Finding the Right Trade Licence for Your BusinessJul 24, 2022
How do you find out what is the best trade licence for you and your business? There are so many different types of businesses that it's hard to give a one size fits all piece of advice; there are more than 60 different jurisdictions in the UAE, both mainland and freezone, where you can register your business.
At Female Fusion, we recommend that you seek professional advice to ensure that you have the right information for you and your business. There is nothing worse than setting up a business, and then finding out that it’s not suited for your requirements. Before speaking with professional advisors, we recommend that you have a business plan in place first.
Why do you need a business plan?
It's very difficult to set up a business if you don't know what it is that your business is doing, who your customers are and what the overall plan and vision is for your business. Your business plan doesn’t need to be written by a specialist, or be 50 pages long, but you need to be very clear on:
- Your products or services
- Who your customers or your clients are
- What your customers or clients want to buy from you
- How you're going to make money
- The vision for your business - where would like your business to be in six months, a year or two years?
Not ready to trade? Don’t get a trade licence yet
We hear countless tales in Female Fusion about businesses that have trade licenses but aren’t even trading yet. Don’t be in a position that you start off your business not able to trade but you’re sitting on a trade licence. The only reason why you might need to do this is if your set-up is complex, or you need several permits or licences in place before you can trade. Take your time, do your research, build your contacts, and get your trade license when you’re close to being ready to trade. There’s no point sitting on a trade license for six months while you’re still doing all of the groundwork.
Closing a business can cost as much as opening one
Setting up a licence in the UAE is expensive. You don’t want to be in a situation six months or a year from now where your current licence might not be the right one for you or your business. Certain licences have restrictions, for example, you might be limited by not being able to sponsor employees for your business, or your trade licence might not be accepted by certain customers. This will make it very difficult for you to scale, let alone trade.
If your trade licence is not fit for purpose for your business, you will end up having to get a different one, and it's not just a case of going and paying for a new trade licence. You will need to:
- Close down the old business
- Get a new bank account
- Get a new payment gateway
- Re-start payment agreements with clients or customers
- Notify clients or customers of your new business
- Create and re-sign any new contracts or agreements
- Re-sponsor employees from one company to the other (if you have any employees)
It's like you're setting up a brand-new company. So, it's not only the actual monetary cost, but it's also the time that it takes to re-do and restructure everything in the business.
Business set-up advisors in the UAE
Business set-up professionals will provide you with invaluable advice to help you set-up and structure your business properly, keeping long-term goals in mind.
There are a number of business setup professionals in the UAE, working directly for the freezone authorities or the Department of Economic Development (DED) in the different emirates. We always recommend that you speak to at least two before making a decision. Talk to them about what it is that your business is doing, be very clear on your business plan, your activities you're doing now, and your vision for the future. Seek recommendations from them and what they suggest would be the correct structure for your business.
A business set-up advisor will always give you a free consultation and tell you what jurisdiction and licence activities they recommend would be best. If you are asked to pay for a consultation, find others who will provide this service to you at no cost.
You can also go directly to the licensing authority and ask for their recommendations – but remember with more than 60 different jurisdictions – they are all competing against each other and want your business.
After you speak with several business setup advisors and licencing authorities, you will notice that there is consistent and overlapping advice. However, if you find that this is not the case, you might want to get legal clarification to ensure that your business set-up will be what you need.
Why legal advice can be the best investment in your business
Some business structures can be more complex, and you might need legal advice. Most lawyers will charge for an initial consultation, but this might be the information that you need to make an informed decision about your business structure.
This is where your business plan really comes into play, because your business plan is going to give further clarity on what is going to be the best structure for your business.
Once you seek the advice of a business set-up advisor or a legal adviser, you should be able to get the correct information to go and establish your business.
Remember, the cheapest trade licence is not necessarily the best option for you or your business. More often than not, cheaper trade licences end up having a number of restrictions which will cost you more in the long-term.
When you set up your business, it's very important to get advice on which is going to be the best trade licence for you and your business that will allow you to build and grow your business.
Set yourself up for success and growth at the outset – you’ll thank yourself for it later!
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