Dubai is a hub of business opportunities, attracting entrepreneurs from all around the world. As a business-friendly city, Dubai offers several advantages to business owners, including tax exemptions, investor-friendly policies, and a strategic location. For entrepreneurs planning to start a business in Dubai, setting up a Limited Liability Company (LLC) is the most preferred option.
LLC is a legal entity that offers limited liability protection to business owners and partners. It is a popular business structure in Dubai as it allows entrepreneurs to have 100% ownership of their company, offers tax exemptions, and enables them to conduct business across the UAE. In this article, we will provide a complete guide to the cheapest LLC setup in Dubai, including the process, fees, and requirements.
Types of Companies in Dubai:
Before understanding the process and requirements for LLC setup in Dubai, it is essential to know the types of companies that exist in Dubai. There are three types of companies that one can set up in Dubai:
Free Zone Company: A company that is established in a specific free zone in Dubai and is exempted from all taxes and duties.
Mainland Company: A company that is established outside the free zone area and can conduct business across the UAE.
Offshore Company: A company that is established in a free zone in Dubai but can conduct business only outside the UAE.
Benefits of LLC Setup in Dubai:
Setting up an LLC in Dubai offers several benefits to entrepreneurs. Some of the advantages of LLC setup in Dubai include:
100% Ownership: As an LLC, entrepreneurs can have 100% ownership of their company in Dubai.
Tax Exemptions: LLCs in Dubai are exempted from corporate taxes, personal income taxes, and import and export taxes.
Conduct Business across UAE: LLCs in Dubai can conduct business across the UAE, giving entrepreneurs a broader market to target.
Limited Liability Protection: LLCs offer limited liability protection to business owners and partners, protecting their personal assets in case of business failure.
Process of LLC Setup in Dubai:
The process of LLC setup in Dubai involves the following steps:
Determine the Business Activity: Entrepreneurs must decide on the business activity they want to conduct in Dubai and ensure that the activity is allowed in the UAE.
Choose a Local Sponsor: A local sponsor is required to set up an LLC in Dubai. The sponsor must be a UAE national or a UAE-owned company that holds 51% ownership of the company but it depends on the Activity of the business as most business are now exempt from Local Business Setup in Dubai.
Register the Trade Name: Entrepreneurs must register a unique trade name for their company with the Department of Economic Development (DED).
Obtain Initial Approval: After registering the trade name, entrepreneurs must obtain initial approval from the DED for LLC setup in Dubai.
Draft the LLC Agreement: The LLC agreement must be drafted, which outlines the shareholding structure, distribution of profits, and management structure of the company.
Obtain a Business License: After drafting the LLC agreement, entrepreneurs must apply for a business license from the DED.
Register with the Chamber of Commerce: Entrepreneurs must register their LLC with the Dubai Chamber of Commerce and Industry.
Documents Required for LLC Setup in Dubai:
Passport copies of all shareholders
Emirates ID copies of all shareholders
No-Objection Certificate (NOC) from the current sponsor (if applicable)
Proof of trade name reservation
LLC agreement signed by all shareholders
Initial approval certificate
Business plan
Tenancy contract for the company's office space
Fees for LLC Setup in Dubai:
The fees for LLC setup in Dubai can vary depending on several factors such as the type of company, the size of the company, and the location of the office space. However, here are some of the common fees involved in LLC setup in Dubai:
Trade name reservation fee: AED 660
Initial approval fee: AED 1,010
LLC agreement drafting fee: AED 2,000 to AED 4,000
Business license fee: AED 10,000 to AED 15,000
Chamber of Commerce registration fee: AED 1,500 to AED 2,000
Office space rental fee: Varies depending on location and size
FAQs
Can a foreigner own an LLC in Dubai?
Yes, a foreigner can own an LLC in Dubai. However, they must have a local sponsor who holds 51% ownership of the company.
What is a local sponsor?
A local sponsor is a UAE national or a UAE-owned company that holds 51% ownership of the company. They act as a silent partner and do not have any decision-making powers in the company.
Can an LLC in Dubai have multiple shareholders?
