Dubai is a city full of business opportunities for all local and foreign investors. If you’re one of those investors, you’ll be able to choose between many options during the setup process. Nonetheless, you should avoid some mistakes when starting a business in Dubai. Therefore, it is essential to gather all the necessary information.

In this article, you will learn everything you need to know about the business setup process in Dubai. Most importantly, you can find useful information about the most common mistakes that you must avoid. Besides, here you’ll discover some tips and recommendations to set up your company efficiently. Let’s observe:

1. Mistake#1: Not choosing a suitable location for your company.
2. Mistake#2: Applying for the wrong business license.
3. Mistake#3: Not preparing the necessary paperwork for registering your company.
4. Mistake#4: Lack of written contracts and agreements.
5. What other mistakes should you avoid during the setup process in Dubai?
6. Learn how to start up a company in Dubai correctly.
7. What documents do you need to register a new company?
8. How many types of business licenses can you find in Dubai?
9. How can Connectfz help you to start up a business in Dubai?

1. Mistake #1: Not choosing a suitable location for your company.

All free zones are different, which is why you must choose carefully the one you desire. Most importantly, you have to choose a free zone in which you can fulfill your business requirements. Although you can choose between many Dubai free zones, you can also choose a different jurisdiction.

If the free zones don’t fulfill your needs, you can choose to set up a mainland or an offshore company. However, in these jurisdictions, you will not have the same benefits as in the free zones. Although choosing a jurisdiction can be overwhelming, you can always ask for professional help. Just remember to analyze each option before starting a business in Dubai.

Here you can learn about the UAQ Free Trade Zone and reasons to choose it as your business location.

2. Mistake #2: Applying for the wrong business license.

Just like some investors can choose the wrong place, some others can choose the wrong license. It’s a fundamental rule to determine the business activities and legal structure before starting a business in Dubai. You can find countless allowed activities from several industries and sectors. Therefore, it could be a hard decision to make.

Nonetheless, you have the option of finding the information you need about each license. Also, you can choose a business setup partner to make the analysis and selecting process more efficient. In case you choose the wrong business license or the wrong activities, you can request a change. However, the cost of changing your activities will vary depending on the jurisdiction.

Here you can learn how to apply for a commercial license in Dubai.

3. Mistake #3: Not preparing the necessary paperwork for registering your company.

This mistake is also one of the most common ones that investors often make. Although starting a business in Dubai is a simple process, it takes time. If you consider the time it takes to open a bank account, the entire process takes around 30 business days. However, it could take even more time if you do not prepare the paperwork you need.

Therefore, you must check on the list of requirements before start completing the process. Once you have everything ready, you can start registering your company without wasting your time. Besides, you can let your partner complete certain processes if you want to skip them and save your time.

Here you can learn more about Dubai and the benefits it offers to all new investors.

4. Mistake #4: Lack of written contracts and agreements.

Another essential element of a good start is having all business agreements and deals written. Most times, verbal agreements are not reliable or accurate and, therefore, are not valid. Having solid written agreements is the key when starting a business in Dubai or any other place.

Besides, written agreements and contracts help investors avoid misunderstandings. And if the investors work together as friends, trusting each other may not be enough to develop the business correctly. Written deals work as evidence to avoid difficult situations in which the investors could lose money, resources, etc. However, it is also important to understand Dubai’s laws and regulations to avoid these situations.

Here you can discover some traps you should avoid when setting up a free zone company in Dubai.

5. What other mistakes should you avoid during the setup process in Dubai?

Although those are the main mistakes, there are many others that you should avoid. For example, these are some other common mistakes that investors make when starting a business in Dubai:

• Choosing the wrong company formation structure.
• Failing to register Intellectual Property.
• Not registering for VAT and maintain books of accounts.
• Adding or changing a business activity without authorization.
• Not renewing the business license in time.
• Having an unclear understanding of Dubai’s labor laws.
• Opening a corporate bank account without checking the bank charges.
• Not checking the available office sizes and preconditions before registering the company.
• Making final plans without concrete information at your disposal.

Here you can learn about the available mainland trade licenses in the UAE and how to apply for them.

