When considering starting a business in the UAE, it's essential to understand the key differences between obtaining a freelance license and setting up a Limited Liability Company (LLC) with a single owner. Both options have their unique advantages, cost structures, and benefits. Here, we compare the pricing and benefits between obtaining a freelance license and setting up an LLC in a Freezone. For expert guidance and seamless business setup, Instacorp is your go-to solution provider.
Freelance License
Cost
License Fee: A freelance license typically costs around AED 7,500 annually.
Establishment Card: Records the company's registration with immigration authorities, necessary for issuing visas under the license, AED 2,000 annually.
Office Space: Freelancers often only need a Flexi desk or managed office, costing around AED 5,000 to AED 10,000 annually.
Visa Cost: The cost of obtaining a freelance visa is approximately AED 4,600 AED annually (excluding medical insurance, Emirates ID fee and medical test fee).
Total Estimated Cost: around AED 14,100 annually without including the office cost.
License Benefits
Ease of Setup: The process is straightforward, with minimal documentation required.
Flexibility: Ideal for individuals offering specialized services such as consulting, writing, design, or other professional services.
Simplicity: Operate under your name without the need for a company name.
Limited Liability Company (LLC) in a Freezone
Cost
License Fee: The cost of setting up an LLC in a Freezone starts at around AED 12,900 annually.
Establishment Card: Records the company's registration with immigration authorities, necessary for issuing visas under the license, around AED 2,000 annually.
Office Space: Free zones offer a complimentary virtual office to all new companies, which is included in their license fee. Additionally, you have the option to select a flexi desk or a dedicated office space based on your requirements, available for an additional fee.
Visa Cost: The Freezone license fee will increase based on your visa requirements, with each visa costing approximately AED 3,750 annually (excluding medical insurance, Emirates ID fee, and medical test fee). Currently, a Dubai-based free zone offers a free visa for life as part of their promotion, waiving the AED 3,750 fee indefinitely. Sign up to find out more.
Total Estimated Cost: around AED 20,000 initially including virtual office and free lifetime visa and AED 16,000 annually to renew the license, establishment card., company documents, and the virtual office.
License Benefits
Legal Structure: Provides a more formal business structure, suitable for larger projects and bigger clients.
Limited Liability Protection: Shareholders' personal assets are protected from business liabilities.
Flexibility in Business Activities: Allows engagement in a broader range of business activities.
Scalability: Easier to scale up, attract investors, and expand operations both within the UAE and internationally.
Conclusion: Which Provides More Value?
The choice between a freelance license and setting up an LLC in the UAE depends largely on your business needs, goals, and financial situation.
Freelance License
Ideal For: Individuals or sole proprietors offering specialized professional services.
Pros: Competitive initial costs, straightforward setup, and operational simplicity.
Cons: Limited business structure, scalability, and the potential impact on perceived business credibility.
Freezone LLC
Ideal For: Entrepreneurs who plan to grow their business significantly, need a formal business structure, or anticipate employing multiple staff members.
Pros: Limited liability protection, broader business activity options, potential for expansion, Competitive initial costs, straightforward setup and enhanced credibility with clients and investors.
Cons: Need a separate bank account for the company.
Value Proposition
Freelance License: Best for those seeking a cost-effective and straightforward way to operate professional services.
Freezone LLC: Offers greater value for those with ambitions to build a scalable and versatile business with substantial growth potential.