Yes, an LLC in Dubai can have multiple shareholders. The shareholders can be individuals or companies.
How long does it take to set up an LLC in Dubai?
The LLC setup process in Dubai can take anywhere from 1-2 weeks to a few months, depending on the complexity of the company and the completeness of the required documents.
How much is LLC registration fee in UAE?
LLC or Limited Liability Company registration fee in UAE can vary depending on several factors such as the type of company, the size of the company, and the location of the office space. However, the fees for LLC setup in Dubai can range from AED 10,000 to AED 15,000 for a business license, while the fees for trade name reservation and initial approval can cost around AED 660 and AED 1,010 respectively.
What is the cheapest business License in Dubai?
The cheapest business license in Dubai is the Freelancer permit, which is a type of business license for individuals who provide professional services. The cost of this license is AED 7,500 for the first year and AED 6,000 for the subsequent renewals.
Which is the cheapest Freezone in Dubai?
The cheapest Freezone in Dubai is the Dubai Multi Commodities Centre (DMCC) Freezone. The DMCC Freezone offers a wide range of business activities and has flexible office solutions for businesses of all sizes. The cost of setting up a company in DMCC Freezone can vary depending on the type of business activity, but it typically ranges from AED 20,000 to AED 25,000.
What is the minimum capital requirement for LLC in Dubai?
The minimum capital requirement for LLC in Dubai is not fixed, but it is generally recommended to have a minimum capital of AED 300,000. However, this can vary depending on the type of business activity.
How much does an LLC cost in Dubai?
The cost of an LLC in Dubai can vary depending on several factors such as the type of company, the size of the company, and the location of the office space. The fees for LLC setup in Dubai can range from AED 10,000 to AED 15,000 for a business license, while the fees for trade name reservation and initial approval can cost around AED 660 and AED 1,010 respectively. Additionally, there may be other fees such as LLC agreement drafting fee, Chamber of Commerce registration fee, and office space rental fee.
Can I own 100% LLC UAE?
Yes, it is possible to own 100% LLC in UAE, but this is only possible in certain Freezones such as Dubai South Freezone, Fujairah Creative City Freezone, and Ras Al Khaimah Freezone.
Can LLC own one person?
Yes, an LLC can be owned by one person. In fact, the new UAE Commercial Companies Law (CCL) allows for 100% foreign ownership of LLCs in certain sectors and industries.
Can a LLC have 3 CEOS?
It is possible for an LLC to have multiple CEOs, but it is not common practice. Typically, an LLC has one CEO who is responsible for the overall management of the company.
Can one person run a limited company?
Yes, one person can run a limited company. In fact, many small businesses are run by a single owner who acts as the director and shareholder of the company.
Do I need an accountant if I have a limited company?
While it is not a legal requirement to hire an accountant if you have a limited company, it is highly recommended. An accountant can help you with financial planning, bookkeeping, tax filing, and other financial matters.
Can I buy a house with a limited company?
It is possible to buy a house with a limited company, but this is typically done by property investors or developers. Buying a house with a limited company can have tax advantages, but it also involves more complex legal and financial arrangements.
What is a disadvantage of a limited company?
A disadvantage of a limited company is that it involves more legal and financial responsibilities than a sole proprietorship or partnership. Additionally, a limited company may be subject to more regulations and reporting requirements.
How do I pay myself as a limited company?
As a director and shareholder of a limited company, you can pay yourself in several ways such as salary, dividends, or a combination of both. However, it is important to follow the legal and tax regulations related to paying yourself from a limited company. It is recommended to consult with an accountant or tax advisor for proper guidance.
Conclusion:
In conclusion, setting up an LLC in Dubai is a great way for entrepreneurs to establish their business and take advantage of the many benefits that Dubai offers. While the process may seem complex, with the right guidance and preparation, entrepreneurs can successfully set up their LLC and begin conducting business in Dubai. By following the steps outlined in this guide and understanding the fees and requirements involved, entrepreneurs can achieve the cheapest LLC setup in Dubai and take their business to the next level.
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