6. Learn how to start up a company in Dubai correctly.

There’s a simple process that all investors need to complete to start operating a company. Here you’ll see how to start a business in Dubai free zone and the steps you must follow. However, it is important to prepare the necessary paperwork and choose your options before getting started. Once you’ve done those steps, you must follow these:

• Firstly, you need to determine the types of business activities you want to perform. Remember that your business license will specify your activities; therefore, you need to be sure about your activities. Besides, you also need to choose the most appropriate free zone for your company’s development. In Dubai, you’ll be able to find more than 20 free zones to choose from.
• Secondly, choose a proper name for your company. You’re free to choose your business name; however, you must follow certain rules when you create it. For example, you cannot include religious nor sensitive content.
• Thirdly, you have to prepare your documents and submit them to the local authorities. You can find more information about the necessary documents below.
• And lastly, you must apply for the license you need to cover your activities. Also, you’ll need to open a corporate bank account in a local or foreign bank. After that, you can start operating your company legally and efficiently.

Here you can learn about Dubai Outsource City Free Zone and how to complete the company registration process.

7. What documents do you need to register a new company?

Paperwork will vary according to the type of company formation you desire to establish in Dubai. When starting a business in Dubai as a foreigner, you’ll have several options: free zone, mainland, branch, etc. For example, if you set up a free zone company, you will need to submit the following documents:

• Your duly filled application license form.
• A copy of your business plan.
• A business card of the contact person.
• Passport copies of the partners and business managers.
• The Memorandum and Articles of Association (MOA and AOA) notarized and attested.
• The original bank reference letters and license of the partner’s existing company, if it is applicable.

On the other hand, you can also set up a mainland company in Dubai. In that case, you’ll need these documents:

• Passport copies of all shareholders and managers.
• NOC (No Objection Certificate) from the current UAE residence visa sponsor.
• A copy of the UAE residence visa, if it is applicable.
• CV for each shareholder.
• Certified proof of address for each shareholder.
• A professional or bank reference letter for each shareholder.
• The Memorandum and Articles of the company (if the shareholder is a corporate entity).
• A board resolution agreeing to incorporate a new LLC (if the shareholder is a corporate entity).
• Power of Attorney to the general manager to incorporate a new LLC (if the shareholder is a corporate entity).

However, if you desire to open a branch of an existing company, you must submit the following documents:

• The original board resolution to guarantee the financial commitment of the branch office.
• An attested copy of the registration certificate, incorporation certificate, and the MAA (Memorandum and Articles of Association).
• The original Power of Attorney of a legal representative and copies of their passports.
• The last 3 months’ bank statements of the parent company.

8. How many types of business licenses can you find in Dubai?

Each location in Dubai offers different licenses, which is why you should avoid choosing the wrong place. Before starting a business in Dubai, you must be aware of each option. Therefore, we’ll take a look at some of the licenses available in Dubai free zones. Remember to select the business activities you want to carry out before applying for a license.

• Trading license: if you apply for it, you’ll be able to perform commercial, consulting, or industrial activities. For example, you can import, export, and sell different types of goods with this license. Besides, if you obtain the commercial license, you can apply for the general trading license later.
• General Trading license: with this license, investors can trade any kind of product. Besides, it allows them to trade different products that don’t need to be related to each other. In other words, if you apply for this license, you can diversify your business. Also, you can sponsor visas for your staff and dependants without restrictions.
• Service license: it is mandatory to have this license in order to operate a services company. For instance, law firms, accounting or consultancy companies, and other similar businesses can only operate under this license.
• Industrial license: in this case, companies that possess this license can carry out industrial-related activities. For example, the industrial license allows you to import raw materials and manufacture products. Besides, this license also covers other activities, such as packaging and exporting finished products.
• Other licenses: if none of these licenses fit your type of business, you can try using others. For instance, try a professional license, a freelancer license, or any other you can find available. However, remember that some locations do not offer all existing licenses. Therefore, you must determine your activities and location before applying for a license.

9. How can Connectfz help you to start up a business in Dubai?

Besides avoiding those previous mistakes, you should also ask for professional advice to achieve your goals. Working alone could be also a mistake that investors should avoid, especially if they lack information. On the other hand, having a business setup partner like Connectfz can help you when starting a business in Dubai.

With our help, your business will be set up in a matter of time. Besides, you’ll be able to save both time and money during the setup process. Moreover, we also offer other services to help your business grow after building it up. For instance, you can upgrade your HR department with services like HR consultancy, payroll, recruitment, and other services.

Feel free to contact our team and request our different services to boost your company. We will also provide you with professional tips to avoid making mistakes during the registration process. As a result, your company will be built up successfully and it’ll be a profitable business in no time.

Would you like to contact Connectfz to obtain more tips and discover other mistakes you should avoid when setting up a business in Dubai? If you have any questions, call us on +97143316688. You can email us at info@connectfz.ae, and you will talk to one of our representatives who will answer your questions.