Dubai is one of the fastest-growing business hubs in the world, attracting entrepreneurs and investors from across the globe. However, starting a business in Dubai requires choosing the right legal structure. 

The legal structure that you choose for your business will determine your legal liability, taxation, and your ability to conduct business in the UAE. Therefore, it is essential to choose the right legal structure for your business to ensure its success in Dubai's competitive business landscape.

In this article, we will discuss the various legal structures available for businesses in Dubai and help you understand which one is right for your business needs. Whether you are a foreign investor, a startup, or an established business looking to expand to Dubai, choosing the right legal structure is crucial to your success. 

Also Read :- Business in UAE: Easy Steps to Setup your Company.

Let's dive in!

Types of Legal Structures in Dubai

Sole Proprietorship:

A sole proprietorship is the simplest and most common legal structure in Dubai. It is suitable for small businesses and individual entrepreneurs. In this structure, the owner has full control over the business and is responsible for all the debts and liabilities of the business. It is easy to set up and requires minimal investment. However, it can be difficult to raise funds in this structure.

Also Read :- Mainland Company Formation In Dubai

Partnership:

The partnership is a legal structure in which two or more individuals or entities share the ownership of a business. The partners contribute to the business's capital, share profits and losses, and share the responsibility for debts and liabilities. There are two types of partnerships in Dubai: General Partnership (GP) and Limited Partnership (LP). In a GP, all partners have unlimited liability for the business's debts and liabilities. In an LP, there are both general partners and limited partners. General partners have unlimited liability, while limited partners have limited liability.

Also Read :- Mainland Company Formation In Abu Dubai

Limited Liability Company (LLC):

A Limited Liability Company (LLC) is the most popular legal structure in Dubai. It is suitable for small and medium-sized businesses. In this structure, the business is a separate legal entity from its owners, and the owner's liability is limited to their investment in the company. It is easy to set up, and the minimum capital requirement is AED 300,000

Also Read :- Dubai Freezone Business Setup

Public Shareholding Company:

A Public Shareholding Company (PSC) is a legal structure in which the business's capital is divided into shares, and the shares are publicly traded. It is suitable for large businesses that need to raise significant capital. It requires a minimum of seven founding shareholders, and the minimum capital requirement is AED 10,000,000.

Also Read :- Offshore Company Formation Dubai

You need the following documents to file to open a business in Dubai:

  • A valid passport copy for all partners or shareholders

  • A visa copy for all partners or shareholders

  • Emirates ID card copy for all partners or shareholders

  • A No Objection Certificate (NOC) from the current sponsor of the partners or shareholders

  • A Memorandum of Association (MOA)

  • A Tenancy Contract or Ejari Certificate

  • A Dubai Economic Department (DED) license application form 

The procedure for opening a business in Dubai is as follows:

  1. Choose the legal structure of your business.

  2. Choose a trade name for your business and get it approved by the Department of Economic Development (DED).

  3. Prepare the required documents and get them attested by a notary public.

  4. Submit the documents to the DED and obtain the initial approval.

  5. Get a tenancy contract or Ejari Certificate for your business premises.

  6. Submit the tenancy contract or Ejari Certificate to the DED and obtain the final approval.

  7. Obtain the necessary permits and licenses from other relevant authorities, such as the Dubai Municipality and the Dubai Chamber of Commerce.

  8. Open a corporate bank account.

  9. Register for Value Added Tax (VAT), if applicable.

  10. In conclusion, choosing the right legal structure for your business in Dubai is crucial. Each legal structure has its own set of advantages and disadvantages, and it is important to choose the one that best suits your business's needs

In conclusion, choosing the right legal structure for your business in Dubai is a crucial decision that requires careful consideration. The choice you make will impact the way your business operates, the level of control you have over it, and the amount of liability you are willing to bear.

Before making a decision, it is important to seek the advice of a professional and understand the legal and regulatory requirements involved in each structure. With the right guidance, you can make a well-informed decision that will help your business thrive in Dubai's dynamic and diverse business environment.

Remember, every business is unique, and what works for one may not work for another. By taking the time to evaluate your business needs, resources, and goals, you can choose the best legal structure that will help you achieve success in Dubai.