Is a Business License Necessary for Your Business Setup in Dubai?

With its towering structures, geography, and business orientated infrastructural development, Dubai is now a center for business for many aspiring entrepreneurs and investors across the nation. Regardless of whether you are a seasoned business person or a potential entrepreneur, business set-up in Dubai can be an interesting but intricate process too.

A business license is one of the key components of this process. In this detailed blog, we are going to focus on the whole process of business licensing in Dubai โ€“ its scope and types, especially the costs involved and the steps involved to obtain one.

The Importance of a Business License in Dubai

Dubai, like many places, does not allow the operation of a business without a license. A business license is an official acceptance from the authority to engage in any commercial activities as permitted in the emirate. Legitimizing a business is not the only importance of a business license; there are many others as discussed below:

  • Legal Compliance: A business license is a requirement for anyone who wishes to operate a business in Dubai so that the person is protected from fines and legal issues.
  • Credibility and Trust: A license raises the level of credibility of the business and promotes the confidence of customers, suppliers, and even partners.
  • Access to Government Services: With a business license, you can access a number of government services and support programs that are geared towards businesses.
  • Corporate Banking: A valid trade license is usually required when opening a business bank account in Dubai.
  • Tenders: A big number of government and private sector tenders in Dubai are restricted to only licensed operators.

Categories of Business Permits in Dubai

In Dubai, every enterprise will be required to acquire a business license, but the type of business license is highly subjective to the kind of business activities and areas of operation. In Dubai, the Department of Economic Development (DED) grants the following licenses among others:

  • Commercial License- A business license that is mostly required by companies for purposes of trade such as import, export, and retailing.
  • Professional License- Apart from the commercial license, theseprofessionsvertainly practiced in Dubai, requires a professional license: doctors, lawyers, consultants and engineers.
  • Industrial License- An industrial license is a must for any business involved in manufacturing or production activities.
  • Tourism License: Such as hotels, travel agencies and tour operators, businesses that operate in the travel and hospitality industry are hereby required to obtain a tourism license.

Factors Affecting the Cost of a Business License in Dubai

In obtaining a business license in Dubai, several influencing factors come into play and they include:

  • Business Activity: The costs associated with licenses are majorly determined by the nature of business that one intends to undertake.
  • Legal Structure: The fees imposed vary with the legal structure of the business e.g. as a sole proprietorship, or a partnership or a limited liability company (LLC).
  • Location: With the location, the license costs tend to vary especially in Dubai whereby there are free zones that are cheaper.
  • Number of Partners: For partnerships or LLCs, license cost can be affected by the number of partners added.
  • Additional Approvals: Some firms may also pursue other business approvals that would mean some government agencies and these costs would be incurred.

The Process of Obtaining a Business License in Dubai

Typically, the procedure for obtaining a business license in Dubai consists of the following steps:

  1. Choose a Business Activity: Specify the business activities you wish to carry out in Dubai.
  2. Select a Legal Structure: Choose the most appropriate legal form for your business taking into consideration ownership, risks, and taxes.
  3. Decide Both Trade Name and Business Name: Appropriate trade name registration must be acquired in compliance to naming guidelines of Dubai.
  4. Obtain Initial Approval: Approach DED by way of an application seeking approval for the name and activities of the business to be set up.
  5. Prepare Legal Documents: Draft and blank sign all necessary legal documents, for example, the Memorandum of Association (MOA) and Articles of Association (AOA).
  6. Find A Local Sponsor (If Anything Else): Basing on the legal structure and business activity that you have chosen, there might be a need for a local sponsor or partner.
  7. Secure A Physical Location: Lease or buy office premises or any other commercial working space required for the business to operate.
  8. Apply for Final Application: Final application should be lodged with the DED along with required documents and processing fees.
  9. Get Licensed: After the approval of your application, you shall be issued with the business license.

Affordable Ways to Start a Business in Dubai

For entrepreneurs and new businesses aiming for a less costly entry into the Dubai market, there are a number of less expensive alternatives:

  • Free Zones: Free zones in Dubai have several advantages such as 100% ownership, no taxes, and easy procedures for starting a business.
  • Business Incubators and Accelerators: This model of business works well for start up services as they are offered at lower prices.
  • Virtual Offices: A Virtual Office is a low cost package for clients who do not need to be physically present in Dubai.
Alina

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