Starting up your own venture was always a run after dream of many aspiring entrepreneurs! However the day you jumped off the cliff and stepped out of your comfort zone to start executing not chasing; a panoply of business questions popping out everyday you have to answer. So, one of those questions was costing! Yup, How much does it cost to setup a business in Dubai? Well, there are basically two options: either you go for a free zone company setup or a mainland business such as a Limited Liability Company (LLC). For instance, let us start with a free zone company since it’s the most preferred one by so many small businesses and startups:

Security Deposit (refundable)AED1,500One Time
License Fee (including 5% VAT)AED5,250Every Year
Rental Cost (smart desktop or flexi desk)*AED7,500Every Year
Admin Cost/Processing FeeAED945Every Year
Establishment Card (used for visa processing )**AED2,400One Time
TOTAL***AED17,595

*This is 1 desk seat up-to 2 seats; so for a large size team, cost goes up depend sqm required
**Also called immigration card used for residence visa process
***Residence visa cost not included estimated to AED 4,800 (start from)

As displayed above, that’s the minimum formation cost to be expected in Dubai for a free zone company. If you’re wondering what is the difference between setting up a company in those free zones and a mainland business license? Well, the local sponsor who charges an annual fee is mandatory when it comes to setting up your business in Dubai mainland. However, it’s not is not a binding rule when getting your business license from a free zone authority. Having said that, if you’re intending to conduct business inside Dubai then you need have a local agent onboard by opening a company branch licensed by Dubai Economic Department (DED) as per UAE Law No. 13 of 2011.

This reminded us with a case of an e-commerce startup company kicked off its operations with a free zone business license but then realized the need of a mainland LLC license with a local agent taking 51% of shares. The reason why for this startup is because of their involvement in delivering products outside the free zone area. This was one of the mistakes that major entrepreneurs make for not checking the regulation and legal aspects while conducting their market research. Another diligence to be performed when applying for your license is the type of your business activity that can affect your setup cost for instance.

At this stage, you should do your home work to clarify your business typology that fits the list of activities offered by every licensing authority. Another highlight worth to be pointed out is the rental cost that differs from an option to another. As mentioned under the table footnote above, there are smart desks or flexible desks that usually fit if you are a team of two with no real requirement to be daily present at your office. However, if your business model is on a different scale then other options of a fixed desk unit or a permanent office are also available.

Let us now run over LLC business inside Dubai or what is called a mainland license:

License CostAED7,960Every Year
Local Sponsor Cost*AED10,000Every Year
Initial Gov. Approvals (admin + business name fee)**AED840One Time
Admin Cost/Processing FeeAED945One Time
Memorandum of Association (MOA) LegalizationAED2,375One Time
Establishment Card (MOL + DNRD cards )**AED7,700One Time
TOTAL***AED29,715

*This depends on your negotiations with the local sponsor (+/-). Also, the value he’s adding to your business can change this cost upside-down.
**This include Ministry Of Labor + Dubai Immigration Department cards
***Office rental cost is not included but an approximate of AED 3,000 per sqm to be added depending again the nature and size of your business.

You may think total setup cost looks almost same either for a free zone or a mainland business. However, look at one time expenses for a mainland: AED 10,915 Vs AED 7,535 in a free zone at first glance. Above that, when you operate inside Dubai, expect 5% of your office rent amount to be be paid as a government fee likewise 20% if you’re running a warehouse. On the same line of thoughts, if you’re going to start a general trading company then you shall pay one time setup cost that starts from AED 25,000 for instance.

Now, you may say I don’t need LLC business license for my case! I’m a solo-entrepreneur. In this case, we’re talking about another legal business form that is sole proprietorship or what is known as a professional license. So here below your breakdown setup cost:

License CostAED5,600Every Year
Local Sponsor CostAED10,000Every Year
Initial Gov. Approvals (admin + business name fee)AED840One Time
Memorandum of Association (MOA) LegalizationAED2,375One Time
Establishment Card (MOL + DNRD cards )AED7,700One Time
TOTAL***AED26,515

 

 

 

 

Similarly, previous notes are applied for a professional license either how you negotiate with your local sponsor in terms of his role in the business? And how much he’s going to charge you annually? In this regards, it’s recommended from past experiences to be engaged with a professional local sponsor or agent who holds many companies under his sponsorship further to a large network of people he can introduce you to will support literally your market penetration!

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