The UAE has become a top choice for establishing businesses, especially for limited liability company (LLC) setups. In the dynamic market of Dubai, investors can choose their desired jurisdiction for their companies in the mainland, free zones, or offshore based on their specific business requirements.
The business-catching environment and diverse opportunities collectively render Dubai an ideal location for LLC formation. Therefore, over the last few years, the LLC formation has increased and made progress in the UAE due to the favorable legal framework and straightforward process.
In this article, we explain the benefits and costs of establishing an LLC in Dubai and a step-by-step guide for LLC company formation in Dubai.
What Is a Limited Liability Company (LLC)?
The Limited Liability Company (LLC) is the UAE’s prevailing business structure. With a minimum requirement of 2 and a maximum of 50 shareholders, an LLC ensures their liability is confined solely to their respective shares in the company’s capital. Therefore, Dubai’s business regulations provide shareholders comprehensive personal protection against liabilities.
When establishing a limited liability company in Dubai, depending upon the activities, it is obligatory to collaborate with a local sponsor (a UAE national) who holds 51% ownership of the company. In this arrangement, the expatriate retains control over the remaining 49%.
If you are looking for trustworthy local sponsors, Now Consultant will provide you with the sponsorship, enabling you to maintain 100% operational ownership of your business.
Benefits of Starting an LLC in Dubai:
There are numerous notable benefits associated with establishing an LLC in Dubai. Some of these advantages include:
1. Affordable Company Formation
The legal structure of establishing an LLC in Dubai provides cost-effectiveness. LLC company formation in Dubai proves to be budget-friendly due to the absence of overhead application costs, along with the possibility of avoiding double taxation.
Moreover, the governing authorities impose no hidden fees, and no additional costs are associated with LLC formation in Dubai. While the estimated cost for setting up a Dubai LLC is approximately AED28,000, the actual expense can vary based on the nature of your business. However, certain business activities may require exclusive approvals and certificates from authorities, which may increase the formation cost of an LLC setup in Dubai.
2. Protecting Shareholders’ Assets:
An LLC is recognized as a separate legal entity, effectively separating the finances of the business shareholders from those of the company. Therefore, shareholders are not individually liable for any losses incurred by the LLC. The liability is confined to the total capital invested in the business, protecting shareholders’ personal assets from seizure under the LLC agreement.
The protection shield for business shareholders has fueled the expansion of LLC business establishments in the UAE. Thus, shareholders have to face liability only up to the extent of their investment in the company.
3. Diverse Business Activities in LLC Formation:
In contrast to other company structures, an LLC offers the flexibility to select from a wide range of legal business activities for LLC formation in the UAE. The Department of Economic Development (DED) maintains a comprehensive list of over 2,000 business activities allowed under LLC formation. These activities can vary in nature, depending upon the company’s chosen jurisdiction.
You have the option to set up your limited liability company within various sectors such as agriculture, finance, technology, and numerous others.
4. Multi-Visa Opportunities
After successfully establishing an LLC in Dubai, you become eligible for an investor visa, which grants you investor status in the UAE. This visa permits residency in the UAE for a duration of three years. Moreover, you can apply for multiple visas for your family members and your employees. As per the standard requirement, you must allocate 100 square feet of business space for each visa application.
If you want to apply for multiple visas for employees and family members, you need to approach the Department of Economic Development (DED) or specified Free Zone Authority for mainland and Free Zone LLC setup, respectively.
Cost of LLC Company Formation in Dubai?
The starting cost for an LLC company in Dubai is approximately AED 18,500. Additional charges, such as those for foreign or non-Arabic trade names, amount to an extra AED 2,000. Dubai’s LLC license cost ranges from AED 8,000 to AED 15,000, the license renewal cost is also same.
The cost of starting a limited liability company in Dubai is usually the same for most types of businesses. However, the total cost might vary depending on factors like how many visas you need, the type of medical insurance you choose, extra approvals required from government agencies, and if you decide to use a foreign trade name.
