Sharjah is one of those emirates which is well known as a business centre in the Middle East. The lower tax rates, favourable policies, and growing economy highly attract entrepreneurs, and these benefits offer numerous opportunities to develop and grow in the business environment.
This article will cover the business models, structures and procedures of setting up a business in Sharjah.
Types of Corporate Entities in Sharjah
There are various types of corporate entities in Sharjah, which is an essential factor to understand when making decisions for a business setup in Sharjah. These corporate entities in Sharjah are as follows –
a) Limited Liability Companies (LLC):
A limited liability company is a business venture which is commercial in nature with a maximum of fifty shareholders. It combines the advantages of a corporation and a partnership. It provides limited liability protection to its owners while allowing for a simplified management structure and pass-through taxation.
b) Partnership Company (PC):
A partnership company is a legal structure that allows two or more individuals or entities to come together and jointly operate a business. This type of model is suitable for businesses that want to pool resources and expertise and share the responsibilities and profits.
c) Private Shareholding Company (PSC):
A private shareholding company refers to a type of joint-stock company where the ownership is restricted to a relatively small number of shareholders who are not governmental organisations.
d) Sole Proprietorship:
A sole proprietorship is a type of legal entity owned and operated by a single individual who is known as a sole proprietor. They control the company’s operations and profits, and the company has unlimited liability. They are wholly responsible for the debts and obligations.
e) Branch Office:
A branch office is a separate office or branch of an existing company, and the ownership of these branches reflects the shareholding of the parent UAE company.
f) Joint Stock Company (JSC):
A joint stock company is a company where the capital is divided into equal shares, and the shareholder's liability is limited to the number of shares they hold. This type of company must have at least ten founding members, and its management is vested in the hands of a board of directors.
Types of Business Jurisdictions in Sharjah
There are two types of business jurisdiction in Sharjah, explained in detail below. This type is selected according to the nature and scope of the business and is a deciding factor for a company setup in Sharjah.
1. Business Setup in Sharjah Mainland:
This type of business setup refers to the process of establishing a company within the geographical areas designated by the UAE government for commercial purposes. A business setup in Sharjah Mainland comprises various benefits in terms of legal policies, ease of incorporation, 100% ownership, etc.
2. Business Setup in Sharjah Freezone:
This type of business setup refers to the process of establishing a company within the designated free zones in Sharjah. The company setup in Sharjah Free Zone offers foreign ownership, which means that foreigners completely own and manage their businesses without the need for a local partner.
Procedure of Setting Up Business in Sharjah
Any type of company establishment wishes to be developed and successful, and this is possible if companies research, plan and follow the steps of a Sharjah company formation, which ensures compliance and builds a reputation in the market. The details of each step are explained below –
i) Determine the type of the business:
The first step in starting a company in Sharjah is to determine the type of business. There are various types of business models, as discussed above, which must be selected to form a company according to the needs, nature and activities of the business.
ii) Choose the business jurisdiction:
An entrepreneur must choose the type of business jurisdiction among the mainland or freezone for the Sharjah company formation. Each jurisdiction has its own benefits and regulations. So, this decision has to be taken for the profits of the company.
iii) Register Trade Name:
A trade name is another essential factor for the company because a name defines the identity, objectives and purpose of the company. The business owner must register a unique name adhering to the regulations of the authority.
iv) Appoint a Local Sponsor:
An entrepreneur must appoint a local sponsor because certain business structures like a local sponsor. They are a helping hand in functioning various business activities and in meeting governmental regulations. They open a door to different business opportunities in Sharjah for the company.
It is essential to submit the required documents like The Memorandum of Association (MOA) and Articles of Association (AOA), personal documents, business plans, etc, because they are used to obtain approvals, certificates and licenses for setting up business in Sharjah.
vi) Obtain a Business License:
Companies must register with the Department of Economic Development (DED) so that business owners can acquire a business license according to the nature and scope of the business. It is because the trade license acts as approval by the relevant authorities to carry out the company's activities.
vii) Open a Bank Account:
Opening a bank account holds various advantages in setting up business in Sharjah, such as making international transactions, maintaining accounts of multiple currencies, managing financial statements, etc.
viii) Pay Fees:
The company must pay the necessary fees issued by the government to meet all the requirements for the application forms and other formalities.
ix) Visa Processing:
Visas are another important factor, and companies must consider completing the visa processing for the employees to help with residency and work for businesses established in and outside Sharjah.
x) Miscellaneous Steps:
There are various other steps in setting up a business in Sharjah, such as renting an office space, ensuring compliance with regulations, obtaining special approvals, an Emirate ID, etc. Each step has its own benefits and makes the company setup in Sharjah easy and quick in the market.
Setting up business in Sharjah is a growing and profitable option for business owners and investors, but it requires research, planning and professional guidance. A consultancy firm, then they help in understanding the compliance, the benefits of setting up business in Sharjah and completing the process of the company formation.
Commitbiz is one such consultancy firm that will guide you through the complete process, ensure compliance, suggest creative business ideas, and help with the business setup with affordable packages. The professionals assist in each step of establishing the company and are a helping hand in all kinds of business activities. Contact us and set up your dream business today.