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The Dubai, UAE is considered as one of the prosperous locations for businesses and entrepreneurs. With advantages like various tax-free benefits, it’s an attractive option for many entrepreneurs. The idea of starting your own business might be exciting, but forming a mainland company in Dubai can require significant effort and resources. Beyond the basic business license and registration fees, there are various hidden costs that can quickly elevate your budget. Understanding the possible expenses before setting up the company is essential for business success. This blog will help you understand the hidden costs you might face when forming a mainland company in Dubai.
A mainland company generally requires a physical office space, along with an Ejari (the compulsory tenancy contract). This will be much more than just a monthly rent.
Unless you are moving to a fully furnished, fitted space, you must budget for the cost of fitting out the office. This means furniture, IT infrastructure, interior design, and preferably, some structural alteration. Additionally, you will pay utility bills for electricity, water, and internet each month in your regular overheads.
While getting you and your employees a visa is an important point, the total cost of this is more complicated than just one application fee.
Any entrepreneur aiming to set up a business in UAE might ignore the documentation and administrative costs. The document process comes with costs.
International Document Attestation Requirements: Documents such as a university degree or a marriage certificate, or any power of attorney from your home country, must be attested. Attestation from a notary public in your home country, followed by attestation from your published country’s Ministry of Foreign Affairs, and then the UAE’s embassy is usually required.
Legal Translation: Many official documents (particularly documents submitted to government departments) require legal translation into Arabic. This is on a per-document basis and can be very expensive, especially for lengthy or complex documents.
Setting up a company is more than a one-time fee; it is an annual cost commitment. Most new business owners have a misconception about what it will cost to maintain the compliance status of their company on an ongoing basis.
License Renewals: Your trade license is valid for only a certain period, and you require a license renewal after it is expired. License renewal fees are generally in the same ballpark as the initial setup fees and will become an ongoing cost you need to include in your business plan.
Other Required/Continual Renewals: Depending on your business activity, you may have other annual renewal fees or mandatory continuous fees, such as establishment cards, immigration cards, etc.
Compliance Fees: If you own a mainland company, you will also be required to consider registering for VAT; starting in 2024, corporate tax compliance is also a factor for many businesses too.
The process of opening up a corporate bank account is important to consider but is not necessarily free or simple.
Corporate Bank Account Requirements: Banks in the UAE typically have a variety of requirements to consider in order to open a corporate account, including a large initial deposit.
Minimum Balance: A common hidden cost, many banks require you to have a high average minimum balance to avoid fee charges each month. This means that a substantial amount of your working capital could potentially be tied up on a monthly basis that you may have hoped to use for business expenses.
Transaction and Maintenance Fees: The bank may have a fee for business transactions, wire transfers, or account maintenance on a monthly or annual basis.
The list of hidden costs may seem long, but never fear, nothing is insurmountable. The focus is knowing the drawbacks from the start, and using this knowledge to properly budget for these costs to avoid an unexpected leap to the next level when launching or relocating a company in one of the most dynamic and promising markets in the world.
It is always recommended to work with a legitimate business setup consultant, like CDA, who will offer a 100% transparent breakdown of all costs, plus, work with you throughout the company formation procedures
CDA is known for its custom-tailored business set up and PRO services which it provides to its clientele in UAE. CDA’s professional experts will ensure that your business set up procedures are smooth and would consider all the overheads that would be incurred. The entrepreneurs can sit back and watch their company formation in Dubai come true while the professional team of CDA takes care of the complex procedures.
To know more about the services, connect with CDA today!
