What does it take to form a company in the UAE? Same as in any other jurisdiction where you might be a new business starter or still not much familiar with the procedures, you may face difficulties and see an unclear picture. It is always a challenge to go through a registration in a new place. Although, in the UAE it is not that much complicated, you might hear different feedbacks on the process of forming a company in this beautiful and pro-business environment. No doubt you may have an experienced friend helping you or a relative, you might also search thousands of articles on the web, but still no one exactly knows the processing unless the person is a professional and really knows the tricks of forming a company. As in any other jurisdiction a good businessperson should consider the professional advise of lawyers or business consultants to ensure a comprehensive solution applied and rely on the professionals without taking a stress. Our experts have prepared a short seven steps guide to help you form a company without headache.
Step 1. - Identify your business activity well and the location of your potential customers.
An activity and general business planning will affect the type of company you should form in the UAE. We receive thousands requests without concrete business activity. If you are not sure what the company will be dealing with, it is no sense to form a company because in the UAE a license is attached to a specific activity. The license can combine few activities as well. Before you decide to form a company, write one or three specific activities: what the company will be offering. If you focus on services, write one or three services you will be offering.
If your activity is trading, do not rely on general trading activity because this will limit your chances to open the bank account. Make your trading narrowed either to industry or to specific items. The best way is to write a list of trading items to easily assign to a group.
The well-chosen activity can positively affect the type of company and make your business formation clear and structured.
In addition, identify you customers and their location. This will also affect the place and type of registration. There are 40 free zones in the UAE and 20 in Dubai. Choosing the right one is important. For instance, if you are really targeting UAE, you must form an onshore resident company.
Step 2. - Choose the right type of company.
Once you identified the activity, customers, and clear on the business to form, you are ready to choose the type of company to register.
Generally, there are two major types of companies: onshore and offshore. If you are targeting the UAE market, you must register an onshore resident company: either a mainland company or a free zone company. Choosing in between depends on the conditions such as physical office, the targeted emirate and once again the business activity. If you need a physical office and target Dubai market, you should form a Dubai based company. If you sell to Dubai mainland, you should choose a mainland company. If you plan to sell internationally and in between free zones, a free zone company is good to choose. With a free zone company you can sell to mainland but with a limited access meaning not as retail and you will be required to pay a duty tax.
International service provision and trading is good to be performed with an international (offshore) company and a free zone (onshore) company.
There are specific activities permitted with certain type of company. If you are in doubt, to make sure your business is registered correctly, you should find a good agent or consultancy.
Step 3 - If you require choose the right agent.
Depending on type of incorporation you may need an agent to register the company. For instance, all international companies or the so called offshore companies require a registered agent meaning you cannot go directly to the authority to register. There are also free zone companies requiring an agent. A mainland company is fine to be formed by yourself. In this case, an agent is required to ease the burden or processing.
Choosing the right agent is indeed important, as you might find an agent, which will not renew its registered agent license, and you may face issues renewing your own license. There are test-agents starting forming the companies but at some point the businesses may not go well and they decide to close down the company. Now you understand the stress many businesses are having not being able to renew their entities. Another issue may be not enough experience. New agents are still “new”. It is always good to have an experienced team to support you through out the processing. Last, the location of the agent is also important. If you are specifically looking for an agent in the UAE, make sure the company has a physical office and good team located in Dubai. Travelling to Dubai and meeting the agent in another emirate will add additional time for travel.
How to choose the right agent?
Ask the representative to tell more about the company and ask the details. The more you know about the agent, the more confident you will be in your choice.
Check how many years the company is operating in the UAE.
If you are setting up an international (offshore) company, check if the company is the registered agent.
Check if the company has lawyers in the company.
Check if the company has a physical office and where the company is located.
Check if the company’s employees are all English speaking. There are many experienced agents having team members speaking your native language but good English is must, as there are many international providers.
Do not choose the agent based only on the lower rates and simple whatsapp communication. Your agent must be professional and the rates should be at the average level to ensure quality and your interests. Always expect an email after conversation with proper details mentioned during your conversation. If you personally prefer messengers, this is great but always keep records of communication via email to keep work updated formally with your agent.
Step 4. – Plan your finance well and study the market if you are entering the UAE market.
If you choose to form the company in the UAE, you should expect to invest to your business. A start-up venture is a good decision, but definitely without good business plan and financial plan, the business may go to a different direction. If you are planning to provide the service or bring the product to the UAE, you should study the market well. If you are confident enough, it is good to go with registration. However, if you are unaware, you can always have a good market research. You can do it yourself or get a comprehensive one from experts. Your registered agent can either prepare one if qualified or connect with a good provider. Investing into market research is better rather than to an unknown market.
Step 5. – Organize your documents and provide all documents translated in English.
Keeping your documents organized always help to provide required on time. For instance, applying for a bank account requires bank statements and your business experience. You should always keep an English version of your CV and clear bank statement transactions with clear source of funds. There may be different cases, but generally, you should be able to produce your CV and translate the bank statement into English with no suspicious transactions.
Step 6. – Contact your agent before you travel to the UAE.
Coming to the UAE must be prescheduled with the agent to allow the agent prepare all required and plan your meetings for signing and meeting the bankers. If you suddenly plan to come, a good agent will be always able to assist you, but you might experience some interruptions in meetings. Hence, you may have an additional reason for stress.
Step 7. – Be positive and prepared for a good outcome.
We have been dealing with thousands of companies and being positive is the best way to ensure smooth registration. If you are ready for a good outcome, the processing will be much smoother than you expect. Being stressed and prepared for worst scenario do not help to register the company. At the end of the day, your company is formed and bank account opened, but being positive keeps you and your agent happy.
We wish you a smooth registration and good luck in all your business ventures!