Dubai is a global hotspot for businesses due to lenient regulations and minimal taxes. After doing insightful business research, businessmen tend to choose to work in this country to avoid government oversight and increase profits. Although Dubai may seem like a business paradise, there are a few requirements that you must complete to start a business there. As an entrepreneur looking to start your enterprise abroad, you need to comply with these steps. Read on to learn how to start a business in Dubai.
Pick The Right Jurisdiction
The first step to starting a business in Dubai is picking the right jurisdiction. Jurisdictions in Dubai are divided by business sector to increase productivity. You can pick from mainland zones, free zones, or offshore establishments. Keep in mind that Dubai requires that you have a native partner to sponsor your company in non free zones. This partner must be the majority owner, with minimum 51% control of your company. If you want total ownership of your company, you have to choose a free zone. However, free zones may be far away from Dubai’s ports and businesses. To ensure the most profit when starting your business in Dubai, carefully consider your jurisdiction.
Choose A Company Name
A mandatory step for starting a business in Dubai is choosing a company name. Dubai law dictates that your company name follows certain standards. Each type of business has a different license, which comes with standards specific to your industry. When naming a business, you must indicate the nature of your business. Furthermore, your name cannot be religious, offensive, or contain references to known organizations. After making your decision, you must register the name with the Department of Economic Development (DED). It can take up to 3 days to complete registration. Start your business off on a high note by picking a strong company name.
Decide Your Company’s Legal Status
You must decide your company’s legal status when starting your business in Dubai. Classify your company’s status as sole proprietorship, one person company, or LLC. As a sole proprietor, you will be held liable for your company’s legal and financial status. In contrast, one person companies limit liability to shares held by the owning entity. Should you choose to classify as an LLC, liability only extends to a shareholder’s share of the company. These are the basics you should know about legal status classification in Dubai. To make a better educated decision, you should consult a lawyer. Avoid future legal problems by picking the right legal status when starting your business.
Get Approval From The DED
A critical step to starting your business in Dubai is to get approval from the DED. Certain commercial activities are forbidden in Dubai. If you have chosen to establish your business in a mainland jurisdiction, the DED will review your operations before you can conduct business. You can avoid such scrutiny by operating from an offshore or free zone jurisdiction. However, you may have to obtain additional business licenses based on the nature of your business. You can usually get these licenses from the DED, but in special cases, you may have to get trade licenses from the government. When starting your business, get the proper approval and licenses from the DED.
Draft Your MOA/LSA Agreement
When starting a business in Dubai, you are required to draft a Memorandum of Association (MOA) or Local Service Agent (LSA) agreement. This is a necessary step regardless of your jurisdiction. You may have to create both of these documents based on what type of company you run. If you have multiple shareholders, you need to draft an MSA that outlines the limitations and responsibilities each partner bears. If you have an outside aiding party or national partner, your LSA must describe the role of your chosen agent and their legal responsibilities. When starting your business, you should consult a lawyer when drafting your MOA/LSA to ensure compliance.
Starting a business in Dubai can be a straightforward process if you follow these steps. Establish the basics by picking your jurisdiction and choosing your company name. Afterwards, ensure legal compliance by choosing your company’s legal status, getting approval from the DED and drafting an MOA/LSA agreement. If you follow these steps, you can start a business in Dubai.