1st August 2018
How do you know if you are getting the best Abu Dhabi business set up provider for your new business? As with most types of corporate services there are a plethora of providers to choose from, but how do you choose which one is right for you?
Naturally, we all want to get a good deal and pay the cheapest fees; but stop for a moment and consider whether that is the best strategy for ensuring that your business is correctly structured for your organisation's circumstances and is fully registered in the correct jurisdiction. Setting up a business is a huge investment financially. Its also a huge investment as part of your organisation's growth strategy. Therefore, its essential to get it right first time. Imagine what the impact would be if you hadn't budgeted correctly at the outset or unexpected delays/incompetency slowed down your market entry. I'm thinking that time is money, each day that you aren't correctly setup with visa'd staff conducting your operations, you are potentially losing or missing out on dollars. Even worse, imagine if your license was issued in the wrong jurisdiction or with activities that didn't cover your scope of work and caused you to lose a tender or cost you in time and money in repeating the business setup process again in the correct jurisdiction or amending your license to include the correct activities.
Over the years that I have been helping foreign companies to establish themselves in Abu Dhabi, I've heard woeful stories of people's experiences. Often, this is due to their lack of initial due diligence, but also combined with their not knowing what questions to ask. As such, I've put together the following list of questions for you to consider when you are speaking to people about setting up your business in Abu Dhabi to help you to avoid making mistakes which may cost you further down the line.
17 Questions To Determine If You Are Engaging The Best Abu Dhabi Business Set Up Provider
1. Who are you talking to about your Abu Dhabi business set up, a sales person or a consultant?
A sales person is usually 'selling' you one product and they will be encouraging you to sign up quickly. This is because they work on commissions. So you need to ask yourself whether they have your best interests at heart or their own bank balances on their mind. They are also likely to tell you whatever you are wanting to hear, as well as to make it sound extremely easy.
2. Is the person you are talking to about your Abu Dhabi business set up confusing you with information?
I recently had a call from a prospective client who was quite flustered after having spoken to a sales person about their business setup. They had been encouraged to sign up quickly, but fortunately that was putting this person off. As we had a conversation about the planned business setup, it became clear very quickly that the prospect had no idea what the sales person was actually trying to sell to them. The sales person had listened to their planned activities and then just provided them with a cost along with jargon which the prospect didn't understand but insisted that they needed (fear selling).
3. Is the person you are talking to about your Abu Dhabi business set up urging you for a quick sign up?
I've touched on this in the above section, but will expand further here. As I mentioned in the introduction, setting up a business is a huge commitment. It isn't something to step into lightly and once the trade license is issued, there are ongoing commitments to be aware of too. Therefore, its essential that you fully understand what you are signing up for. Don't be afraid to ask questions and if you don't understand the answers, ask again until you are sure and you are comfortable that you are making the right investment. This isn't the same as a double glazing salesman trying to sell you windows; this is the future livelihood of your organisation. So take time to fact find, ask questions, think about how you want to move forward. If someone is pressuring you to sign and hand over money, its likely they don't have your best interests at heart.
4. Is the person you are talking to about your Abu Dhabi business set up asking your about your initial scope of activities, as well as future plans?
Understanding the short term as well as the long term goals is essential before starting on the incorporation of your business setup in Abu Dhabi. If for example you are wanting to sell the Abu Dhabi arm of your business at some point in the future, then a foreign branch isn't going to be the correct structure for you as it is fully owned by the overseas parent company rather than being a standalone entity with shares. Equally, if the longer term goal is to expand into the other Emirates, it might be worth considering an LLC as it will be far cheaper to set up an initial LLC in Abu Dhabi and then structure local branches from that LLC into the other Emirates, rather than setting up a Foreign Branch in each Emirate (if you are a services company). If the person you are talking to is only focused on the 'now' then it could work out more costly for you to achieve your longer terms plans in the future.
