Business licenses are one of the crucial elements of starting a business anywhere in the world. However, in a bustling city like Dubai that fosters growth and innovation, navigating the maze of business license regulations and costs can often be a hurdle. Hence, exploring the complexities of a small business license cost in Dubai can impact the financial environment for aspiring entrepreneurs who are eager to establish their presence in this thriving economy.
In Dubai, license issuance is monitored by the Department of Economic Development (DED). Businesses of all sizes, from small and medium enterprises to multinational companies, need to be licensed in order to operate legally. Additionally, several contributing factors collectively influence the overall UAE business license cost.
Types of business licenses in Dubai
The Dubai authorities have approved three different types of business licenses –
Commercial license –
Companies with a commercial license are permitted to sell or buy goods, export/import goods, conduct logistics operations, brokerage agencies, product trading, provide services on rent, etc. Moreover, they are allowed to perform ten related activities under one license.
The activities covered under this license are as follows:
- Gold & Precious Metals
- Automobiles & their Spare Parts
- Used Furniture
- Oil & Gas
- Chemicals
- Publications & Media Material
- Safety Equipment
Professional license –
Individuals who use theoretical knowledge to serve the consumer group must apply for this license. For example, auditors, consultants, and professionals with similar backgrounds.
The services covered under a professional license are:
- Computer
- IT & IT Infrastructure
- Management
- Environmental
- Tax
- Insurance
- Marketing
- Real Estate Brokerage
- Commercial Brokerage
Industrial license –
Organizations that are engaged in converting raw materials or natural resources into finished goods can obtain this license. The process includes production, segregation, accumulation, packaging, etc.
The list of activities that you can carry out with an industrial license are:
- Paper Manufacture
- Petroleum product manufacturing
- Textile manufacturing
- Equipment and engine manufacturing
- Food industry
- Casting of metals
- Timber and furniture production
- Light aircraft manufacturing
- Metal Molding
- Battery production
Factors influencing the UAE business license cost
Several key factors influence a small business license cost in Dubai:-
- Nature of the business: Business licenses in Dubai are issued to entities based on the activities they are engaged in, also referred to as the nature of the business. For example, trading and commercial entities are issued commercial licenses while businesses offering professional services are issued professional licenses. Similarly, manufacturing companies are issued industrial licenses. Thus, the nature of the business serves as the prime factor that determines the cost of a business license in Dubai.
- Number of partners: Another factor that may fluctuate the small business license cost in Dubai is the number of partners in a business. A business with a single owner is the best to keep the costs lower. Additionally, the business partnership also depends on the business license applied for. For example, businesses with a commercial license require two partners, while professional license holders can operate with only one partner in the company.
- Rented office space: Renting an office space can increase the cost of a business license by 2.5%. As per the regulations of the DED, businesses are required to pay 2.5% of the total rent towards the UAE business license cost. Shuraa Business Setup experts will help you find an affordable office space for rent in Dubai.
- Additional approvals: The approvals and sanctions required for a business license may significantly impact the business license cost in Dubai. Additional approvals from certain authorities might be required depending on the business activities. This can further raise the total cost of a business license. They aren’t direct costs, however, will contribute to the overall expenses.
- Location: Dubai offers various jurisdictions for company setup – mainland, free zones, and offshore, each with distinct regulations and costs. The cost of business licenses in free zones is typically lower than in the Mainland, which usually requires additional requirements, such as local sponsorship.
- Business structure: The legal structure of the business can influence the licensing costs. For instance, the cost of an LLC setup is higher due to its complex compliance requirements and documentation.
Set up a small business in Dubai
The strategic location, tax incentives, and supportive government policies in Dubai provide a conducive environment for entrepreneurs to launch their new ventures. Here’s a detailed guide explaining a step-by-step approach to establishing your small business in Dubai:
Define the business idea –
To establish a strong foundation for the business, the business owner must define the business idea effectively.
- Study the market thoroughly to understand local trends and identify market gaps.
- Determine the customer demographic, such as their age, income, and preferences to customize the offerings accordingly.
- Identify the USP (Unique Selling Proposition) of the business that distinguishes it from its competitors.
- Evaluate the practicality and profitability of the business idea.
Choose a legal structure –
Selecting an appropriate legal structure is crucial for a business. The primary alternatives are:
- Mainland, allowing unrestricted trading within the UAE
- Free Zones, allowing 100% foreign ownership and tax incentives with limited trading with the local UAE market
- Offshore, providing privacy and minimal tax obligations for international businesses without a local presence
Register a business name –
Find a unique name for the business that not only reflects its identity but also complies with local regulations. Make sure the name is not already in use. Once selected, submit it for approval to the relevant authority. The approved business name will be further used for business operations and enhance brand recognition in the competitive market of Dubai.
Obtain necessary licenses –
Start by identifying the type of license required for the business. A general trade license is necessary for all kinds of businesses, specialized licenses may be required for specific sectors such as food, healthcare, and education. The process involves filling out an application form with the necessary details and submitting required documents such as the business plan, passport copies, proof of address, etc.
Find a location –
The location chosen for the business must align with the business type. For instance, Mainland companies must consider commercial spaces in high-traffic areas whereas free zone entities can opt for flexible office solutions like co-working spaces or dedicated offices. Also, consider factors like visibility, accessibility, costs, amenities, and proximity to suppliers and clients to ensure that the selected location aligns with the operational needs and growth plans.
Apply for visas –
Business owners must start with applying for an investor visa which allows them to reside in the UAE. As part of the application process, they must gather necessary documents, such as a valid passport, proof of business ownership, and a no-objection letter from the local sponsor if applicable. Furthermore, they must apply for employee visas and prepare documents accordingly.
Speak to an expert at Shuraa Business Setup
In conclusion, understanding the small business license cost in Dubai is necessary to make your company formation successful. Since the costs can vary widely depending on various factors, it is advisable to consult with an expert like Shuraa who can promise a smoother and more efficient process. Through their expertise and knowledge, they will help you get accurate cost estimates and comprehensive assistance throughout the process, thus supporting the establishment and growth of your business.
For tailored assistance, contact Shuraa Business Setup at +97144081900.
