Starting a business is undoubtedly a rewarding endeavour but can be equally challenging and fraught with risk. Through this article, we aim to share some of the common mistakes made while setting up a business in the UAE. We hope this article helps you have a hassle-free business setup journey and a successful operation going forward.
Not Choosing the Right Jurisdiction
One of the most vital considerations to be taken into account before starting a business is the jurisdiction. The jurisdiction you ultimately pick must offer you every advantage your company might require. For instance, choosing a free zone like JAFZA if you are involved in import/export activities would benefit you logistically due to its proximity to a seaport. The mainland, on the other hand, might be a better choice if you want no trading limitations in the UAE. Before selecting a jurisdiction, you must carefully consider the nature of your business and its requirements.
Not Selecting Additional Business Activities
Choosing the right business activity is crucial when starting a business in the UAE. Depending on the services/products you will be offering, you may be required to pick more than one business activity. You may take into account your future plans as well if you intend to expand your offerings. It is advisable to carefully consider the choice of your business activities since engaging in a business activity other than the one(s) permitted by your license can attract harsh penalties and/or legal actions.
Not Estimating the Expenses Involved
How much will it cost to set up a business in the UAE? This is a question to which you must find the answer. Though it is tricky to figure this out well in advance, having a rough estimate is essential to avoid any unforeseen expenses. You should carefully analyse all expected investments in your venture such as the license costs, lease rates, etc.
Not Selecting the Right Bank
It is essential to thoroughly compare and contrast various banks before selecting the one that best serves business objectives. Before you choose a bank, it is imperative to evaluate all the necessary parameters for your corporate bank account in the UAE. The minimum balance requirements, fees and charges assessed, policies and guidelines, and payment methods are a few of these criteria.
Not Choosing the Appropriate Legal Structure
The legal structure of your company has numerous implications. A legal structure can separate personal and business liabilities, determines the liability faced by your business during lawsuits, determines the maximum number of shareholders permitted, and many other aspects of your business. Selecting the right legal structure at the beginning is crucial, and can have unintended consequences if not done correctly.
Before starting a business in the UAE, the best course of action would be to hire a business setup consultant. InZone is a leading business setup service provider in the UAE. With years of experience in the UAE’s business setup industry, our advisors will guide you on every aspect of setting up a business and make sure you avoid the common mistakes usually made by entrepreneurs in the UAE.