Company Formation in Dubai: Most Common Legal Mistakes Business Owners Make

When you are in the process of company formation in Dubai, a small legal misstep can transform your entire process into stress. As an entrepreneur, you focus on different aspects of the business, including product development, marketing and sales. There are several things you can overlook legally, such as contracts, compliance and intellectual property. This can lead to financial loss, lawsuits and business failure. We have identified a few legal mistakes that are commonly made, which can cost your business heavily. Learn all about them and on how to prevent them as well.

·         The biggest mistake you are likely to make is choosing the wrong business structure. This is one of the basic decisions you ought to make and getting it wrong can impact taxation and operations for your business. The most common structures include sole proprietorship, Limited Liability Company and corporation. While sole proprietorship can be simple, it doesn’t offer personal liability protection. In case of limited liability, it offers flexible taxation. Lastly, corporations are suitable for larger businesses and involves several complex regulations. You might want to work with a business attorney or an accountant to identify the best structure for your business.

·         The second most common mistake includes not registering your business properly. If you haven’t obtained the necessary permits and trade license in Dubai, you might have to pay heavily in fines and might be stuck with operational restrictions. You must look up for the permits and licenses that are meant for your business based on the location and industry. Most businesses need to ensure they have a state license, local permits and professional certifications. You should also possess an employer identification number for the business. You must research all about the regulatory requirements in your jurisdiction before you get the permits.

·         Most new business owners tend to neglect the contracts or agreements. They tend to rely on verbal agreements and assume they are legally binding. However, when there is a dispute, you may not be able to enforce the agreement without these contracts. As a result, it is important to have a written contract during company formation in Dubai. You should have proper partnership agreements. This would help clarify the roles and responsibilities. You should also look for the deliverables, payment terms and liabilities. Employment contracts are equally important when creating the contracts or agreements. You should also sign the vendor contracts for when you establish partnerships with suppliers. Having proper contracts made can help reduce misunderstandings.

·         A lot of you may ignore protecting the intellectual property you own. If you don’t secure the copyright or trademark, you may find competitors stealing your ideas and branding. For instance, if you don’t trademark your business name or logo, you might find someone else having something similar. Similarly, copyrighting the materials without permission or failing to patent the products can also cause issues. You should register the trademarks, and copyrights with the right government agencies to protect your business’s identity and assets from getting infringed.

The last mistake you are likely to make is overlooking employment laws. There are specific trade license Dubai you might need. Along with that, you need to familiarize with the wage and hour laws for the place. You might also need to know the anti-discrimination laws and worker’s compensation.