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Avoid delays and fines with our guide: Top 7 Mistakes to Avoid When Applying for a Business Trade Licence in Dubaiu2014ensure a smooth business setup.
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Top 7 Mistakes to Avoid When Applying for a Business Trade Licence in Dubai Dubai is ranked as one of the fastest-growing business centers in the world, and businesspeople are flocking to it in terms of business setup. It is the ideal location to establish a business due to its strategic location, tax incentives and premier infrastructure. However, as much as the opportunities abound, maneuvering the process of getting a business trade license in Dubai becomes more complex than many might anticipate. Any business operating in the UAE is required to have the proper trade licence and improperly executing the application process can result in delays, fines and even license rejection, which can be costly. Whether you are an upstart entrepreneur OR an experienced investor looking to establish a business setup in Dubai, common pitfalls or mistakes are essential to prevent on your way to success. This article outlines the seven biggest mistakes entrepreneurs make when applying for a trade license in Dubai. Mistake 1—Selecting an Incorrect Business Activity When trying to obtain your business trade license in Dubai, the initial thing to do is to choose the suitable business activity. The authorities of the UAE classify thousands of business activities, including consultancy, retailing, manufacturing and digital services.
So what? The nature of the activity chosen predetermines the kind of trade license, commercial, professional, or industrial, as well as the permits to be obtained in order to operate in a legal way. The declared activity must be the same as what you actually engage in, as your application may be denied or worse, your license revoked at a later stage. An example is where a company submits an application to have a consultancy license when in fact it deals with products and, as a result, pays a hefty penalty. How not to fall into this error: • Authorizes only acceptable business endeavors by either DET or your Free Zone authority. • Discuss with the experts to ensure that you have a classification of your operations properly done. • When it comes to such a situation as multiple services, then you ought to apply for a license that permits mixed activities. Mistake 2 Ignoring the difference between mainland and free zone Entrepreneurs have the option of establishing their business in Mainland Dubai or in a Free Zone. All options have their requirements, advantages, and restrictions. Key differences: Mainland: Lets you trade directly in the UAE market and engage in government contracts. It is subject to local laws and, in some cases, special permissions. Free Zone: The free zone offers 100 percent foreign ownership, reduced complexities in setting up, and taxation benefits. But the Free Zone firms can find it difficult to conduct business within the local market directly but through a distributor. How then to select which? Mainland is usually a better option in case clients are located primarily in the UAE or you require an actual office in the city. A free zone license can be more economical in case your business targets international markets or operates on the Internet. How not to do this: Do not blindly shoot at any business idea. A poor selection can restrict your tumor or require the restructuring procedures in the future. Mistake 3—Being Economical with the Truth About Costs and Hidden Fees
Lots of novice businessmen in Dubai underestimate the totality of business establishment costs. Although Dubai is business-friendly, there are expenditures at every level. Typical costs are • Application investments to >= 2 trade licenses • Government approvals/certifications • Visit visa processing and Emirates ID • Office rent or flexi-desk rent • Legal charges relating to the documentation, including the Memorandum of Association (MoA) The hidden cost to look out for: • Some activities that will need additional approvals • Translation or attestation fee • The yearly fee of renewal How not to do this: Make a practical budget that is not limited to registration fees only. Talk to a business setup advisor and have him/her give a breakdown estimate to avoid disappointments. Mistake 4—Making Use of Incomplete or Inaccurate Documentation Your trade license application is supported by paperwork. Approval can be held up by even minor errors. The most frequently missing/incorrect documents are as follows: • Inconclusive passport details of shareholders • Wrong or obsolete tenancy contracts • Mistakes in the Memorandum of Association (MoA) information How not to make this error: • Conduct due diligence in research and study the application requirements before applying • Make sure that all names, passport and business information reflect the same across the documents. • To check for paperwork accuracy and compliance, use professional PRO services.
Mistake 5—Not Meeting Office Space Requirements In Dubai, some licenses need to show evidence of a physical office location, whereas others can take an alternative that consists of either a virtual office or flexi-desk setup. Making an application without adhering to these requirements might lead to rejection. Key considerations: Flexi-desk: A cheap option when it comes to the startups working remotely. Virtual office: Excellent with some Free Zone licenses but not necessarily with Mainland business. Rented office: Necessary in some strictly regulated activities or those that are bigger in scale. How not to make this error: Ensure that you have checked the relevant office space requirements in your preferred license type and jurisdiction before you do it. Mistake 6 - Ignoring the Deadlines on License Renewal Obtaining your trade license is just the onset. All licenses in Dubai should be renewed in order to ensure that upon renewal, the license is valid and it renews each year. Failure to renew on time results in high penalties, blacklisting or the suspension of businesses. What not to do to make this mistake: • Put calendar reminders months ahead of time before the renewal due date • Manage renewals and government notices using a PRO service. • Note any alterations in your business activity that might necessitate license amendments at the time of renewal. Misconception #7: More jumping over professional guidance Although it can be said that a person can apply for the business trade license in Dubai independently, the process covers several governmental organizations, control of documentation, and requirements of proceeding at the pertinent jurisdiction. It is simple to make errors without any advice. Why you need the help of a professional • Business setup consultants make it easy and comprehensible, and hence they make it compliant. • The services paperwork, approvals and paperwork renewals.
• Experts will assist in choosing the appropriate jurisdiction, type of license, and activity codes that will be most suitable to your objectives. What not to do to make this mistake: Engage the services of a business setup consultancy in Dubai that is well known. They are quick, cost effective and avoid future legal hassles due to their local knowledge. Conclusion Dubai can be a business wonderland to entrepreneurs, although obtaining a business trade license in the city needs critical thought. Selecting an unsuitable activity, misinterpreting Free Zone and Mainland options, missing documents, or neglecting renewal due dates can all be the reason leading to the created delay. The solution? Careful investigation, a good budget and the help of an expert. These seven mistakes are avoidable, which makes it easier to establish your company in less time and ensure that you stay compliant and are free to concentrate on expanding your business. To ensure a seamless business setup in Dubai, the best business setup advisors or PRO services should be consulted, and the process should be completed end-to-end by a professional body. With the aid of the expert, the selection of the correct license and on-time renewal processes will not be a failure.Contact Us