LLC Company Formation in Dubai: A Guide

February 2, 2023

This article will cover everything you need to know about LLCs, from how you can form them to their key advantages and the entire process of LLC Company formation in Dubai with the requirements and legal structure.

What is an LLC in Dubai: Limited Liability Company

An LLC, or limited liability company, is one of the structures of businesses. It offers personal liability protection and flexibility regarding taxes and management. LLCs are popular among small businesses and entrepreneurs. It is designed to protect its owners/shareholders from personal liability for business debts and obligations. The LLC also offers flexibility in management and taxation compared to other business structures. An LLC can be owned by one person or multiple members and used for legal business purposes.

You can form an LLC in Dubai with 1 minimum member and 100 maximum shareholders. Each member is liable for their share of the company's capital. This makes stockholders fully protected from liability under Dubai's corporate rules.

Limited liability partnerships (LLPs) and limited liability companies (LLCs) combine elements of partnerships and corporations. The two business forms differ in management, liability, insurance, tax advantages, and other factors. The difference between LLP and LLC is very little. However, the Asian countries use the word LLP more than LLC.

Why Setup an LLC in Dubai

Free trade zones are available in the UAE, making it simple for you to launch and run a business. There is no better environment to conduct business with 100% ownership, no income tax, and first-rate infrastructure. The International Monetary Fund (IMF) predicted that the UAE's economy would soar in 2022 - and they were right. Dubai's economy has grown tremendously since then, making it an ideal time to invest in the region. Business in Dubai grew tremendously in 2022.

For example, Savills predicted that in 2022, Dubai's real estate market would experience $35 billion in transactions. The UAE welcomed 7.12 million tourists in the first half of 2022. It increased by more than 183% over the 2.52 million tourists in 2021.

Forming an LLC Company in Dubai

LLC companies have become the most popular business structures in UAE due to their exceptional benefits. With one minimum and hundred maximum shareholders, LLC companies can trade anywhere in Dubai and other GCC countries and can hold shares in any other company. An LLC also has no relevant income tax and fixed capital requirements. You must first register the name of your business. The Department of Economy & Tourism gives you a business license after that. You also need to submit some documents to them. You finish the visa application procedure upon approval and then open a bank account. Later in the guide, we'll explain the complete step-by-step process of LLC company formation in Dubai.

Benefits of Starting an LLC in Dubai

• LLCs are 100% Tax-Free

An LLC (limited liability Company) can trade anywhere in the UAE and the GCC countries, and there's no income tax applicable or fixed capital requirement. A limited liability company registered in free zone and doing business outside of the UAE will not have to pay the taxes however companies registered in UAE mainland and doing business in UAE local market will have to pay the corporate tax at the rate of 9% on earned profits over and above AED 375,000/-. This benefits entrepreneurs and businesses looking to start a business in the UAE. They save money on taxes and keep more of their profits. LLCs also take advantage of incentives such as free zones and double taxation treaties with other countries.

• Affordable and Quick Business Creation

There are no overhead application fees for LLC company setup in Dubai. You only need to pay the LLC formation cost. You get a license fast because of UAE's Instant Licenses initiatives. Registering an LLC company in Dubai takes just one and a half hours to register with the DED (Department of Economic Development). Government certifications are only one of the problems that might cause the process to be delayed.

• No Minimum Share Capital Needed for LLC

You are not required to have minimum share capital to set up an LLC in the UAE. The shareholder will have to show the authorized share capital of AED 100,000/- which will not be paid up.

• Wide Variety of Permitted Business Activities

UAE LLC companies have a larger range of business activities to choose from. You have fewer to almost no restrictions on those business activities. Without the UAE national sponsor's interference, your LLC firm can do lawful independent business within the UAE. The UAE provides more than 2,000 business activities in industrial, commercial, professional, tourist, agricultural, and occupational sectors. Moreover, you can establish an LLC firm with various business ventures if DED clearance is obtained.

