one, you need to be aware of the different company types that can be formed in Dubai. The most common, and the one that we’ll cover here in detail, is the LLC.
In short, an LLC is a company that benefits from an entirely separate legal identity to its owners. It is an independent entity established in the UAE mainland that can be owned by one or more shareholders. There are many benefits to forming a mainland LLC including direct access to the UAE marketplace and low start-up and running costs.
If this sounds appealing, below is everything you need to know about LLC company formation in Dubai.
Limited company formation: a wealth of opportunity
One of the biggest benefits of forming an LLC in Dubai is that you can establish your business anywhere across the mainland. While you are required to lease official business premises when forming an LLC, it is entirely up to you where you do this. Perhaps your business needs a prestigious address? Or maybe a warehouse near the airport would be more suitable? The choice is yours.
With an LLC mainland set up, you’re also completely free to trade directly with the local UAE market. Mainland LLCs are also able to carry out government work, which is a rather lucrative business here in the UAE.
LLC company formation cost
Contrary to popular belief setting up an LLC in Dubai is not usually any more expensive than establishing a business in a free zone.
There are several costs involved – fees for the license itself along with setup fees. There is also a fee payable to secure a local sponsor. In all, you should expect the cost of forming an LLC in Dubai to be in the region of AED 50,000. There is then a fee payable every year to renew your business license.
A simple, straightforward setup
Setting up an LLC in Dubai is not just affordable, the process is incredibly straightforward too.
To get started, you simply need to register with Dubai’s Department of Economic Development (DED). This is an incredibly simple process that usually only takes around an hour and a half. As with all applications in the UAE, it’s advisable to work with a company formation expert during this process to ensure everything is completed and filed correctly.
You have the choice of forming your LLC alone or with a business partner or partners. An LLC can be established with up to 50 shareholders which can be companies or individuals.
Flexible company formation
Another major benefit of forming an LLC is greater flexibility.
When forming an LLC in Dubai you are free to choose from any of the 2,000-plus business activities as set out by the DED. These include everything from potato trading to business consultancy. It is even possible to combine multiple activities under a single business license.
LLCs are also incredibly flexible when it comes to expanding. As you are free to set up anywhere in the mainland, you are also free to move and expand as your business does. You have the option of applying for more and more visas as your business grows too.
There is no maximum cap on visas, but generally speaking, it is possible to apply for one employee visa per 100 sq.ft. of space. There is some leniency to this rule if you are operating a business with many remote workers.
The process for sponsoring dependants for their visas is just as straightforward. As the owner of a UAE LLC, you’ll also qualify for an investor visa. This allows you to sponsor the visa applications of your spouse, any dependant children or family members and any domestic staff. Again, as with applying for your business license, it is a good idea to work with a company formation expert at this stage to ensure your application runs smoothly.
LLC company formation in Dubai and UAE
Once you’re familiar with the formalities and the benefits of establishing an LLC, the next step is to understand what’s involved in setting one up. There are several key steps to this process.
- Step one: Choosing an activity
The first thing to do when setting up a business in Dubai is to decide on the business activity or activities you wish to undertake. While there are thousands to choose from, it is vital that you pick the ones that best suit your business. Carrying out activities not listed on your license can lead to regulatory difficulties and even fines. A company formation expert with a knowledge of UAE license types and activities can work with you at this stage to advise on the best ones to suit your needs.
- Step two: Choosing a name
A difficult task anywhere in the world but here in the UAE, it comes with a few extra complications. Some of the UAE’s business naming conventions are simple common sense (no offensive or blasphemous language) while others may take a little working around. For example, if you wish to name your business after yourself, you can only do so if you include both your first and last name. You must also avoid reference to known organisations (such as ‘CIA’ or ‘church’). Finally, and most importantly, you must check that your chosen name is available to be registered.
- Step three: Finding a sponsor
Previously when setting up in the mainland, foreign entrepreneurs would have to work with a local sponsor who would hold a 51 percent stake in the company. However, this is no longer the case. Foreign ownership of mainland companies is now permitted in most sectors. There are, however, some exceptions. These include banking and finance, water and electricity provision, telecoms, pilgrimage services, printing and publishing, and medical retail.
- Step four: Applying for your license
With most of the vital admin out of the way, you are free to apply for your business license. To make your application you will need to provide the DED with a number of documents including your passport and visa copies and shareholder information. The whole process takes around three weeks. With your license in hand, you can apply for visas for you, your employees and your dependants.
That’s all there is to it. A simple yet hugely important four-step process. Working with a company formation expert here can help you to avoid any delays in your application and ensure your UAE LLC is up and running in no time.
