How to Start a Low Cost Business Setup in Dubai – A Step-by-Step Guide

Dubai has evolved to be among the best places to commence business ventures. It is a fast-growing city with developed infrastructure. So, it is among the best cities for supporting and encouraging entrepreneurs. If you want to start a low cost business setup in Dubai welcome to the right site. It helps people establish their enterprises because Dubai has favorable business conditions.

For an individual, freelancer, startup, or small business, there are numerous ways and cheap cost structures to form a business in Dubai. So, in this guide, we will guide you through the process of business that you need to take to open your new business. You will also realize why Dubai is among the most preferred destinations for opening a low cost business setup in UAE.

Understanding Low Cost Business Setup in Dubai

Why select low-cost business formation in Dubai?

When it comes to setting up a business setup Dubai comes out as one of the cheapest when it comes to start-ups and new small businesses. There are many reasons why setting up a business in Dubai is a great choice for entrepreneurs:

Cost Efficiency for Entrepreneurs and Startups

The primary benefit of a low-cost business formation in Dubai is that it enables any business owner to avoid wasting money. There are still various ways to keep the cost low; for example, tax is only chargeable in some zones, and the office space is relatively cheap too. It also does not cost much to establish your business here while you tap into a huge market that is the global market.

Global Market Access

Geographically Dubai is located at the crossroads of Europe, Asia, and Africa which is very convenient from a business point of view. Thus, for a business owner, it is an opportunity to access the international market without much effort.

Business-Friendly Policies

The government of UAE has been setting functional policies that will foster the growth of companies. However, some of the examples of free zones that we find in the market include full ownership, free zone license, and no tax. Such policies reduce the cost and time required to commence the operations of a business, thus offering you more time to manage the business.

Dubai Free Zones Compared to Mainland and Offshore Companies

Before you start your low cost business setup in Dubai, it’s essential to know about the three main types of business locations: Mainland, Free Zone, and Offshore. 

Mainland

Benefits

• Local businesses of the Mainland can freely participate in the local market of Dubai.
• They do not limit your location to having an office.
• There are no restrictions put on foreign traders and it is very easy to get into direct business with other companies in Dubai.

Considerations

• Certain types of businesses will require a local sponsor or agent. This means that the UAE national has to have at least a 51% share of this business that you would like to open in the country.
• The cost may also be a disadvantage to the establishment as compared to operations in a free zone.

Free Zones

Benefits

• As with all sectors in Vietnam, foreign investment is allowed up to 100%, which means that you do not need a Vietnamese partner in this sector.
• They learn there are exemptions of taxes for several years and also that the process is very efficient.
• Free zones are, thus, ideal for e-commerce companies, tech startups, and small companies aiming for straightforward service provision.

Considerations

• One of its major limitations is that the free zone company can transact business only within the free zone, or with persons outside the United Arab Emirates.
• Being aware of the fact that not all activities are allowed in free zones, in essence, some free zones will limit the kind of activities that you are allowed to undertake.

Offshore Companies

Benefits

• A key reason to undertake business in offshore companies is security, anonymity, or discretion.
• They do not require their physical presence in the UAE which has cost implications that you can avoid.

Considerations

• This means that the offshore companies cannot do business through the local market of the UAE directly.
• These businesses are utilized in the portfolio to hold assets and investments.

Steps to Start a Low Cost Business Setup in Dubai

The process of starting a low-cost business setup in Dubai is quite straightforward. Here are the key steps you need to follow to launch your business successfully:

Define Your Business Activity

Select the right business activity before making any decisions. It is also the most crucial process of establishing a company from the floor. Frequency and type of business activity will be decisive about the licenses required, venues where the enterprise is permitted to function, and the codes to follow.

For example:

• There are certain cases when registering a consultancy business you may be required to have a license.
• If you are going to offer some products, you will have to obtain a commercial permit.

The business activity must be profitable and interesting to the person who wants to set up the business.

Select Your Jurisdiction

The second step in the process of legal entity registration is choosing your jurisdiction after you have defined your business activity. This is where you decide whether to register your business in Mainland, Free Zone, or as an offshore company. Every site has its guidelines and fees.

• Mainland: Makes sense when you are targeting the local customers and require some degree of elasticity.
• Free Zones: Ideal for small beginnings and new entrances to the market as they can avoid huge expenses and enjoy tax incentives.
• Offshore: Most suitable if you require protection of your properties and do not wish/require an office space in UAE.

Choose Your Legal Entity

Thus, after identification of the business activity and the jurisdiction, comes the decision of the legal structure of the company. Common options include:

• LLC (Limited Liability Company): This structure is quite popular among small businesses.
• Sole Proprietorship: Recommended to people doing freelance work or those who avail themselves to offer professional services.
• Branch Office: Good if you are diversifying an already existing business venture.

Register a Trade Name

A trade name is a legal name or the name you use to refer to your business. Hence the name must be special and easy to remember as well as not too complicated to pronounce. The name must also meet the legal requirements in Dubai. For example, it should not clash with existing company names or suffixes/prefixes and they should not contain any improper words or phrases.

Prepare Documentation

After you have decided on the business activity, the jurisdiction, and the trade name required for registration, you have to assemble the papers needed for registration. The documents you will need include:

• For the shareholders and partners the copies of the passports they used when acquiring the shares.
• Proof of address.
• A business plan.
• No objection certificate if any Any other document which the authority may deem necessary.

The following documents will be necessary based on the nature of the business and the place it facilitates.

The Business must apply for a Business License

The subsequent procedure is to obtain a business license. There are different types of business licenses available in Dubai:

• Commercial License: Specifically for those traders or business people who trade in physical commodities.
• Professional License: In a business that deals with professional services such as consultancy.
• Industrial License: It is especially for businesses involved in manufacturing or industrial activities.

Pay the Fees

Paying the relevant fees is the last step in the registration process for any course in an institution. The fees differ depending on the type of business you undertake, your geographical location, and the license you hold. This must be shouldered by cost and you have to prepare for payments regarding registration, licensing, and for setting up an office.

Affordable Business Setup in Dubai – Simplified 5-Step Process

Creating an inexpensive business in Dubai is not difficult. Here is a simple 5-step process:

• Define Business Activity: Select what you want to do depending on your ability and market demands.
• Choose Location: Choose between Mainland, Free Zones, or Offshore entity to engage in operation.
• Register Trade Name: Choose an appropriate and legal name for your organization.
• Prepare Documents: The next step requires you to assemble all the paperwork that you need.
• Obtain Business License: Obtain your business license Apply for and obtain your business license.

FAQs

How long does it take to set up a business in Dubai?

The actual business setup process may take anywhere between two to three weeks depending on the type and physical location.

Is it possible to start a business in Dubai from home?

It is possible to incorporate a business in Dubai from the comfort of your house via business setup consultants and PRO services.

What is the cost of a low cost business setup in Dubai?

The cost of compliance depends on business activity, location, and legal form of business. It can go up to 10,000 to 30,000 AED, If it is an adult patient then it could be 1500 to 3000 US Dollars.

Does a Mainland company require a local sponsor?

Yes, for most of the Mainland business, one is required to obtain a local sponsor with 51% equity of the company’s share.

Is it possible to start a business and not have an office in Dubai?

Yes, you can use virtual offices in some of the zones. Because of this, office rental costs are minimized.

Conclusion

The beginning of low cost business setup in Dubai is a good solution for numerous people. These are reduced cost, versatility, and direct market access. So, by following the above steps and selecting the right place you can start your business. Moreover, with business setup consultants and PRO services, the process is even easier to complete.