A Step-by-Step Guide to Setting Up a Business in a Free Zone

Beginning a business in a free zone offers myriad advantages. Excitingly, Indian business owners and investors can benefit from full ownership of their businesses, affordable company registration, tax exemptions, and additional benefits when they set up a business in Dubai, powered by the free zone. This guide provides essential instructions to follow when establishing a business in a free zone.

Setting up your business in a free zone can be a great choice, as it involves less paperwork and faster processing times. Free zones offer a convenient way to establish your business with minimal hassle.

Let’s dive into the broad umbrella steps to establish a business in a free zone:

1) Identify the Legal Entity Type

There are different types of legal entities in free zones, with the two most common being the Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.), and Free Zone Establishment (FZE). However, it’s essential to note that not all free zones offer these legal forms. Before registering your company, you should consult with the relevant free zone authority to determine the legal entity type available in your preferred zone.

Moreover, you have the option to open branch offices in the free zones, and the capital requirement varies from zone to zone. Therefore, it’s crucial to do your research and evaluate the benefits and drawbacks of each legal entity type available in the free zone before making a decision.

2) Select a Trade Name

One of the requirements for setting up a free zone business in Dubai (UAE) is selecting a registered trade name. The trade name should be unique and not infringe upon any famous or existing brand. It’s important to note that the name must also comply with certain rules and regulations set by the government, such as adhering to public morals and order in the country.

Additionally, the trade name should follow the legal structure of the organization, including the use of abbreviations such as FZ-LLC, FZE, and FZCO, among others. The trade name should also be compatible with the desired business activities and legal framework. Therefore, it’s crucial to conduct a thorough search of the desired name to ensure that it was not reserved previously.

Lastly, it is important to exclude words that hint towards any religion or administrative authority, as well as names or emblems of any external bodies. By selecting an appropriate trade name, you can establish your free zone company without any legal issues or conflicts.

3) The trading license is the next step

It’s critical to obtain the correct license for permissible business activities as an incorrect license can lead to operational inefficiency. There are more than 2000 permissible business activities in the free zones, which include advertising, film production, graphic designing, marketing communications, manufacturing, and e-commerce.

Therefore, you can contact the designated free zone authority to learn more about the permissible business activities in that free zone. Additionally, you must renew your free zone business license to avoid penalties, suspension, termination, or even blacklisting of your free zone firm.

4) Up next – picking an office space

It is essential to have office space if you are setting up a company in UAE Mainland but can be setup on a virtual space as well in the Freezone. Depending on your business activities and Free Zones, you can either rent an office space or work on a virtual address.

You can start with a cost-effective mini space and upgrade to larger spaces as your business grows, considering your business activities and the participating members in your business.

5) Acquiring and getting aligned with pre-approvals

To register your firm in the desired free zone and obtain visas for yourself and your family members, you must follow the steps mentioned below:

A. Initial Approval To acquire a free zone business license, you must first obtain the initial approval certificate from the concerned jurisdiction. Following are the three documents that you will need to submit pertaining to this step:

  • Application form
  • Comprehensive business plan
  • Registry Identity Code Form

B. Registration After obtaining the initial approval certificate, you must pay the free zone business registration fee, which is mandatory for all investors and expatriates. Ensure that you submit the following:

  • To start with – Registration application form
  • The second is the power of Attorney given to the Director that is notarized & attested
  • Up next, Memorandum of Association (MoA) and Articles of Association (AoA) (notarized & attested)
  • Finally, the information regarding shared capital

C. Licensing and Visa Process Finally, you can obtain your business license and apply for visas for yourself, your family members, and domestic help.

I hope the blog brought clarity concerning setting up a free zone business in the UAE.