5. Is the person you are talking to about your Abu Dhabi business set up explaining the different legal structures which may be available to you?
So many people are unaware that there are different legal structures available and just get given a cost for establishing their company. Its important to understand the implications of the entity you are establishing, e.g. if you were to set up an Establishment (similar to a sole trader in the UK), it is important to know that you as an individual will have unlimited liability on yourself and your assets; therefore it might be worth considering a Limited Liability Company (LLC) limiting the liability based upon your shareholding.
6. Is the person you are talking to about your Abu Dhabi business set up asking you about your intended client base?
This is such a key question to be asked. You will need to have a license wherever your intended customers will be based. E.g. if your intended clients are based in Abu Dhabi, setting up a license in Ras Al Khaimah will be insufficient. Despite popular belief, there is no such thing as a federal license covering the whole of the UAE. Each of the Emirates has its own licensing procedures and requirements. The license issuing authority issues a license for you to operate within its own jurisdiction. For example, the Abu Dhabi Department of Economic Development (ADDED) is the mainland licensing authority in Abu Dhabi, so if you are wanting to work onshore in Abu Dhabi, such as with any of the government departments, it will be necessary for you to have a license issued by ADDED.
I still meet sales people who insist that the product they are selling will enable you to work throughout the Emirates - beware this is not the case.
7. Is the person you are talking to about your Abu Dhabi business set up discussing with you about the ownership options?
Will you be establishing a holding company to hold the shares in your Abu Dhabi LLC or will an overseas parent company hold them? Alternatively, will you as an individual be listed as a shareholder? It is important to understand the implications of the ownership, particularly if your organisation could be liable for tax in its home jurisdiction. Also, might there be implications for you as an individual being a shareholder in someway and how could it affect your existing visa (if you are already living here)? Is the person you are speaking with explaining all of the options to you so that you can decide what is most appropriate for your circumstances?
8. Is the person you are talking to about your Abu Dhabi business set up promising you business, contracts and open doors too?
If I had a Dirham for every time I heard someone say they were promised X, Y and Z but it never materialised. Unless it is in a contract, don't take such promises at face value. This is particularly important if you are new to working in the Emirates. It is easy to be spellbound by promises of introductions and connections to get you contracts as you are fresh to the country and starting out on building up your connections. Speak to lawyers and other professionals for their take on this and I'm sure many will concur that most often these promises don't materialise.
9. Is the person you are talking to about your Abu Dhabi business set up "selling" you one option?
As shocking as this will sound, this is a true experience of mine. I once participated in a speed networking event (in case you aren't familiar with this, it is a time managed event whereby - each time you meet a new person you each have one minute to introduce yourselves to the other). This one particular sales person introduced themselves to me and the told me all about setting up companies in the free zone they were representing. When it was my turn to speak for one minute to introduce myself, I explained to the individual that my area of authority was setting up companies onshore. The person had no idea what I was talking about. They had never even heard the terms 'onshore' or 'mainland'. As such, they only had experience of 'selling' their particular free zone. So in such an instance its necessary to ask whether you are getting the most suitable business setup in Abu Dhabi because the individual you might be talking with may not know about all of the options you could be considering and therefore you might not end up with the ideal solution.
10. Is the person you are talking to about your Abu Dhabi business set up focusing on being the cheapest option or providing you with value?
Unless you are genuinely looking for the cheapest option, in which case seek out the business setup advertising which is cost-based, do ask yourself whether the person you are speaking with about your Abu Dhabi business setup is focusing on the cost in order to get a quick sale or whether they are providing you with value and reassurances to address your objections and concerns.
11. Is the person you are talking to about your Abu Dhabi business set up providing you with all of the costs upfront, including all third party fees?
