Business

How to Start a Business in Sharjah?

Sharjah is one of the most popular and culturally diverse emirates in the UAE. Its central location between the northern Emirates and Dubai, along with the business-favourable policies, makes it an interesting choice for foreign entrepreneurs and investors who want to start a business in Bahrain. The government of UAE has also established several free zones in Sharjah, providing several benefits to business owners, such as an easy registration process, 100% ownership and tax benefits. This blog will provide you with the steps to start a business in Sharjah, along with the type of entities that you can set up in Sharjah. It also talks about the benefits, required documents, and costs of a Sharjah Business Setup.

Types of Business Entities to Start a Business in Sharjah

There are several kinds of business entities for a Sharjah business setup, and you need to choose which one is best for you based on your business plan. A list of the business entities is provided below for your understanding:

LLC: A limited liability company in Sharjah is a combination of a company and a partnership. It is a separate legal entity having a maximum of 50 shareholders. It is different from a partnership as it limits the liability of the owner or member of the LLC and safeguards their personal assets from the liabilities of the company.

Partnership: If there are 2 or more individuals willing to start a business in Sharjah, they could opt for a partnership form of business. Unlike an LLC in Sharjah, it has unlimited liability, i.e., the liability of the business is not limited to the assets of the company. It is also different from sole proprietorship as there are 2 or more individuals who jointly operate the business and share the profits and losses of the business.

Sole proprietorship: It is a solo business having only a single owner who doesn’t share any profits and losses with anyone. This kind of business also provides unlimited liability to the owner of the business. The liability of the owner extends to his or her personal assets like a home or car in case of repayment of debts of the business. Apart from this, the owner of the sole proprietorship in Sharjah can retain 100% of the profits to himself or herself.

Private Shareholding Company: This kind of company is owned by two or more private individuals. A private shareholding company also has shareholders and can raise capital but their shares don’t trade on public stock exchange. 

Joint Stock Company: It is a type of company that is owned by its shareholders and shareholders can buy or sell the shares. The only way to become a part of the ownership network of this company is through the buying of its shares.

Branch Office: You can also start a business in Sharjah in the form of a branch office, and expand the business operations of the parent company. It is only an extension of a parent company operating under a similar name and presuming the same functions. 

Benefits of Sharjah Business Setup

If you start a business in Sharjah, you have easy access to a skilled global workforce. Having a skilled workforce aid in building a successful global business.

One of the attractive benefits of the Sharjah business setup that motivates all foreign entrepreneurs to start a business in Sharjah is 100% foreign ownership. When you start a business in Sharjah, you are provided with an option to claim 100% repatriation on profits.

Another benefit of the Sharjah business setup is its prime geographic location between the northern Emirates and Dubai, which gives easy access to African and Indian markets.

If you start a business in Sharjah, there are no restrictions on the currency, unlike in other emirates. A currency restriction hampers the investor’s business, and therefore, having no currency restriction is a big reason to start a business in Sharjah.

Sharjah has a business-friendly environment and the government has launched various incentives to encourage foreign investors and entrepreneurs to setup a business in their territory. The government of Sharjah has always encouraged foreign direct investment which is evident from its policies, advanced legal framework and established free zones.

The registration process for Sharjah’s business setup is very quick and simple compared to other emirates in the UAE.

If you setup a company in Sharjah, there is no compulsion on your company to conduct the audit every single year. Instead of conducting an audit each year, you can now put your resources into some other important work of the company. The choice of every year audit is left to the company’s management and there is no compulsion from the government authorities.

One more benefit of the Sharjah Business setup is that it puts no restrictions on the type of business activities that you want to conduct through your business. You can start a business in Sharjah and engage in any business activity of your choice as there are no limitations, unlike some other emirates where certain types of business activities are restricted.

In order to encourage foreign investors and entrepreneurs to start a business in Sharjah, no minimum capital is required for the Sharjah Business Setup. It is a very economical way to commence your business with minimum financial resources. It helps small and medium sized business owners to start a business in Sharjah with fewer resources.

As the business grows you can build your team and hire skilled and talented individual from around the globe as there will be no issues regarding their visas.

One of the unique and different benefits of the Sharjah Business setup is that entrepreneurs and investors are provided with free warehouse facilities for a period of 2 months to store their goods.

Locations for Sharjah Business Setup

There are two options for an entrepreneur willing to start a business in Sharjah, i.e., free zone and mainland. We will discuss the Sharjah business setup in both locations for your better understanding:

Start a business in Sharjah Free Zones

Free zones are the special economic zones established by the UAE government to encourage foreign direct investment in the country. There are a total of 6 free zones in Sharjah, providing various benefits to foreign investors and entrepreneurs. If you start a business in Sharjah-free zones, then you are provided with 100% foreign ownership, 100% repatriation on profits and 100% exemptions on the payment of customs duties, VAT, corporate income tax, etc.

