How to Start a Business in Dubai – Step-by-Step Guide in 2019-2020
Looking to launch a business in Dubai? That is a great idea. Dubai is one of the world’s hottest business destinations, with thousands of high-profile investors, political stability, and the most diverse economy in the Middle East. In preparation for the expected boost to the economy by the Expo 2020, start-ups benefited from a variety of business-friendly legislation, reduced government fees, eased bank financing, and large sums of investment capital. This blog will provide you with a comprehensive step-by-step guide to pitching your idea to investors and how to start a business in Dubai!
Step 1: Pitching your idea to partners and investors
In order to succeed, your idea needs to solve an issue or provide new benefits to your clients. Pitching your idea is the most crucial step when starting from scratch. The challenge is proving the feasibility of your proposition by mitigating the risks and potential weaknesses of your proposition. It is also essential that when you present your idea to partners and investors – the potential of your proposition is being visually and objectively communicated. Use visual aids like images, videos, simulations, or augmented reality.
- Show the business’s potential to grow
Investors trust sustainable ideas with the potential to grow in the long-term. You should convey that your market is healthy and that it will continue growing. Strong claims should always be backed up with market research and statistics.
- Express your long-term ambitions
Your business must be able to evolve into a more profitable venture. An entrepreneur must have the ambition to create new products and services, enter new markets, and drive profits higher.
- Show commitment to your idea
The entrepreneur, on the other hand, should be committed to bringing their idea to life. You should be the first person to believe in your idea, once others see how much time, effort and money you invest in your startup – they will follow.
- Demonstrate your capabilities to see the business through
The next step of ensuring the success of your idea is to convey that you have the skills, leadership, and experience to guide your business through any scenario. It is crucial to have a detailed understanding of your day-to-day operations and their activities.
- Propose your budget and receive funding
It is also advisable to contribute your funds. If you (or one of your teammates) are skilled in accounting and finance, explain the projected costs and budget requirements for starting and running your business.
- Show projected returns
Justify when your business is expected to start making profits, outline your margins – the more specific you are with this information the better. These are essentially your SMART targets, showing that you are confident in achieving them presents a good picture in the eyes of investors.
- Develop your relationship with your investor
If you are able to find out more about them, try to align with their expertise and interests. A solid relationship with your investor will give you the upper hand when securing trust and funding.
Step 2, Option A: Setting up your company in Mainland Dubai
- Find a local sponsor (UAE National)
This individual(s) is required to own at least 51% of your mainland company. However, you benefit from a business license that allows you to operate anywhere across Dubai. The Emirate offers a variety of low-cost as well as high-end locations that are suitable for all budgets and business activities.
Local sponsors can take a non-executive role and receive a fixed salary as determined by both partners. These partners can help iron out any future issues with government authorities, it is best to maintain a healthy and positive relationship with him or her.
- Determine your business type, form, and activities
When approaching the business license-issuing authority, the Department of Economic Development (DED) of Dubai, you must determine whether your company will be a commercial, professional or industrial business.
The legal forms of Mainland companies are determined by the ownership structure as well as activities, the list of legal forms is as follows:
- Joint Liability Company – permitted to conduct both commercial and industrial activities.
- Limited Liability Company, LLC:
Permitted to conduct all activities including tourism, with some professional activities as exceptions or subject for approvals*, contact us for details.
- Public Joint Stock Company – permitted to conduct all types of activities
- Private Joint Stock Company – permitted only commercial and industrial activities
- Civil Company:
Permitted to conduct professional activities such as accountancy, engineering, law, and medicine.
- Branch of a UAE or GCC-based Company
This form is only able to conduct activities permitted by the main company license.
- Branch of a Free Zone Company – permitted all types of authorized activities
- Branch of a Foreign Company*
- Representative Office*
- Sole Establishment (limited to only UAE and GCC Nationals)
The sole proprietor can conduct all types of business activities.
- Simple Commandite Company
For more information about forms of ownership, legal requirements, and permitted company types, send us an inquiry.
