The UAE has a thriving economy that is expanding rapidly around the world. However, entrepreneurs frequently struggle with determining whether to start their business with a trade licence or a freelance licence. This can be determined by considering several aspects of both licences.
To start a business in Dubai, the entrepreneur must receive a valid licence from the appropriate authority. Obtaining a company licence is likely the most important stage in business setup in Dubai or anywhere in the UAE. To decide whether to get a freelance permit or a trade licence, you must first grasp what these terms mean and how they differ.
What is a trade licence?
It is a generic licence that permits you to carry out several trading activities in the UAE, either in the same or separate industries. Imports, exports, product and service trading are among the activities. A trade licence is required for everyone who wants to perform wholesale commerce. Having a trade licence can help you conduct your business both locally and abroad.
What stages are involved in obtaining a trade licence in Dubai?
- Choose the company’s legal structure and trade name.
- Determine the business operations that will be performed.
- Apply for initial approval.
- Draft the Memorandum of Association (MOA) and other required documents.
- Choose a location for your company.
- Fill out the application and send it to the Department of Economic Development (DED)
Benefits of trade licence:
- Increase Credibility: A licence of this type assures clients that the organisation is a law-abiding entity devoted to ethical business activities. This licence also increases the entity’s visibility in the market in which it operates.
- Increase your chances of receiving financial assistance: Under the effect of a trade licence, any entity can obtain loans from a financial institution without violating any restrictions.
- Encourage investors: Authenticity and trustworthiness are not something that can be acquired immediately. To reap such benefits, an organisation must work in the direction of the law and adhere to all compliances without deviation. Such agreements may even assist the company in securing major investments from outside entities eager to contribute further capital to gain fiscal benefits.
- Ensure that there are fewer legal conflicts: Apparently, businesses that achieve complete compliance with all regulations are less likely to botch up their legal matters. Unless the organisation deliberately violates the law, it will never be subject to legal duties.
What is a freelance licence?
The Freelance Permit allows you to work as a freelance professional. The Permit identifies you as a lone practitioner and allows you to conduct business under your given name rather than a brand name.
As of now, freelancers can work in the following free zones:
- Design District in Dubai
- Studio City in Dubai
- Media City in Dubai
- Knowledge Village in Dubai
- International Academic City in Dubai
- Production City Dubai
- Twofour54 [Abu Dhabi]
- Fujairah Creative City
What are the steps to obtaining a Freelance License in Dubai?
- Apply to one of the free zones previously mentioned.
- Send your application together with a copy of your passport.
- The client will next send you a confirmation letter, which must be signed and returned.
- Pay the requisite clearance fees.
- Collect the UAE Free Zone-approved Freelancer Visa certificate.
- The independent licence is issued within 7-10 business days.
Benefits of freelance license:
- Flexibility in terms of working hours and locations: With the UAE Freelance License, you can legally operate as an independent contractor for a variety of enterprises and sectors based in the UAE. You can change your working hours from 9 a.m. to 5 p.m. to assist your life-work balance.
- Building your own business: You will have your own brand and business, and you will be entirely self-sufficient. This would be useful for launching your future firm and honing your management skills. Because the government encourages freelancing, you will become acquainted with government-issued restrictions.
- Legal support: As previously said, because the government gives the freelance licence, you will have legal authority over your operations, which will enhance and validate your employment identity.
- Familiarizing oneself with the market: Many business people are curious in learning about the market environment and its regulations. Freelancing is a unique option for entrepreneurs who want to test the market before establishing a firm in the area.
We can clearly see the difference between trade license and freelance license in these particular areas:
Recruiting employees in the future
- Trade licence: If you have a trade licence, you can hire as many employees as your licence allows. This price will vary according to the size of your premises or the free zone in which you operate. If your licence permits for six visas, you will allow to hire six people.
- Freelancer: If you want to recruit a freelancer, you must go through an additional stage. The freelancer permission only allows you (the designated individual) to work in the company.
Ease of starting and maintaining a business
- Trade licence: This is maybe the simplest way to conduct business in the UAE. The DED and all free zones give trade licences, so getting start is simple.
- Freelance license: Freelancer permits are not as widely available as trade licences, however many UAE free zones, including RAKEZ, Dubai Media City, Dubai Internet City, the Dubai Design District, and Dubai Knowledge Park now grant them these days.
Keeping costs low
Trade license: A trade licence is more expensive to get than a freelancing licence.
Freelance licence: The cost of a freelance licence is lower. In the UAE, there are lucrative freelance permit packages available for professionals.
