A Guide To LLC Company Formation in UAE

A Guide To LLC Company Formation in UAE
0 0
Read Time:7 Minute, 52 Second

The Middle East is a region that has seen rapid growth in the past few years, and with this comes more entrepreneurs. With new businesses coming to the region, there are many questions about how things work here. This post will answer some of your most pressing questions on LLC company formation in Dubai

What is an LLC?

An LLC can be thought of as a hybrid between a partnership and a corporation. It provides limited liability for its members while still maintaining flexibility through taxation rules. 

What do I need to start my own business?

You need two people at least one of whom must have Emirati citizenship or residency status; you also need an office space if you’re doing business from home (unless you have no other place to operate).

The two people will sign for a general partnership, in which the property is owned by one party and the other one pays the rent. But when you want to start your business formally as an LLC, you need at least two partners with both Emirati citizenship or residency status. The main advantage of setting up an LLC is that irrespective of whether it’s run by a company or private individuals, it will have the same legal status. Further, if you’re setting up an LLC, your personal status is not taken into account for taxation purposes. This means that it will be taxed like any other business entity; which grants the individual running the LLC a lot of benefits such as lower taxes and allows him to write off a lot of expenses. 

Ideas How to Start LLC company formation in Dubai, UAE

A UAE-based LLC must have at least one designated individual to manage the company. The law doesn’t specify a minimum amount of shares that each partner can own in his company but usually, this amount is determined by the agreement between partners, and it’s up to them if they would like their respective names to be registered as shareholders or not. It’s also worth knowing that the share capital cannot be transferred without the consent of all partners, and there must only be one manager. If you’re a sole proprietor looking to start your business in the UAE, you don’t need to establish an LLC but you can register it with the local trade licence office instead. 

What are the benefits of establishing an LLC in the UAE?

As LLCs are treated as corporations, they enjoy more tax benefits than sole proprietorships but not as many as a limited liability partnership. Being a member of an LLC also entitles you to share of the net profit and loss after all expenses and taxes have been taken into account. This means that if you start your business as a sole proprietor you’ll have to pay individual income taxes, while on the other hand if you’re part of an LLC, you won’t. However, this is only applicable if there are at least two members in the LLC. 

If one of the partners decides to sell his share in the company or leaves for any reason, his shares will be redistributed among the other partners; he won’t lose them.

However, if you’re a member of an LLC and decide to sell your share in the company, you can only do it with all consent from the members. 

The payment method for salaries is also different between full-time employees and partners of an LLC. If it’s an LLC, the company will pay the salary directly to the partner; if not, then that person will have to file his tax returns as a full-time employee and receive his wages from that job. 

Also, if you’re running your business in an LLC then you may be exempt from paying income tax for certain types of transactions that have taken place outside your country.

If you’re planning to move to the UAE and don’t have any ties to it, then an LLC is one of the best structures you can choose for your business. However, this structure is not usually used by foreign investors because at least one person must be a UAE resident or citizen; there must be a designated manager or director, and the LLC has to be registered in one of the emirates.

LLC Company Formation

What are the requirements for establishing an LLC?

If you’re planning on setting up your business as an LLC in UAE, then you should know that it’s not enough to simply register it with the local trade licence office; there are several other things that you have to take care of as well. You’ll need to open a local bank account and register with the Ministry of Finance in order to obtain an Emirates ID card for your business.

For LLCs, obtaining an Emirates ID is required, because they’re treated as individuals when it comes to taxation purposes. While sole proprietorships are exempt from this rule, they’re not allowed to obtain an Emirates ID. The Arabian Business directory can provide you with the contact information for all government offices and professional bodies in UAE.

While registering your LLC there will be some things that you’ll need to start up your business; these include a certificate of incorporation, a memorandum of association, a share transfer form, and bank reference letters.

A certificate of incorporation is easily obtained from the Ministry of Commerce after you’ve applied for your company’s Emirates ID; you can contact the ministry before filling out the required documents to inform them that your business will be registered as an LLC so they can process it much faster. You may have to wait for a few days before you can get your certificate of incorporation, but it’s definitely worth the wait.

The memorandum of association contains all members of the LLC and their residence addresses; this information is provided by the Memorandum Registrar at Court No. 10 under the Federal Supreme Court in UAE. You’ll have to sign as witnesses by two people who are not partners in the business; these witnesses should also be UAE residents.

The share transfer form has to be signed by the previous owner of the shares and all other members of the LLC, after which it will be transferred to you as the new member or shareholder.

The bank reference letters are issued by your current bank in your home town. Your bank should be able to provide you with a reference letter within 12 hours after your request, so it’s best if you contact them before the registration process is started up.

How do I register my LLC?

The initial procedure for registering your LLC includes submitting copies of your certificate of incorporation, memorandum of association, 1 copy each of the share transfer form and memorandum of association, a valid Emirates ID or passport with your company name clearly written on it, and a bank reference letter. All documents have to be submitted in Arabic, so you may need the help of an Arabic speaking use to prepare them for you.

When all these documents have been prepared, you should visit the Ministry of Commerce located at the Sharjah International Business Centre. You’ll need to visit them in person and pay a registration fee.

Once you’ve paid for the LLC’s registration, it will take about 10 days before your company registration number is released by the government; this will be issued by the Commercial Registry office in UAE which accepts all types of applications. Your company registration number will be found on the certificate of incorporation.

You’ll also get a letter of approval that should be taken to the Federal Tax Authority (FTA) and presented at their main office in Abu Dhabi or Dubai. You can find the FTA’s contact information on their website – you can request a tax reference code after your LLC registration number has been issued.

Once you’ve obtained your tax reference code, it’s time to open a bank account in the name of your LLC at any authorised commercial bank in the UAE. This step is required because there are some benefits available for business owners who have opened a local bank account for their companies. Most banks require an Emirates ID or passport along with your company registration number and tax reference code. You can also open a bank account for your LLC if you have an Emirates ID and a job contract in the UAE when you apply; this is subject to bank approval, though, so it’s best to check first before applying.

After you’ve taken care of all these formalities, you may start conducting business from your UAE based LLC. Most of the services and product companies are required to register with local or federal government authorities in order to operate legally, but this is a very important step that all businesses must follow. You’ll have an easier time getting licences and permits for your products and services if you’re registered, so it’s important that you conduct this step as soon as possible.

Conclusion

This post has answered some of your most pressing questions on LLC company formation in the UAE. If you have any other queries related to this topic or are looking for a professional team that can help with all of your business needs, contact us! We’re here to provide expert guidance and assistance for entrepreneurs who want to start their journey as an entrepreneur in the Middle East region.

Happy
Happy
0 %
Sad
Sad
0 %
Excited
Excited
0 %
Sleepy
Sleepy
0 %
Angry
Angry
0 %
Surprise
Surprise
0 %
Previous post Why yoga is good for mental health
Next post Know about the most dangerous pests in the UAE

Average Rating

5 Star
0%
4 Star
0%
3 Star
0%
2 Star
0%
1 Star
0%

Leave a Reply

Your email address will not be published. Required fields are marked *