The Do’s and Don’ts of Doing Business in Dubai

Do's and Don’ts of Doing Business in Dubai

The Do’s and Don’ts of Doing Business in Dubai

New business setups have always been encouraged in Dubai. The government provides excellent business infrastructure with the exemption of taxes, availability of free zones, manpower, materials, supplies, intellectual property and many more which make this city an appealing destination for business minded dreamer. Due to its economic stability, it is of no wonder that Dubai has attracted millions of foreign investors from around the globe.

Now is a great time to start business in Dubai as it is going to host a mega event of Expo 2020 which will bring tremendous business opportunities for all sectors. In this article we have summarized few points which you must consider before doing business in Dubai so that you are aware of the hurdles and are able to avoid potential hazards beforehand.

Do’s Of Doing Business in Dubai

  1. Study All Options

It is very important to investigate all possible company formation options for your business as there are so many like Free Zone Company, Mainland Company and several categories under these forms. Some formation types will suit you more than others like there are certain geographical restrictions, ownership restrictions, visa limitations etc. on each type. You should study all options and plan accordingly.

  1. Choose a Local Sponsor for Local Business Setup

Amongst plenty of business opportunities, the most common form of business setup that exploits the potential of Dubai is locally registered LLC (Limited Liability Company) formation. In order to setup Dubai LLC, you are required to have a local sponsor who must be UAE National and will own 51% of shares of your company. This requirement is by law which will give you the liberty to conduct your business operations anywhere in UAE.

Choose a local sponsor for your business setup in Dubai mainland. There are three types of local sponsors which are elaborated further in our blog. Develop good relationship with your sponsor so that he helps you out in your problems you may face with the authorities during your business setup in Dubai. In order to understand why local sponsors are needed for business in Dubai, read here.

  1. Select a Free Zone if You Want Complete Business Ownership

If you do not to hire local sponsor and retain 100% business ownership to yourself, then setup business in free zone of Dubai. Free zones offer special benefits such as complete ownership, tax exemption, complete repatriation of capital and profits, speedy startup and no customs duty. However, keep in mind rental fee in a free zone may be higher for your budget. Also businesses like restaurants and retail stores should be located in mainland.

Businesses who work along with government are also required to have local sponsor. So It depends upon nature of business activity and your budget which will help you decide to go for free zone or not.

  1. Locate Business Premises Which Optimize Cost & Convenience

Another vital point for your plan of business startup in Dubai is choosing the location which is most profitable for your business. What would be the point of setting up a profit based company in an area where customers can’t reach you?

In case of shop or an office in local market, choose the area which is well known for the work you are dealing with. In case of free zone setup, then you should choose location based upon distance, cost, product and your trade requirements.

  1. Confirm The Requirement For Visa Eligibility

In order to run your business in Dubai, you need a visa for yourself and your employees. Government usually gives visas to every business. However, the number of visas varies according to size of the office and nature of your business.

For local business, you will need your sponsor apply a visa for yourself. Later you may be allowed to apply for visas of your employees provided your sponsor has given you the authority.

  1. Hire a Consultancy Firm for a Successful Business Startup

Getting help from consultant agencies will give a great kick start to company formation process. They act as your right hand and do all the procedures for you.

We provide complete business formation services at KWSME. As among st the leading consultant agencies of UAE, we assure you that you have our best guidance throughout your business endeavor whether it is to obtain business license, registration process, acquiring visas or registering trademark etc. We will do all the work for you while itemizing your business setup cost.

Don’ts of Doing Business in Dubai

  1. Do not choose business license without checking whether it allows your business model or not

You should not choose a business activity which is too narrow. Often business model need change. They are never perfect. Keep this in mind so that when you need certain change, your business license allows you that activity.

  1. Don’t open bank account without knowing requirements

There are various banks in Dubai which may charge a substantial amount for a bank dependent operation. Always know their charges and requirements beforehand and not just opt for a fancy bank based on its reputation only.

  1. Don’t proceed with sponsorship without having legal contract with local sponsor

For business setup in Dubai, you may need much support from your local sponsor who may charge separately for additional services.

Have a legal contract with local sponsor and do not solely rely on verbal commitment or mutual understanding. For more information on how to secure an LLC partnership, read here.

  1. Don’t be afraid to ask help if you need

If you are setting up business in Dubai, you should talk to other business owners who have undergone same incorporation process. It will help you decide the space and other operational work in a cost-effective way. Also it will save your time in terms of administrative challenges. If you do talk to other businessmen, save their names and contact information so that you can follow up if any future problem arises.

  1. Don’t forget to understand new culture

Dubai is a very diverse place in terms of population. People from all over the world come here to be part of it. You should understand local values, norms and traditions as they may be different to your home culture. Be polite and avoid R-rated language.

If you are looking to setup business here, keep in mind these do’s and don’ts of business in Dubai. It will help you in the longer run. For further assistance, contact our KWSME agents.

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