This unfortunately is something I hear about far too often. People sign up for a business setup package, pay the fees, and then half way through the process get burdened with additional third party costs being incurred. It turns out that the upfront fees were just for the service provider and didn't include the government and third party fees, such as Ministry of Foreign Affairs (MOFA) stamps, legal translations, license costs, notary public fees etc... Be sure you are aware of all of the costs you will incur upfront to help with your budgeting, as well as to avoid any nasty surprises part way through the business registration process.
12. Is the person you are talking to about your Abu Dhabi business set up clearly describing their scope of work and does it meet your requirements?
Be clear exactly what to expect from your service provider. Will they be arranging the legal documents or will you need to organise those yourself directly with a lawyer? Will they be organising the MOFA stamping of your corporate documents when you bring them into the UAE to commence the business incorporation process? Will they be organising the legal transactions and Notary Public appointments, as well as the submissions into the various government departments. I once met with a company who shared with me their experience whereby they were expecting the business setup provider to do just that, set up their business. Sadly, that wasn't the case and this particular company wasted a huge amount of time trying to find their way around the process of setting up a business in Abu Dhabi.
Also, just this year, I've encountered a number of companies who are established here with a Foreign Branch structure but have not completed their registration with the Ministry of Economy (the initial approval is prior to the trade license issue and the completion is after it). However, failure to complete that registration within 30 days of the license issue incurs fines accruing on a monthly basis of AED10,000/month. In these instances, the business setup provider has gotten them as far as the issuance of their trade license and the companies didn't know that really their business registrations weren't completed and ended up paying huge fines, which could have so easily been avoided.
13. Does the person you are talking to about your Abu Dhabi business set up have credibility in the market?
Do some market research and desk research to find out who the person is that you are speaking to? Do they have the experience and credibility to effectively help you to setup the right business for your needs? Read their interviews and testimonials as a starter and if they don't have any then hopefully that lack of credibility will serve to steer you in an alternative direction.
14. What experience does the person you are talking to about your Abu Dhabi business set up have?
I think this is important. As I mentioned above, if an individual is 'selling' one product, then how can you be sure that you are getting sound advice for your organisation. Check that the person you are speaking with has experience behind them. Also check that they have both free zone as well as onshore expertise to be able to give you an unbiased evaluation.
15. Is this the main business of the person you are talking to about your Abu Dhabi business set up?
So many companies now provide Abu Dhabi business setup as a 'bolt-on' to their usual day-to-day business. From my experience of these situations these setups are generally slow as they fit in around the main business. Also, the PROs doing the work are not necessarily familiar with the procedures and requirements, so they will attempt to do something one day, find it doesn't work or might have changed, and then have to find out how to do it, which in turn ends up wasting time and money of the client.
16. Can the person you are talking to about your Abu Dhabi business set up provide you with testimonials?
Always ask for testimonials from the individual you are speaking with about your company formation in Abu Dhabi.
17. Was the person you are talking to about your Abu Dhabi business set up recommended to you?
How did you find the person that you are speaking to? Have you researched them online to reinforce their credibility? Were they recommended to you from a credible source(s)? Don't be afraid to ask around. Be 100% comfortable before you engage someone to manage your company formation on your behalf in Abu Dhabi.
The above highlights some of the things to be aware of when speaking to company formation providers. By being aware of these 17 questions I hope that it will draw your attention to what you need to priortize and consider when setting up your own business in Abu Dhabi to ultimately save you time and have an efficient and hassle free experience. My own organisation, Gateway Group of Companies, is the authority on company formation in Abu Dhabi. I set up the business to share knowledge about setting up and doing business in Abu Dhabi; to provide excellent client communications throughout business setup and visa processing assignments; and provide such business setup and visa processing services with speed of implementation.
If you are planning to expand your business to Abu Dhabi speak to Gateway about how we can help navigate the business setup formalities and structure your business so you have full operational and financial control of your business by engaging Gateway's corporate nominee sponsor service.
Written by Jenny Hunt, Founding Partner & CEO, Gateway Group of Companies, Abu Dhabi UAE
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