- Register your trade name
This name will differentiate your business from your competitors while providing basic information about your activity. Here are the requirements:
- Must not disrupt public order and national morals
- Must include the legal form at the end of the name (e.g. LLC)
- Must be original
- Must be relevant to your activities
- Must not include existing names and logos, or religious and political references
For more information and assistance with choosing your trade name, consult with us today!
- Receive initial approval
Foreign investors require the approval of the General Directorate of Residency and Foreigners’ Affairs for this approval (the initial approval is not to be mistaken for a full license).
- Receive external approvals based on your activity*
Dubai Business Advisors will assist you with providing the list of relevant government authorities of each activity, we can also process your documentation for you.
For example, insurance, transportation, legal consultancy, and trading specialized equipment requires approvals from various ministries and other governing bodies.
- Choose and rent a location for your business
The premises must comply with DED and Dubai Municipality requirements. It is also required to provide an Ejari certificate (tenancy contract) to proceed with your incorporation.
Up to 10 trade licenses can be registered with one location if:
- The local sponsor remains the same for both licenses
- There is 200ft2 of office space per license
Dubai Business Advisors can provide you with all of the other requirements and procedures when renting an office space for business licensing.
- Finalize your license
This includes submitting all of the relevant documents to the DED, paying your fees, and becoming a member of the Dubai Chamber of Commerce. After completing these steps you can receive your full mainland business license. We can assist you throughout this process.
Step 2, Option B: Setting up your company in a Dubai Free Zone
There are also benefits when opening a free zone company in Dubai. For instance, the setup process can be more cost-effective and simpler. There is less paperwork to process and the process is relatively faster. Below you can find the necessary steps to opening a free zone company!
Determine the legal type of your business
These are the options:
- Free Zone Establishment (FZE)
- Free Zone Limited Liability Company (FZ LLC)
- Free Zone Company (FZ Co.)
- Branches of UAE, GCC, and foreign companies
The legal type is decided by the number of ‘natural’ and ‘legal’ shareholders. All Free Zones are required to accommodate both of these legal types. There are 30 specialized free zones in Dubai, we can provide you with a list of all Free Zone Authorities (FZA) and assist with a fast and affordable Dubai business setup.
We also can provide quotations on the capital requirements of starting your company in any Dubai or UAE Free Zone.
- Select an appropriate trade name
This step is similar to the mainland process, however, the FZA approves the proposed trade name, instead of the DED. We can assist you in selecting an appropriate trade name as per Free Zone requirements.
- Apply for a business license
Contact us for a list of approved activities as per each specialized free zone.
- Select your office space
It is possible to both lease and buy an office space in a free zone. Required office space is determined by the number of people employed by your company. There are cost-effective flexi-desk options in various free zones.
- Receive the initial approval from the Free Zone Authority
This step requires businesses to submit:
- An original and notarized Registry Identification Code Form (RIC) for the directors or managers
- Letter of Intent
- Unit title deed
- NOC from your sponsor (if applicable)
- Audited financial reports from the last 2 years OR certificate of reference from the shareholder’s personal bank
If you are a freelancer, you will need an application form, CV or portfolio, bank reference letter and an original and notarized RIC
In this step, you finalize your licensing fee payments. The fees vary based on your license type. Contact us for a quotation as per any free zone of your choice.
You will need to submit:
- Completed application form
- Share capital information
- Photo (Passport-sized)
- Attested and Notarized Board Resolution of choosing the Director or Manager
- Attested and Notarized Power of Attorney given to the Director or Manager
- Attested and Notarized Articles and Memorandum of Association
- Receive your free zone license and visas
We hope this blog will be useful in your business journey. Dubai Business Advisors offer our 17 years of Dubai and UAE market-entry expertise. We provide our clients with comprehensive services covering all of the avenues of a successful business launch in Dubai.
For detailed information, professional advice, and cost-effective assistance – contact one of our market-entry specialists today!