Top Factors Contributing to Cost of Small Business License in Dubai

Small to medium businesses are the lifeblood of the Dubai economy. The investor-friendly environment of business setup in Dubai provides lucrative opportunities for SME investors. To explore the opportunities, foreign investors must know the costs associated with starting a small business in Dubai. The costs are dependent upon many variables such as the legal structure, visas requirements, facilities (office or warehouse space) required and business activities etc. Therefore, to know the cost of a small business license in Dubai, the aspiring entrepreneurs should analyse the variables for a cost-effective company formation.

Also read: How Startups & SMEs can Take Advantage of Low-Cost Business Setup in Dubai

Here we are providing you with the top factors that contribute to the cost of a small business license in Dubai.

1. Nature of the Business 

Getting a trade license is the primary step of company formation in Dubai. The license corresponds to the nature of the business you are planning to undertake. The costs also vary depending on the type of license. Commercial, professional and industrial licenses are the three broad types of licenses issued to the investors.

Related: Types of Costs Involved in Obtaining a Trade License in Dubai Mainland

A commercial license is mainly issued to businesses that are into trading activities while professional licenses are required for professional activities such as a salon, consultancy services etc. Industrial license is meant for manufacturing activities. The trading and manufacturing activities may require more investments and approvals compared to professional services. The costs may vary depending on the nature of such activities. Business set up consultants in Dubai can offer you more insights into the cost associated with each of these activities.

Also read: Why Should You Setup a Business in Dubai in 2020?

2. Number of Partners

Costs of starting a company also depend upon the number of partners that are involved. This especially holds for Limited Liability Companies (LLC) where two or more shareholders are involved. Further, an LLC requires a UAE national sponsor who is entitled to 51% shares of the company. The costs can be lowered if you are opting for other types of legal structures such as a Sole Proprietorship, where the extent of liability solely rests upon you.

Related: UAE’s 100% Ownership Reform: A New Era to Attract Foreign Investments

Sole proprietor companies mainly operate under a professional license, where a Local Service Agent (LSA) is mandatory. Unlike the UAE national sponsor, the LSA has no claims over the ownership structure of the company. Yet, a decision on the legal structure solely depends upon your proposed business activity.

Also read: Setting Up a One Person LLC in Dubai: Key Insights for Investors

3. Costs for Renting an Office Space

The DED issues the trade license only if the proposed companies have a physical office space and address. The investors are required to submit the tenancy contract / Ejari to get the DED approval. However, small businesses and startups can opt for coworking spaces in business centres that offer ready to move, fully-furnished and cost-effective office spaces.

Earlier, startups were required to have a minimum space of 200 sq ft (It is 100 Sq ft per license unless it is business centre activity) to get the trade license issued. However, with the introduction of Estidama or Sustainability license, the DED started allowing companies to set up office space in a business sustainability centre with a minimum space of 50 square feet. The business centres provide excellent facilities including modern meeting rooms, common reception, and shared spaces. Consult with business setup consultants in Dubai for cost-effective office space solutions.

4. Cost Incurred for Approvals

The DED has classified certain business activities as special activities, for which the entrepreneurs are required to obtain approval from concerned ministries or government departments. Oil & gas activities, legal services, accounting, real estate are some of the activities for which external approvals are mandatory.

Related: External Approvals in Dubai Mainland: Top Considerations for Businesses

There are some costs involved in obtaining approval from the government authorities. The fee for approvals depends on the activities you choose to start a business in Dubai. All activities are not similar and the charges for external approvals may vary from activities to activities.

5. Other Allied Costs

Apart from the variable discussed, here are some important factors that influence the cost of business licenses in Dubai. These costs may include mandatory Government Fees, costs at Immigration & Ministry of Labour, PRO assistance expenses, the fee for Ministry of Economy registration, the fee for Chamber of Commerce registration etc. Business set up consultants in Dubai can advise the entrepreneurs in effectively managing the costs of obtaining a business license in Dubai.

Also Read: 10 Mistakes to Avoid While Setting up a Business in Dubai

Hire the Best Business Setup Consultants in Dubai

For a cost-effective company formation in Dubai, the entrepreneurs need to plan every aspect of the setup procedure, especially the cost.  For a newbie entrepreneur, gathering the cost-related information won’t be easy. This is where the advice of the best business setup consultants in Dubai such as Jitendra Business Consultants (JBC) makes a big difference. Our experience and legal expertise ease the complexities of Dubai company formation process. JBC’s team of company formation specialists are well-versed in the UAE laws and are experienced in dealing with the authorities. We assure you that the business license was issued without any hassle.

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