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LLC or individual entrepreneurship: what is best for your business?

ООО или индивидуальное предпринимательство: что лучше для вашего бизнеса?

Forming the right corporate structure for your company is one of the fundamental aspects of starting a business in Dubai. However, before figuring out which type of company structure is suitable for your company, it is important to understand the difference between an LLC and an individual entrepreneur.

Limited Liability Company (LLC) 

An enterprise with this type of organizational and legal structure has a share capital structure with more than one partner. LLC’s are popular among entrepreneurs because they require minimal investment from shareholders. Moreover, it allows holders to apply for as many visas as they want.

LLC can be registered by obtaining a commercial trade license from the Department of Economic Development (DER). This business license allows the company to trade freely within the UAE, as well as import and export products internationally.

The cost of creating an LLC

The cost of creating LLC

An all-inclusive package of commercial licenses for organizing business in the zone for local firms costs approximately 25,500 dirhams of the UAE. The amount includes:

  • trade license;
  • name approval fee;
  • initial approval fees;
  • Tashil fee;
  • service fee;
  • payment for printing;
  • drafting of the foundation agreement/notary fee;
  • registration of an immigration card;
  • opening of an investor visa;
  • registration of an Emirates identity card;
  • payment for a medical test;
  • fee for status change;
  • visa stamp;
  • contract for sustainable office development/office solution;
  • payment of a quota for obtaining a working visas;
  • bank assistance.

VAT registration and tax consultation are free of charge.

Individual entrepreneurship (IE)

Individual entrepreneurship (IE)

This is a corporate structure that allows one owner to own his company 100%. To do this, DARE issues a professional license that allows service-oriented firms to open their business in Dubai. Holders of this business license also have the opportunity to get a virtual office and a quota for a visa for employees.

The following are some types of entrepreneurial activities that are included in the professional license of the DEr:

  • consulting services;
  • accounting and bookkeeping;
  • digital marketing;
  • IT solutions;
  • event management.

The cost of opening an individual enterprise

Creating a service-oriented company is affordable. You can open a company for just 14,500 dirhams. This package includes:

  • trade license;
  • name approval;
  • initial approval;
  • notary fee;
  • printing;
  • fee for Tashil;
  • service fee;
  • complete documentation.

Business setup consultation is provided free of charge.

For an additional 4000 dirhams, business owners can get a lifetime investor visa in the UAE. This comprehensive package also includes:

  • immigration card;
  • change of status;
  • Emirates ID card;
  • visa stamp;
  • office solution;
  • quota for obtaining work visa;
  • assistance with a bank account.

VAT registration and tax consultation are free.

LLC or sole proprietorship

The main difference between an LLC and an individual entrepreneur is in the partnership model, as well as obligations, since 100% ownership is allowed in both corporate structures. LLC registration allows owners to combine their assets and share resources. Meanwhile, the sole owner of the company enjoys complete freedom, as well as control over its operational aspects and finances. However, in case of any legal or financial problems, they may have to bear huge expenses: they do not have shareholders, so the responsibility will fall solely on them.

The main factors to consider when choosing an organizational form include:

  • personal responsibility;
  • ownership and management;
  • the cost of creating and registering a business;
  • taxation.

To get a clear idea of what factors affect the structure of your company, you need to use the services of corporate consultants.

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