• Option to Apply for Multiple Visas

UAE entrepreneurs can get unlimited work visas when they form an LLC. You also get an investor visa that stays valid for two years. This allows you to get visas for your family members if you want to bring them to the UAE. The foreign national can get long term prestigious golden visa for him and his or her family after successfully complete the one year of business and having equity and retain earnings more than 2 million AED.

• 100% Foreign Ownership

Most of the business activities licensing types no longer require a UAE National Sponsor. This permits 100 percent foreign ownership of businesses outside of free zones. Due to this, several types of LLPs in Dubai are permitted by the Commercial Companies Law to have 100% foreign ownership.

• Live Top-notch Infrastructure

Dubai offers a world-class infrastructure that is unrivaled anywhere else in the world. Dubai has everything from the world's tallest buildings to the most luxurious hotels. And with a growing population of millionaires and billionaires, Dubai is quickly becoming the place to be for the rich and famous.

Steps to LLC Company Formation in Dubai

Step 1: Decide What Activities your Business Will Do

The UAE government offers an LLC a selection of more than 2000 business activities. You can find your preferable ones easily. However, do market research before choosing an activity. It will help you analyze if there is a potential to grow that business idea. Making the right choice during business registration in Dubai is crucial. Avyanco helps you find and plan the best business activities.

Step 2: Find a Location For Your LLC Company

When opening an LLC company, your location affects your income and legal responsibilities. To get the most out of your office, you should choose a location accessible to your market. You must consider several factors when deciding the business location, such as budget, space, employees, technological requirements, etc. You need a lease or rent agreement to acquire office space. Decide the location and get the DED's initial approval certificate. You won't receive this certificate if your trade name is turned down. Many companies are registered in UAE without the renting office space for the first year which will save the cost for the foreign national and have advantage to test the water in the market.

Step 3: Reserve a Name For Your LLC Company

Pick a name for your firm after deciding the types of operations that your company will engage with. You need to reserve your business name to avoid breaching naming convention law. You may list potential names for your company considering its goods, services, objectives, target market, and more. Business owners must follow the UAE government's rules for company naming. Avyanco can assist you with naming and making sure your business name is legitimate.

Step 4: Make MOA to Get Approval for Business Activities

You must create a Memorandum of Association for your company that outlines its business activities. You need to include details on your company's legal standing and rights. After that, you define your company's connection with its shareholders and original objectives. You should then give your MOA to the authorities with the lease or rental agreement.

Step 5: Obtain a Trade License

Once the required authorities have approved your company's activities, you can obtain MOA and other legal documents, including a trade license.

LLC License and Company Formation costs in Dubai

The price of an LLC license in Dubai typically starts at AED 18,500. Foreign commercial names that are not Arabic will incur an additional fee of AED 2,000. Around 10,000 to 15,000 dirhams are required to renew an LLC license in Dubai. Your limited liability business registration in Dubai will cost between AED 18,500 and 35,000. The prices, however, differ according to the services and industries.

Connect with our specialists at Avyanco to learn more about LLC company formation costs in Dubai.

Documents Required to Open an LLC in Dubai

The Department of Economic Development (DED) requires documentation when you form an LLC in UAE. You submit these documents directly, but you can hire an agent to make the paperwork easy.

• Copy of the investor's passport
• Emirates ID copy if any
• Copy of the DED's registration form
• The lease agreement for the office space
• Entry visa
• Few Name choices for the company name reservation.

How Avyanco Help During your LLC Formation in Dubai

Are you a business owner worried about personal assets being at risk for business debts and lawsuits? With an LLC company setup in Dubai, you can protect yourself from these risks. Avyanco provides a simple and effective way to set up an LLC for your business.

We keep your assets safe. We guide filing the right paperwork, help you craft legal documents like operating agreements, and provide advice on managing taxes and other important financial aspects of running an LLC. Our process is fast and easy. You can setup an LLC in Dubai in a few days. Our team of business formation experts also helps you decide if an LLC is a suitable choice for your business. Contact us today to learn more.