10 Dos and Don’ts When Starting a New Company in Dubai

Congratulations on taking the leap! Now that you’ve decided to start your journey as a business owner in Dubai, it’s time that you learn the ropes about launching a business in the city.

Rules and regulations on starting a new firm vary from one country to another. So, if you’re migrating to the United Arab Emirates (UAE) in the hopes of growing in entrepreneurship, you need to learn about the 10 dos and don’ts of company formation in Dubai.

How to Start a Company in Dubai

The basics of company formation in Dubai entails five important steps:

  1. Choosing the right company formation structure.

One of the first decisions you’ll have to make when launching a company in Dubai is selecting a business formation structure. There are several you can choose from, namely:

  • Mainland
  • Freezone
  • Offshore

When deciding among these three, you’ll need to factor in the market you plan to target. Are you going for specific industries inside the nation’s jurisdiction? Or perhaps you plan on expanding internationally?

Each company formation structure has its own merits, ownership limitations, and geographical restrictions. That means you’ll also have to think about your plans for your company’s future before making a final decision.

  1. Selecting a business licence carefully.

Getting a business licence in Dubai is relatively easy. The challenging part is choosing the right one for your business.

The appropriate business license you need will depend on your company’s objectives, services, and products on offer. From there, you’ll need to choose among three types of licenses:

  • Commercial Business Licence: This licence allows businesses involved in trading activities to operate in the UAE legally.
  • Industrial Business Licence: Those who plan on manufacturing goods should get this type of business license.
  • Professional Business Licence: Professionals, artisans, consultants and other service-oriented firms need to have this type of business licence to operate legally in Dubai.

Choose your business license carefully. Once you decide, make sure you learn all about the proper documentation and approval procedures as it varies from one license to the next.

  1. Seeking out reliable local sponsorship.

Limited liability companies are most preferred in the UAE. If you choose this type of business entity, you must make sure you team up with a reliable local sponsor or agent for registration.

Some Mainland businesses require a local sponsor who would own 51 percent of the company’s total share. Because they will be given the majority of shares for your firm, you must make sure that you select a dependable sponsor.

They are also responsible for managing official formalities, so choose someone you can trust to avoid unnecessary hassles.

  1. Getting an investor visa.

One of the most basic requirements for foreign nationals to operate a business in the UAE is an investor visa. The good news is that acquiring this document is a pretty straightforward process.

The authorities involved are also quite considerate in the UAE. However, you’ll still need to submit all the required paperwork and accomplish all legal formalities for you to be able to launch your business in the country.

Note that a work visa can be issued according to the type and duration of your business. You can always ask your local sponsor for help in handling this process.

  1. Asking for professional help.

If you’re new to UAE company formation, it pays to have valuable assistance accessible when you need them. From registering a business to forming a brand strategy in Dubai, there are plenty of experts who can help you every step of the way.

Professional business formation services help reduce the risks your company takes and increase your chances of growth and success. Some even open opportunities that let you reach out to other businesses and expand your network to gain business success.

What Not to Do When Starting a Company in Dubai

Besides knowing the best practices, you also need to learn the mistakes you should avoid when launching a Dubai company. These include:

  1. Failing to put agreements into writing.

No matter how much you trust someone, you must always put your commitments in writing. This will not only allow you to have a clear and fixed copy of what all parties agreed upon, but it also serves as your protection against legal troubles.

Be it a partnership, a sponsorship, a lease, or anything involving your business, make sure everything is in black and white. Draw up a written legal agreement and have that document attested in local court to make it legally binding.

  1. Disregarding cultural sentiment.

The UAE has one of the most culturally diverse societies in the world. This multicultural economy thrives on mutual respect, so make sure everything about your business – from trade name selection to marketing advertisements – is in line with the cultural beliefs system in the country.

Never make the mistake of disregarding cultural sentiment. Otherwise, you’ll risk hurting your company image and branding, not to mention impeding the formation of your company. After all, only culturally appropriate trade names are approved for registration.

  1. Keeping to yourself.

Dubai is a significant hub for consumers across Asia, Africa, and the Middle East. As such, one of the biggest advantages of doing business there is gaining access to such a massive wealth of opportunities.

Since networking is one of the most effective ways to grow in any industry, keeping to yourself whilst operating a business in the UAE is a colossal waste of opportunity.

What makes more sense is to expand the reach of your operations.

To gain a foothold in the MENA region, you must conduct meetings, conferences, and other public relations activities. Let the rest of the region know who you are and what you do best, and you’ll be able to reach new heights with your new business.

  1. Forgetting about capital.

Having enough funds is one of the most important things in starting a new business. Don’t ever think that you can run a successful business without it. Any company would be more likely to fail without sufficient money to fund the start-up costs.

  1. Skipping research.

You still need to understand many things before you can be ready to start a company in Dubai. As such, you must never fail to research more details about the endeavor.

Focus on information specific to your business. Seek out mentors in your industry and get someone to help you with more technical aspects of the company formation.

Don’t just rely on published information and heresy. Make sure you confirm everything with the appropriate authority and seek out verifiable data on the industry.

The same applies to opening a bank account, signing a commercial lease, and other aspects of running a business. Always read the fine print and never forget to get your contracts attested in court.

Reach for Success in Dubai

It’s never too early to think about succeeding in business when starting a company in Dubai. When planning for company formation, always aim to reach success using the right knowledge of what to do and what to avoid. Only then can you make your goals a reality.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.