UAE is one of the most investor-friendly locations in the\nworld. With a host of business benefits and cost-effective Company Formation\npackages, UAE is an attractive location for company setup.<\/p>\n\n\n\n
Why is UAE the investor\u2019s favorite choice for Company\nSetup?<\/strong><\/p>\n\n\n\n The ample choice of business activities, technology\ninfrastructure, banking, logistics support, and Government policies are\nproviding the required ecosystem for the businesses to flourish in the UAE.<\/p>\n\n\n\n As an entrepreneur setting up a business in UAE, there are\ncertain parameters to consider to ensure you have a hassle-free company\nformation and a successful continued business operation in the region.<\/p>\n\n\n\n 9 Common Mistakes made while setting up your Company in\nthe UAE<\/strong><\/p>\n\n\n\n Here are 9 Common Mistakes made while setting up your\nCompany in the UAE.<\/p>\n\n\n\n 1. Not choosing the right Free Zone, Company Activity and\nBusiness License<\/strong><\/p>\n\n\n\n Choosing the right Free Zone, Company Activity and Business\nLicense is a very crucial step in Company Formation in UAE.<\/p>\n\n\n\n The future of the company lies in selecting the right\nparameters for the continued business operation.<\/p>\n\n\n\n All commercial activities in the UAE need a license issued\nby the concerned regulatory authority.<\/p>\n\n\n\n Solution: Ensure the right Business Activity and Business\nLicense is chosen<\/strong><\/p>\n\n\n\n UAE offers various options for business incorporation. There\nare specific free zones of specific business activity.<\/p>\n\n\n\n Also, there are specific business licenses to be obtained\nfor carrying out business in the UAE.<\/p>\n\n\n\n Choosing the wrong business structure and operating without\nrequired licenses will result in penalties and blacklisting of the company.<\/p>\n\n\n\n 2. Violation of Employment Agreements<\/strong><\/p>\n\n\n\n An individual while working for a company is not legally\npermitted to open a business in UAE unless the employer has provided a No\nObjection Certificate for the same.<\/p>\n\n\n\n Also, new businesses have to be compliant with the\nemployment laws in the UAE. Employers are not allowed to employ people with\nVisit Visa at any instance.<\/p>\n\n\n\n All the employees must be having a valid work permit and\nemployment visa.<\/p>\n\n\n\n 3. Improper Legal Agreements with Local Sponsor<\/strong><\/p>\n\n\n\n When it comes to mainland company formation, one must look\nfor a local UAE national sponsor for the new company setup.<\/p>\n\n\n\n The UAE local sponsor will be holding 51% of the company\nshares. The shareholding agreement must be recorded with proper legal\nstructure.<\/p>\n\n\n\n Solution: Prepare a Legal Contract with all Partnership\n& Other Management Clauses to protect you from any dispute<\/strong><\/p>\n\n\n\n All partnership clauses, other management, and ownership\nterms must be included in writing.<\/p>\n\n\n\n It will protect you from any dispute regarding the shares\nand the smooth functioning of the business.<\/p>\n\n\n\n Prepare a Notarized legal contract with all the information\non shareholding, mutual responsibilities, and other business management terms.<\/p>\n\n\n\n The complete agreement on each other expectations has to be\nrecorded clearly to avoid any further dispute in the courts.<\/p>\n\n\n\n 4. Not choosing the right Free Zone Company Registration\nPackage & Checking on the available Office Spaces<\/strong><\/p>\n\n\n\n Freezones have a wide range of office choices. Ensure you\ncheck the availability of your desired office and not end up spending more for\nbigger sized office space due to unavailability.<\/p>\n\n\n\n Also, ensure you have ample visa quotas for your employees\nand room for expansion. Most of the starting packages are of one visa quotas.\nAdding more visas will require extra payments etc.<\/p>\n\n\n\n Solution: Choose the right Free Zone Company Registration\nPackage & Check the available Office Space<\/strong><\/p>\n\n\n\n Ensure you have a clear understanding of the company\nregistration packages of the selected Free Zones.<\/p>\n\n\n\n Also, the available visa quotas with your license,\nadditional fees for adding new visa quotas as well as the available office\nspace.