How Can You Start a Low Cost Business Setup in Dubai?

Dubai has never been just a city; it has always been eye candy for tourists and a hotspot for entrepreneurs chasing growth. For entrepreneurs seeking to establish a business setup in Dubai, the city offers a variety of options tailored to different budgets. You can choose a cost-effective Free Zone setup or a business setup in mainland for broader market access.

Setting up a company in a Dubai Free Zone can start as low as AED 5,500, depending on the zone and business activity. These zones provide benefits like: 

• Foreign ownership: Keep full control of your company without a local partner with the regulatory approval of 100% foreign ownership by UAE authorities.

• Zero income tax: Maximize your profits with no corporate or personal income tax.

• Full repatriation of profits: Move your earnings freely to your home country.

Free Zone setups are ideal for startups seeking cost efficiency and global scalability.

Alternatively, a business setup in Dubai Mainland offers broader market access but comes with higher costs. The Dubai mainland license cost in 2024 starts from approximately AED 15,000 to AED 35,000, varying based on factors like license type and business activity.

Understanding these costs and options helps entrepreneurs make informed decisions. Whether you choose a Free Zone or Mainland setup, Dubai provides the infrastructure, regulatory support, and market opportunities to help your business thrive.

Establishing a business in Dubai requires meeting specific criteria. You must prepare the right documents, choose the appropriate license, and follow Free Zone regulations. Below are the key requirements for a low-cost company formation in Dubai:

• Valid Passport: You need a passport copy for all shareholders and partners.
• Visa Status: Some Free Zones require a UAE residence visa or a valid entry permit.
• Business Activity: Clearly define your business activity before applying for a license.
• Trade Name Approval: Reserve a unique trade name that complies with UAE rules.
• Office Space: Rent a flexi-desk, co-working space, or virtual office as required by the Free Zone.
• Bank Account: Open a corporate bank account to manage business transactions.
• Initial Capital: Some Free Zones may ask for minimal share capital, depending on the license type.
• Local Sponsor (if required): Certain business activities or Mainland setups need a UAE national sponsor.

Meeting these requirements ensures a smooth setup process. Proper preparation saves time and avoids delays.

The fees for setting up a low-cost business in Dubai depend on the Free Zone, license type, and additional services. You must plan for both initial setup fees and recurring charges like renewals. Here’s a clear breakdown of typical costs:

Note: Prices may vary depending on the Free Zone, business category, bank requirements, and service provider. Always confirm the latest fees before starting the process.

Starting a business in Dubai can be simple if you follow the right steps. Each step ensures you meet legal requirements and avoid unnecessary costs. Follow this process to start your low-cost business setup smoothly and efficiently.

Step 1: Choose Your Business Activity

• Decide what type of business you want to start.
• Check which activities are allowed in Free Zones or the Mainland.
• Ensure the activity matches your long-term business goals.

Step 2: Select a Business Jurisdiction (Mainland vs Free Zone)

• Choose Mainland if you want to trade directly in the UAE market.
• Select a Free Zone for full foreign ownership and tax benefits.
• Compare setup costs and licensing requirements for each option.

Step 3: Get Initial Approvals

• Apply for preliminary approval from the relevant authority.
• Reserve your trade name with the DED or Free Zone authority.
• Ensure your proposed activity meets UAE regulations.

Step 4: Draft MOA and Arrange Office Space

• Draft the Memorandum of Association (MOA) or Local Service Agent (LSA) agreement, depending on your business structure.
• For Mainland businesses, secure an office or shop space. You must register the tenancy contract with Ejari (Dubai’s tenancy registration system).
• For Free Zones, opt for flexi-desks, shared spaces, or a virtual office set up to save costs.

Step 5: Prepare Documents and Apply for a License

• Submit passport copies, visa copies, NOC (if required), trade name approval, and tenancy/Ejari certificate.
• File for your business license through DED (Mainland) or your Free Zone authority..
• Apply for your business license through the relevant authority.

Some Free Zones allow businesses to use virtual offices or flexi-desks instead of renting full physical space. This setup reduces costs while meeting Free Zone requirements.

Step 6: Apply for an Establishment Card and Visas

• Apply for an Establishment Card from the immigration department to sponsor visas.
• Submit your own residence visa and employee visas under your quota.
• Complete medical tests and Emirates ID registration.

Step 7: Open a Corporate Bank Account

• Choose a UAE bank that fits your business activity.
• Submit your trade license, establishment card, MOA, and shareholder documents.
• Deposit share capital if the bank requires it.

Step 8: Start Operations

• Set up your office or flexi-desk.
• Activate your business services (e.g., VAT registration if applicable).
• Begin day-to-day operations and stay compliant with renewals.

Dubai offers several Free Zones business setups that are both affordable and fitting. Each Free Zone provides unique benefits, cost structures, and facilities. Choosing the right one helps you reduce expenses and scale your business smoothly.

Note: Dubai, Abu Dhabi, and Ras Al Khaimah offer freelance licenses that provide a cost-effective way to start a business. These permits allow entrepreneurs, consultants, and creatives to operate legally with minimal overhead. 

Starting a low cost business in Dubai looks simple, but you may face certain challenges. Knowing these hurdles helps you prepare better and avoid delays. Here are the most common issues you should watch out for:

• Understanding Legal Requirements: You must follow specific rules for licensing and compliance. Missing any detail can delay approvals.
• Choosing the Right Free Zone: Each Free Zone in Dubai offers different benefits and costs. Pick one that matches your business activity and budget.
• Handling Hidden Costs: Expect extra charges for visas, offices, and renewals. Plan your budget to cover these expenses.
• Managing Cultural and Language Differences: You may face challenges in contracts or negotiations. Always use clear communication and trusted advisors.
• Opening a Corporate Bank Account: Banks often ask for detailed documents and business proofs. The process may take time and require professional help. To avoid delays, choose banks familiar with business setups and the type of license you hold.
• Hiring Skilled Staff: Some industries need local approvals for work permits. Factor in time for clearances and onboarding.
• Keeping Up with Renewals: Trade licenses and visas require annual renewals. Missing deadlines can lead to fines.

Small changes in your approach can save you money and keep your startup lean. Use these tips to reduce expenses and manage your budget effectively:

• Choose the Right Free Zone: Select a Free Zone that matches your activity and offers lower setup fees.
• Start with a Flexi-Desk Package: Use shared office space instead of renting a full office in the beginning.
• Apply for Fewer Visas Initially: Take only the visas you need at the start. Add more later when your business grows.
• Bundle Services with a Business Consultant: Many consultants offer discounted packages for license, visa, and office setup.
• Use Digital Tools for Operations: Replace costly physical resources with affordable online platforms for accounting, HR, and marketing.
• Renew Licenses on Time: Avoid late penalties by setting reminders for license and visa renewals.
• Negotiate with Service Providers: Always ask for offers or discounts on business setup services, especially if you bundle multiple services.

A business setup in the UAE opens doors to global markets with minimal investment. Free Zones let you retain full ownership, enjoy tax benefits, and repatriate profits easily. Meanwhile, Mainland setups give wider market access and credibility. By planning carefully, selecting the right jurisdiction, and managing costs, entrepreneurs can scale efficiently and stay competitive.