Many tradespeople desire to start their own businesses and operate in the lucrative UAE markets. Having general trading business in UAE is immensely rewarding; however, it can also be hard work with many businesses failing to succeed. In order to make sure you have laid the right foundation for your general trading business, here are steps to follow on how to start a UAE general trading business and maximize your business’ chances of success:
Also Read: 9 Essential Steps to Start a Small Business
Creating a Solid Business Plan
The first step when it comes to starting a business, especially a general trading business in UAE, is making a solid business plan. It has to come complete with your target market, which means it has to be properly formulated. Your business plan has to include the following information:
- Total number of staff members
- Products and activities
- Office/store space requirement
- Marketing tactics
- Initial investment
- SWOT analysis
- Major competitors
The parameters we mentioned above are to be carefully studied. As an entrepreneur, you should select the market wisely, your business activities more accurately, and initial investments required of the business with due care.
Deciding the Activities of the Business
A general trading business in UAE is where the business owner is best to focus on limited business activities that require one specific trade license. If possible, choose different kinds of business activities that belong only to a general trade license. Take note: a general trading business with a license for general trading would cost more to set up as the license allows for a number of different products to be traded.
Selecting the Jurisdiction to Operate and Register
When selecting a specific jurisdiction in which your new business will operate in, it’s important that you consider all available jurisdictions where you’ll be able to trade in. In Dubai, jurisdictions are classified into three types: free zones, mainland, and offshore. With business setup in Dubai free zone, you will have to choose between approximately 45 different free trade zones.
A free zone is incorporated in one distinct jurisdiction; it’s also governed by the jurisdiction’s authorities. A free zone general trading business is great as you will be able to retain full ownership of your business. For UAE mainland business setup, a business investor or entrepreneur would have to look for a UAE national to partner with and the UAE national who will provide sponsorship for the business would have to retain majority of the business’ shares. The sponsor is likely to ask remuneration every month as well.
As for UAE offshore company formation, your business won’t have any physical office within the jurisdiction it is registered in. It’s also not physically present within the country. An offshore company established in the UAE usually has a parent corporation that is from another country.
Finding a UAE National as Sponsor
As discussed, when a business owner selects mainland for business setup in UAE, then it’s going to involve a different set of requirements. An important requirement is the partnership with a UAE national that will help in the establishment of the general trading business. The sponsor will get majority or fifty one percent of the shares of the company.
There are three different kinds of sponsors that are available in UAE. The sponsor that signs the documents and takes care of the problems of the business will charge the lowest fee. The second kind of sponsor is the one that’s equipped with connections to government agencies in UAE and represents your business when dealing with UAE authorities. This type of UAE sponsor often requires a higher fee. As for the last type, this is the high-level brand that is connected to government agents at a senior-level. The fee is the highest.
Also Read: How to Find the Right Business Partner for Your Business
Taking Care of all Legal Formalities
Obtaining a license is the most important aspect of business setup in UAE as it ensures the business is operating in the country legally. For general trading businesses wherein many products are traded and many activities are carried out, import and export permits are to be processed as well. General trading licenses in UAE cover all aspects such as fixtures and furniture, clothes, accessories, equipment, and electronic appliances. Here are steps to obtain a license for your general trading business:
- Planning the activities of the business;
- Choosing a trade name that’s appropriate for the company;
- Filling up and submitting the application for licensing;
- Getting external approvals from relevant authorities;
- Obtaining a rental or tenancy contract (also attested by Ejari);
- Choosing a location for the business;
- Arranging all required documents including government approved documents;
- Submission of application to authorities;
- Settling fees for license issuance
These are the main aspects that are to be taken care of when starting a UAE general trading business. We know you have questions regarding the process. Call FAR Consulting Middle East’s business setup experts in UAE to get clarifications to your concerns.