<\/p>\n\n\n\n As depending on the Square Feet, the Office rates will vary.\nHave a clear check on the overall cost of company registration to avoid\nunexpected expenses on the go.<\/p>\n\n\n\n 5. Opening a Bank Account for Business without checking\nthe Bank Charges<\/strong><\/p>\n\n\n\n The Bank fees are a significant amount especially for\nstart-ups and newly formed companies. Confirm with the bank authorities on all\nhidden charges and requirements beforehand.<\/p>\n\n\n\n The investor has to choose the Bank according to their\nbusiness requirements and activity. Banks in the UAE have various charges for\ntransactions, Credit\/Debit cards, Checkbook, Foreign Fund transfers, etc.<\/p>\n\n\n\n Hence while opening the Corporate Bank Account, ensure you\nare aware of all the recurring and hidden charge the banks will be charging\nfrom you.<\/p>\n\n\n\n 6. Lack of Agreements or Signing Unenforceable Contracts<\/strong><\/p>\n\n\n\n Businesses are often done on trust and verbal contracts.\nHowever, in case of any future dispute, it becomes challenging to prove the\nstatements.<\/p>\n\n\n\n So, the most reliable and legally bound form of contract is\nwritten form.<\/p>\n\n\n\n Many of the start-ups and newly formed companies go for\nreadymade contracts from the internet or their business network.<\/p>\n\n\n\n It helps to save legal & notarization costs in drafting\nnew ones but prevents getting the right legal protection through notarization\nof the contracts.<\/p>\n\n\n\n It is best advisable to have a legal contract newly created\nwith the assistance of a legal expert for your company and not go by standard\ntemplate-based contracts to avoid any long term risks.<\/p>\n\n\n\n 7. Relying Solely on Information Available on the Internet<\/strong><\/p>\n\n\n\n There is an enormous amount of information available online\non company formation, various licenses, business setup packages, etc.<\/p>\n\n\n\n For building awareness and get a basic understanding of the\ncompany formation process, the online information will be of great help.<\/p>\n\n\n\n It is best to get in touch with an expert business\nconsultant to have a hassle-free company set up in the UAE.<\/p>\n\n\n\n Often there can be outdated information sources on the\ninternet that would not give you the right facts.<\/p>\n\n\n\n Why Choose the right Business Consultant for Company\nSetup in UAE?<\/strong><\/p>\n\n\n\n So before you signup with any consultant or online company\nsetup package, ensure the credibility of the Consultant or the website.<\/p>\n\n\n\n Contact them and physically visit them as company formation\nis a long-term engagement with your consultancy.<\/p>\n\n\n\n Benefits of having a Business Consultant for Company Setup\nin UAE<\/p>\n\n\n\n Your Consultant will be playing a vital role in not only for\ncompany formation and obtaining your trade license.<\/p>\n\n\n\n As your progress in the business, any additional requirements\nrelated to company formation, administrative, and accounting, you can rely on\nyour business consultant\u2019s assistance.<\/p>\n\n\n\n Business Consultants come handy for a lot of business\nsupport & advisory services such as:<\/strong><\/p>\n\n\n\n 8. Planning for Worst-Case Scenarios<\/strong><\/p>\n\n\n\n Risks for business cannot be avoided but can be mitigated to\na level by signing up for insurance or through a well-documented legal\ncontract.<\/p>\n\n\n\n Planning for the worst-case scenarios could help in risk\nmitigation at the event of any unavoidable circumstances for the company and\nbusiness owner.<\/p>\n\n\n\n Hence, companies registering in the UAE must have a clear\nexit strategy in case of any unexpected event of failure to avoid legal\nconsequences and bankruptcy.<\/p>\n\n\n\n 9. Not Registering Intellectual Property<\/strong><\/p>\n\n\n\n Intellectual Property (IP) is a very important aspect of new\nbusiness for branding and marketing purposes.<\/p>\n\n\n\n It will help in future economic benefit to the business\nowner. All the business assets could be secured by intellectual property\nrights.<\/p>\n\n\n\n The marketing and branding assets such as websites, a\ncompany logo. colors and fonts, business proposal documents, other business\ndocuments, etc., could be saved from copying and re-using without permissions.<\/p>\n\n\n\n by Jesseca<\/p>\n\n\n\n