Business

Everything you need to know about company formation in Dubai

Business structures in Dubai are broadly divided into sole proprietorships, partnerships, and companies. Each of these has its pros and cons, but most people prefer to operate as a business because it is recognized as a separate legal entity from the owners. This means that owners are only personally liable for the liabilities of the business to the extent of their ownership of the business.

Legal entities in Dubai

Company formation in Dubai is a bit complex and without a good understanding of the different types of companies and the requirements and procedures for registration, it can be quite difficult to get it right. A sole proprietorship is a company whose shares are owned by a single person. In Dubai, this type of company can be owned by a GCC citizen, a UAE citizen, or another company whose shares are owned by GCC or UAE citizens. The business name must include the name of the owner and LLC at the end. The shares of such a company cannot be listed on the stock exchange; Other requirements must be met for a sole proprietorship to go public.

A limited liability company (LLC) is a company that has between 2 and 50 shareholders. For an LLC to be registered in Dubai, at least 51% of the shares must be owned by UAE citizens. The accounts of such companies must be audited by an auditor accredited by the UAE. LLC shares are publicly traded on the stock exchange. Sole proprietorships and LLCs pay corporation tax, which is separate from the tax on individual owners. General partnerships are owned by two or more people who may be general or limited partners. General partners are UAE citizens, while limited partners are foreigners. Profits are shared according to a pre-agreed ratio and the partners are individually taxed.

A sole proprietorship is a business owned and operated by one person. The owner is personally responsible for the financial obligations of the business, which means that in the event the business is unable to meet its financial obligations, the owner’s personal assets can be used to liquidate them. This is the main disadvantage of this type of business. However, it gives the business owner complete autonomy to run the business the way he wants, without the red tape that comes with running a business. Also, unlike corporations, a sole proprietorship has no minimum capital requirements. For a sole proprietorship to be registered in Dubai, the owner must be a UAE or GCC citizen and must be qualified to provide the services they offer if it is a consultancy company.

Conclution

While the above are not the only forms of legal entities in Dubai, they are the most common. Company formation in Dubai is not very complicated if you understand the different legal entities and their implications on your business. However, it may be prudent to use the services of a business lawyer to help you decide which legal entity is best for your business and to help you with your business registration.

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