In a study conducted by the World Bank last year, the United Arab Emirates ranked 21st in terms of the ease of doing business. This means that setting up a business in this country is relatively straightforward and even fast.
The UAE made a jump to this ranking since there were improvements regarding the required number of procedures, cost, minimal paid-up capital, and days for completion to set up a business.
Because of these, the prospect of starting a business in Dubai, Abu Dhabi, and other emirates has never been more convenient and truly interesting. And if you have always wanted to expand your business in the UAE, now is a good time to make your move.
Breaking Into the UAE Market
Although it may be easier to set up your company in the UAE today, making certain mistakes can delay all your plans and even cause you to waste your resources.
To ensure your success in setting up a company in the UAE, avoid these mistakes:
Failing to study the local market before planning
Before you even start making your business plan, you need to have a good knowledge of the region. This means doing extensive research into the business sector you will operate in.
When creating your business plan, make sure you include a study of the market conditions, your competition and your business forecasts.
At the very least, you should be 100% sure that you will have a target market interested in your products or services so that your goal of business success becomes achievable.
Not choosing the best way to establish your business in the UAE
There are two ways to establish your venture in the UAE. Here’s an overview of the two:
Having a UAE national shareholder/service agent
To register a limited liability company (LLC) type of business, you need to find a UAE national who is willing to be shareholder or service agent.
This business arrangement will give you the freedom to operate your business from anywhere you want in the city.
Establishing your business in a free zone
If you want to have full ownership of your business, you can do so by setting up your business in one of the many free zones located across the UAE. With this type of business arrangement, you won’t have to find a UAE national to help you open up your business.
However, this option is not often practical for businessmen whose enterprise would benefit from being on the mainland and the central business areas such as those who want to open restaurants and retail shops.
But for those whose business model and industry can greatly benefit from a free zone setup, aside from having full ownership of your business. You will also benefit from 100% exemption from import and export duties.
Selecting the wrong license category
There are three categories of business licenses you can get in the UAE:
Commercial license – this is given to businesses that will engage in any kind of trading activity
Industrial license – this is issued to companies that will engage in manufacturing, production, and other industrial activities
Professional license – this license is issued to service providers, craftsmen, artists, and other skilled workers
Before applying for a license, make sure your planned license category will allow you to carry out all the activities relevant to or covered by your business.
Opening a bank account blindly
There are various banks in the UAE where you can open a business account in. Make sure the bank you choose has a good reputation and is known for supporting local businesses. They should also have all the banking features and services your business will need now or in the future.
Lastly, take the time to check the terms and conditions you have to meet once you open an account with a particular bank. This includes knowing all the fees and charges you will have to pay for using certain services and features.
Not knowing when to get help
Lastly, opening a business in the UAE will take up a lot of your time. And if you want to conduct a thorough market research, you may have to visit the UAE several times even before you start the formal business setup procedures. All these trips will eat up a chunk of your budget.
Getting help from a company that specializes in setting up businesses in the UAE is a smart idea. They will assist you in every step of the business setup process.
They will register your company for you, assist you with opening your bank account, recommend an auditor, and provide other services you may need.
By doing your own research and getting help from trusted business advisors in the UAE, you can be 100% certain that opening a company in this country is the best decision you’ll be making for your business.
Raj Herry is the Founder and Chairman of Flying Colour Business Setup Services. His extensive experience comes from more than 15 years in the field of company incorporation for the Dubai Mainland, all Free Zones across the UAE and offshore companies worldwide. He also owns several business centres offering furnished and ready-to-move offices in Dubai.