How to start a small business in Dubai

Arab Business Consultant

How to start a small business in Dubai?

How to start a small business in Dubai – Understanding the Costs

A lot of entrepreneurs today have the question ‘How to start a small business in Dubai’. Well, starting a business in Dubai is quite straightforward. However, when it comes to starting a business in Dubai or anywhere else for that matter, you need to know about a few things. In the following post, we are going to focus on the costs of starting a business in Dubai.

Understanding the costs of starting a business would give you a clear idea about How to start a small business in Dubai. Here, we have talked about the costs of forming a Limited Liability Company (LLC) and company formation in Dubai freezone.

How to start a small business in Dubai – Costs For a Limited Liability Company (LLC)

A limited liability company in Dubai can be formed by a minimum of two and a maximum of 50 persons who would be the shareholders of the firm. The liability of a shareholder is limited to their shares in the company’s capital. According to the laws, foreign equity in the company cannot exceed 49%. This means that you are a foreigner then you would need to find an Emirati citizen who would own the remaining 51%. The local partner may or may not make an investment in your company. Usually, the minimum capital is AED 300,000.

Here we have listed some of the other things that you need when you are wondering ‘How to start a small business in Dubai’

  1. Initial approval or instant license from DED

One-time cost

Approximately: AED 110

If you are wondering How to start a small business in Dubai, then you can start by getting an instant license from the Department of Economic Development (DED). This license allows you to start business operations right away and you would be given a time of 120 days to complete all your other documentation.

  1. Trade name approval

One-time cost
Approximately: AED 700-900 (AED 2,000 – 3,000 for non-Arabic names)

The next thing in the costs of How to start a small business in Dubai is getting your trade name approved. The cost might change slightly, based on the name you pick. There are several fees to be paid for this, including reservation fees, commercial name fees, foreign company name fees, etc.

  1. Office rent

Yearly/Termly cost

According to the law, it is mandatory for businesses to have an office space to set up the business. This is done mainly to ensure that it’s a legitimate business by allowing the authorities to do inspections, monitor operations and verify that immigration laws are followed.

  1. Memorandum of Association (MOA) Attestation

One-time cost

Approximately: AED 400

The MOA is an agreement between the partners/ shareholders. This is signed between the partners of the company. The attestation fee can vary depending on the share capital.

  1. Drafting the contract and Court Agreement Attestation

One-time cost

Approximately: AED 1,000 – 2,000 for CAA + AED 300 for typing

The contract of an LLC should be drafted with mutual consent of the partners. The legal contract needs to be drafted in both Arabic and English. The cost of the translation is additional. All partners or their attorneys will need to go to the court and sign the Court Agreement Attestation.

  1. Ministry of Economy fee

One-time cost

Approximately: AED 3,000

You will be charged a fee by the Ministry of Economy to register your company.

  1. Trade license 

One-time cost plus renewal fees

Approximately: AED 15,000 + AED 3,000 renewal (For general trading licence)

This is one of the most important things that you need if you are wondering ‘how to start a business’ Depending on the type of your business, the nature trade license fee can vary. In some cases, you might also be asked to show proof of a security deposit.

  1. Commercial Licence fee (Tejari)

Yearly cost
Approximately: AED 700

The Tejari fee needs to be paid annually to be legally allowed to conduct commercial activities.

  1. Chamber of Commerce fee

Yearly cost
Approximately: AED 1,200

The Chamber of Commerce Fee would vary depending on the nature of the business. For example, the fee for a general trading company will differ from an industrial or manufacturing company.

  1. Commercial services improvement fee

Yearly cost

Approximately: AED 400

  1. Administrative services fee and public waste municipality fee

One-time cost

Approximately: AED 50 + AED 1,000 for waste  

This is another fee that you need to pay when you are looking at How to start a small business in Dubai.

  1. Market fees

Yearly/Termly cost
Approximately: AED 1,250+ –  Can vary a lot

You also need to pay market fees when you are looking to How to start a small business in Dubai. This is a percentage paid to the government on the total amount of rent. An office or shop pays 5%  of the  rent while a warehouse pays 20%.

How to start a small business in Dubai – Costs for a Free Zone Company

When you are looking at How to start a small business in Dubai, you should seriously consider starting a business in the many Free Trade Zones in Dubai and elsewhere in UAE. Setting up a company in a Free Zone has many benefits. For example, even a foreigner can have 100% ownership and the company would be exempt from all import duties. There are many different Free Zones and the features vary depending on the location and type of business.

Some of the major Free Zones in the Dubai Emirate come under the authority of Dubai Creative Clusters Authority (DCCA) and the Dubai Multi Commodities Centre Authority (DMCC). There are also other options such as Jebel Ali Free Zone, Dubai Airport Free Zone and Dubai Silicon Oasis Free Zone.

You also have cheaper options outside of Dubai, which includes areas such as Sharjah Airport International Free Zone, Umm Al Quwain Free Zone, RAK Free Trade Zone, Fujairah Free Zone and Ajman Free Zone.

If you are wondering How to start a small business in Dubai free zones, then let me tell you that you would probably require a minimum share capital to open the company and this can also vary tremendously.

  1. Office rent

Yearly or termly cost
Approximately: AED 15,000+

The cost of rent will depend on the Free Zone and its rules. The place you rent will determine the number of visas that your business can obtain. You can have a Smart Desk (for freelancers or if no office space is needed), or an office unit (small and self-sufficient) or even a permanent office (full-fledged office space). You also need to pay a service charge that would be calculated as a percentage of your rent.

  1. Free Zone license

Yearly cost

Approximately: AED 10,000 – 50,000

If you are looking to start trading companies, services companies and industrial companies, then you need to pay for a free zone license.

  1. Free Zone registration

One-time cost

Approximately: AED 5,000 – 45,000

This fee is paid to the Free Zone authority for registering your company. The cost will vary depending on the Free Zone you are located in and the company type you choose to start, such as Free Zone Establishment (FZE) or Branch Company.

  1. Free Zone visa

Yearly cost with renewal fees

Approximately: AED 3,000 – 5,000 each

If you are wondering How to start a small business in Dubai and you are worried about the workforce, then let me tell you that Free Zone companies have a limited number of visas allowed according to the office space.

  1. Bank Guarantee

Yearly cost

Every Free Zone company has to prove that they have a certain amount of bank guarantee for each of its employees. For example, this can be 45 days salary plus a one-way ticket to their home country for each of their employees. This is another cost that you should be aware of when you are looking at How to start a small business in Dubai.

  1. Registered agent fee

One-time cost with renewal fees

To do business in Dubai free trade zone, you’ll need a UAE local agent to proceed with all the governmental procedures. This is fee is for them.

How to start a small business in Dubai – Other costs?

  • Initial approval
  • Trade name (AED 500 – 1,000)
  • MOA – (AED 1,000 – 2,000)
  • Postal services
  • Health insurance premiums

If you want to know more about How to start a small business in Dubai, you can get in touch with Arab Business Consultant. They have years of experience in the field and they know how to give you the best advice. So, contact them today and get the right information on How to start a small business in Dubai