The UAE has a thriving economy that is expanding rapidly around the world. However, entrepreneurs frequently face a dilemma when determining whether to start their firm with a trade license or a freelance license. This can be determined by taking into account various aspects of both licenses.
Company formation in Dubai, trade licenses and freelance licenses are two prominent choices. While both are reasonably straightforward to obtain, depending on the type of business you want to create, they have different features and benefits.
So, if you're thinking of launching a business in the UAE but aren't sure which permit to get, keep reading. We'll lay down the distinctions below so you can figure out which is best for you.
What is a Freelance License?
A Dubai freelance work permit certifies you as a freelancer or self-employed individual. So, if you're a lone practitioner who runs his firm under his own name, you'll need to apply for this authorization. A freelance work visa is ideal if your firm is primarily online and does not require any employees, such as content authoring.
However, you will run into problems if your earnings exceed the taxation threshold or if you begin working for large organizations that require a TRN (Tax Registration Number). This is due to the fact that TRN does not apply to freelancers. Furthermore, freelancers in the UAE are not permitted to register a corporate bank account.
Who should apply for a Freelance License in the United Arab Emirates?
In Dubai, obtaining a freelance permit is relatively simple, requiring only a few documents and procedures. While freelancing permits may become limited if you start earning a lot of money and your income becomes taxable, until that time arrives, the freelance permission will suffice.
Furthermore, the UAE government offers a variety of lucrative freelance work permit packages. Any freelance work visa will set you back anywhere from AED 10,000 to AED 25,000. You must have a resident visa and a work permission in Dubai if you want to operate as a freelancer without a freelance work permit. You should also keep in mind that you must renew your freelance permit every year, and the fee of this renewal varies by location.
In addition to the price, you will need to submit supporting documentation in order to receive a freelance work visa in Dubai. Some of the most popular are listed here, however depending on the type of work you conduct, you may also need some extra documents.
Read more :- Startup License Dubai, UAE: Costs & Requirements
Documents Required to obtain a Freelance License
- The business plans
- Copy of NOC from the current sponsor
- Degree certificate or CV profile (attested as per the standard procedure for international usage)
- Copy of passport
Who Shouldn’t go for Freelance License?
If you're unsure about when you shouldn't get a freelance license, consider the following grounds for clarification.
- Because a freelance permit is provided to a single person, you will never be able to hire any form of staff (only you).
- Only a few industries, such as journalism, fashion, and education, are eligible for a freelance permit.
- As a freelancer, you will not be issued a TRN by the Federal Tax Authority. As a result, you may never be able to operate in a large corporate setting.
Let us now look at how to obtain a trade license in Dubai and the advantages it provides.
What is a Trade license?
A Trade License enables a business owner to engage in a variety of trade activities, hire employees, and get various licenses and numbers linked to taxation and various sorts of trading. Traders in the UAE can work in a variety of industries and participate in important trading activities such as import and export. They don't have to confine themselves to a few categories, like freelancers do.
A general trade license is required if you want to work as a wholesaler. However, regulated products including beverages, frozen foods, and medications, among others, require special authorisation from the authorities. Overall, one of the advantages of commerce is the capacity to operate locally, nationally, and worldwide.
Why should you apply for a Trade License in the United Arab Emirates?
A UAE trade license allows you to operate more freely and does not stifle your expansion. Employees can be hired whenever you need them. You can collaborate with a variety of businesses, including huge enterprises. If you work as a freelancer, you must deregister as a freelancer and apply for a trade license in Dubai if your firm grows. So, in a nutshell, the trade license alleviates the problem.
You can operate freely across the country and even worldwide with a trade license. Within the freezones, the mainland zone, and with any other commercial organization, you can trade.
Who Shouldn’t go for Trade License?
If you don't have enough money, you shouldn't get a trade licensing permission. A trade license costs between AED 30,000 and AED 40,000 and may be an additional cost. So, if you're starting off as a freelancer on a shoestring budget, we recommend starting small.
For some company domains, the paperwork and approval procedure can be lengthy and exhausting. This is undoubtedly off-putting and may add to the pressure. So, for a better and faster approval, approach the application process with the support of a reputable agency.
What is the procedure for obtaining a Trade license in UAE?
- Finalize the business domain and name
- Outline the business activities (10 activities are allowed on one license)
- Submit the applications, remit the fee, and complete the additional tasks such as attestations
- Specify a business location and get a contract for the lease
- Finally, submit the application to DED, or the Department of Economic Development (DED)
- Remit the various fees and obtain the trade license
Difference Between Freelance License and Trade License
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Freelance License |
Trade License |
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With fewer documentation, obtaining a freelance license is pretty simple. |
Obtaining a trade license is a difficult process. |
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The cost of a freelance license is lower. In the UAE, there are lucrative freelance permit packages for professionals. |
When compared to a freelance license, the cost of obtaining a trade license is higher. |
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Only the designated person is allowed to work in the business with a freelance license. If the freelancer wants to recruit others, he must change his license to a trade license. |
A trade license allows hiring employees |
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Only a small number of domains are eligible for a freelance license |
A trade license can be given in any industry that the entrepreneur wishes to pursue. |
Conclusion
If you want to engage with large corporations or government agencies, you should get a trade license since it gives them more openness and confidence. However, if cost is your primary concern, you can choose to work as a freelancer.
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