Difference between Trade License and Freelance License

by Zaara 25, Nov 2021

Difference between Trade License and Freelance License

The UAE is undoubtedly an excellent place to start your own business, with its entrepreneurial community and a vibrant economy. However, you need a suitable licence for that and for that, you have two options: a business licence or a freelance licence. You can opt for a trade licence if you have ambitious growth plans and are trying to appeal to broad corporate or government customers. And if you intend for the near future to operate independently, and want to keep your costs and business formalities minimal, the way to go is to get a freelance permit.

Acquiring a company license is arguably the most crucial step in starting your business in Dubai or the rest of the UAE. To choose whether to go for a freelance permit or a trade license, you’d have first to understand what these mean, and how they are different.

What is a Freelance License?

A freelancer is a self-employed individual providing a particular service. A freelance permit recognises you as a sole practitioner and allows you to start your company on your behalf. As of now, the following free zones enable freelancers:

 

What are the Steps Involved to Acquire a Freelance License?

  • Apply to one of the previously listed free zones
  • Send an application along with your copy of your passport.
  • You will then obtain a confirmation letter from the client, which must be signed and returned.
  • Pay the necessary fees for clearance
  • Collect the Freelancer Visa certificate authorised by the UAE Free Zone
  • The independent licence is provided within 7-10 working days.

Advantages and Disadvantages of Freelance License

 

                          Advantages

                   Disadvantages

It is comparatively easier to obtain a freelance permit, with fewer procedures and documentation involved.

Freelance access allows only you (the person named) to work in the organisation, preventing employee hiring from being possible.

Consequently, if you don't want your costs to go up, a freelance permit is the best choice, there are lucrative freelance permit packages for professionals in the UAE. A freelance license in the UAE can cost between AED 10,000 and AED 25,000 in total.

Only in the case of a restricted collection of domains-education, fashion and media-can a freelance permit be given.

 

The Federal Tax Authority does not issue a tax registration number (TRN) to freelancers.

 

What is a Trade License?

A general trade licence facilitates several trading practises to be carried out in the UAE that are in the same or different industries. Trading licence activities include the importation, exportation or trade of goods or items such as clothing, footwear, furniture, electronics, etc. Also, there should be a general trade licence for anybody who wants to do wholesale business in the UAE. A general trade licence facilitates several trading practises to be carried out in the UAE that are in the same or different industries. Trading licence activities include the importation, exportation or trade of goods or items such as clothing, footwear, furniture, electronics, etc. Also, there should be a general trade licence for anybody who wants to do wholesale business in the UAE.

What are the Steps Involved to Acquire a Trade License?

  • Select a legal framework for your business and a trading name
  • Determine the business practises being carried out [10 per licence maximum]
  • Apply for initial consent
  • Procure, if necessary, any official permissions,
  • The proposed Memorandum of Association  (MoA) and any other documents needed by government authorities
  • Select a business location and obtain a tenancy agreement approved by Ejari
  • Send an application to receive the final licence from the Department of Economic Development (DED)
  • Pay the appropriate fees, including the issuance fee for the licence receipt.

Advantages and Disadvantages of Trade License

 

                          Advantages

                   Disadvantages

A trade licence enables one to hire workers. They will have to de-register their freelance licence and upgrade it to a trade licence in case a freelancer wishes to do so. But it's easier to get commercial support from the beginning.

The cost of acquiring a commercial licence is marginally higher than that of freelance help. In the UAE, a commercial licence could cost anywhere from AED 30,000 to AED 40,000

You can operate anywhere within or outside the UAE with a commercial licence.

 

A business licence provides more trust and legitimacy, which is essential if you want to deal with large companies or government agencies.

 

Difference between Trade License and Freelance License

 

                  Freelance License

                       Trade License

With fewer papers, obtaining a freelance licence is comparatively more straightforward.

It's a reasonably complicated job to secure a trade licence.

There are lower freelance licencing rates. For professionals in the UAE, there are lucrative freelance permit packages.

When opposed to freelance claims, the cost of acquiring a commercial licence is higher.

The freelance support enables only the designated employee to work in the business. If the freelancer wishes to recruit staff, he must upgrade them to a trade licence.

A trade licence enables workers to be hired.

Only a small number of domains is given a freelance permit.

Any sector which the entrepreneur is willing to pursue is given a trade licence.

Conclusion

  • A trade licence can be a wise option if you wish to deal with large corporations or government entities since it carries with it clarity and legitimacy that can be searched for by those companies when going into business with others. Also, a trade licence is the only choice for you if the essence of your company is not limited to your free zone, as a freelance permit allows one to work only locally. Again the only way you can do so is to obtain a trade licence if you want to recruit employees in your company.
  • If your most significant concern is cost, work as a freelancer. This way, as a one-person company, you are allowed to use it. As free zones in Dubai will enable you to rent a workstation for that reason, you don't even need to rent an office space for your company.

 

Would you like to set up your company in Dubai, but are you confused about whether you want to go for a trade licence or a freelance licence? We have a back of yours. For over a decade, Commitbiz has been helping businesses and entrepreneurs begin their place in the UAE. We take care of the specifications and customisations of your business, liaising with government authorities and UAE external agencies. We will guide you on the journey from agreeing on the form of licence to receive it once we understand what you are searching for. Do contact us for free advice – we'd be happy to help!