How to Open an LLC Company in Dubai, UAE
To open an LLC company in Dubai, follow the six essential steps, comply with all legal regulations, and adhere to the business guidelines set by the UAE government.
Step 1: Determine the Activities For Your Business
The UAE government provides LLCs with a wide range of over 2000 business activities, making it easy to find ones that suit your preferences. In the first step, you need to gather complete information and thoroughly comprehend all the business activities associated with your business.
Having complete information, select the business activities from the Department of Economic Development (DED) list and other relevant authorities according to your business requirements.
It is advisable to get guidance from the Now Consultant experts when choosing business activities because this step has long-lasting impacts on your business.
Step 2: Reserve Trade Name For Your LLC Business
Selecting a suitable name for your company comes after determining the nature of your business operations. In the second step, it is essential to reserve a trading name for your business, ensuring it complies with all naming conventions as mandated by the UAE government.
Consider various factors such as the products, services, goals, and target audience of your company when brainstorming potential names. It’s imperative for business owners to adhere to the naming regulations set by the UAE government.
Step 3: Select a Suitable Business Location
Selecting a suitable location for your LLC company is crucial as it impacts your revenue and legal obligations. Opting for an office space that is easily accessible to your target market can maximize your business potential.
Various factors should be taken into consideration when determining the business location, including budget, space requirements, staffing needs, technological infrastructure, and more. Securing an office space typically involves entering into a lease or rental agreement.
Once you’ve decided on a location, you must obtain the initial approval certificate from the Department of Economic Development (DED) or relevant authorities. It’s important to note that this certificate may not be granted if your chosen trade name is rejected.
Step 4: Get Pre-approvals
After choosing the activity, trade name, and location, you must complete all necessary documentation, including Memorandum of Association (MoA) and Local Service Agent (LSA) agreements. The required document list is explained below in detail.
The documentation is mandatory for the initial approval of your LLC’s trade license. If you are facing any trouble, you can collaborate with the expert team of Now Consultant who will assist you in meeting legal requirements.
Step 5: Acquire a Trade License
In step five, the relevant authority will review all your submitted documents. Upon verifying by the relevant authority, you can acquire a trade license for your LLC in the UAE. In case of any mistake in document completion, you will not be awarded a trade license for an LLC setup in Dubai.
Step 6: Other Documentations
In the last step, you can apply to the labor registry to acquire the necessary labor cards and manage both your visa and the visas of your shareholders. You will be fully prepared to operate your legal LLC company in Dubai upon completion.
Documents Required To Start An LLC In Dubai
The following documents are required for forming an LLC in Dubai include:
- Copy of the investor’s passport
- Copy of the local sponsor’s passport
- No Objection Certificate (NOC) if the shareholder is employed by a UAE company
- Emirates ID copy
- Registration application form from DED
- Attested tenancy contract for office premises
- Attested Memorandum of Association from a public notary
How We Assist You?
Although establishing an LLC in Dubai may seem straightforward, a single mistake can lead to an avoidable loss of resources and time. The expertise of qualified professionals is required throughout the formation process and to meet all governmental compliances.
Now Consultants, with its cost-effective packages, provides services to diverse LLC formations according to the client’s requirements. Our expert team not only provides business setup services but also provides local sponsorship for LLC setup. We ensure you achieve 100% operational ownership of the LLC and provide you with the solutions for your problems to meet your business startup needs.
FAQs:
Which Is The Best Free Zone For LLC Formation In Dubai?
Every Free Zone in Dubai offers its own specifications; however, IFZA Free Zone is the best choice for LLC formation in Dubai due to its cost-effectiveness and streamlined processes.
Do I Need Local Sponsorship For An LLC Setup In Dubai?
Most of the activities in the LLC list demand local sponsorship for LLC formation in Dubai, It depends on the sector also. Now Consultant can help you by providing trustworthy local sponsorship for LLC setup in Dubai.
How Long Does It Take To form an LLC in Dubai?
It takes 4 to 5 working days for the complete process of LLC company formation in Dubai, but on the condition that you do not make any mistake in submitting and processing the LLC company setup.