Start a business in Sharjah Mainland.

On the other hand, if you start a business in Sharjah mainland you can expand your business operation in other UAE markets without any restrictions, unlike the free zones. Setting up a business in Sharjah mainland provides 100% foreign ownership in more than 1000 commercial activities but some of the central sectors like oil, gas, banking, military, insurance, etc are restricted from the 100% foreign ownership rule.

The Process to Start a Business in Sharjah

In order to start a business in Sharjah, you need to follow the below-mentioned steps:

Select your Business Activity

The first step is to select a type of business activity for your Sharjah Business setup. There are no restrictions on selecting any business activity to start a business in Sharjah.

Finalise your Legal Structure

The second step involves the selection of the legal structure of your Sharjah Business Setup. There are many types of business structures, such as LLC, sole proprietorship, partnership, branch office, private shareholding company or joint stock company. You can choose the structure for your business as per your business plan and requirements, i.e., if you want to operate a solo business without sharing the profits with anyone, then you should start a sole proprietorship in Dubai, but if you want to share the losses and profits of a business with a partner, then you can opt for a partnership form of business. You can start a branch office of your parent company if you don’t want to establish a separate new business entity and just want to expand your business operations in Sharjah under the name of your parent company. Moreover, you can start a limited liability company in Sharjah, which is the preferred form of business structure for foreign entrepreneurs and investors. It will limit your liability and protect your personal assets from the liability of the company.

Select a location for your Sharjah Business Setup.

The next step after choosing the legal structure is to select a location for your Sharjah business setup. You can start a business in Sharjah-free zones or on the mainland as per your business’s requirements. Where you want to set up your business will depend on your business goals and strategies. If you start a business in the Sharjah-free zone, then you can enjoy 100% ownership of your business, 100% repatriation on profits, as well as 100% exemptions on payment of corporate income tax, customs duty, VAT, etc. However, if you set up your business on the mainland, you can expand your business operations in other UAE markets without any restrictions. You are allowed to own 100% of your business in the mainland in more than 1000 commercial activities, but some central sectors are barred from this rule, such as banking, insurance, oil, gas, military, etc.

Selecting and Reserving the Trade Name

Following the selection of the legal structure, you need to register the name of your business with the DED. You should submit 3 options for the name to the Department of Economic Development, and they will approve the name based on local laws and guidelines. The name you selected should not be similar to any already registered business and should not have any religious name.

Drafting a MOA and LSA Agreement

This step involves drafting a Memorandum of Association depending on the legal structure of the business. It contains vital information such as the structure of the company, the liability of the shareholders, etc. If you want to establish a branch office for your existing company, then you should provide the MOA of the parent company. Based on your business activity and structure, a local service agent might be required to start a business in Sharjah. To hire an LSA, a local service agent agreement needs to be signed.

Apply for the Business License with SEDD

The next step in the process of Sharjah Business setup is applying for a business license with the Sharjah Economic Development Department, but if you start a business in Sharjah free zones, then you need to apply for the business license with the respective free zone authorities. You need to apply for the license based on your business activity, i.e., if your business is engaging in industrial or manufacturing activities, then you should apply for an industrial license, and if your business is providing professional services like legal services, account management services, management consultancy, IT consultancy etc., then you need to apply for a professional license. You can also engage in trading activities like buying and selling goods or importing and exporting goods; for that, you will have to apply for a commercial license with the SEDD. To apply for the license, you need to pay the specified fees and submit the required documents to the Sharjah Economic Development Department’s office or online at their website.

Open a Corporate Bank Account

Now, you need to conduct financial transactions for the business, so you should find a suitable local bank in Sharjah and open your corporate bank account.

Look for an Office Space

As you have selected a location for your Sharjah business setup, you should look to rent or buy an office space in the selected location. The Sharjah mainland and free zones offer advanced office solutions with world-class infrastructure.

Apply for Visa for Your Employees

Now, the last step involves the application of visas for your business employees. The application for the visas should be made in adherence to the local labour laws and regulations.

Conclusion

Sharjah is one of the most popular emirates of the UAE among business owners and entrepreneurs around the globe. It provides easy access to Indian and African markets owing to its excellent geographical location between the northern Emirates and Dubai. Apart from its business-friendly environment, it also offers a quick business setup compared to other emirates of the UAE. It is a heaven for small and medium businesses as there is no minimum capital required for a Sharjah business setup, and you can start a business in Sharjah with minimum financial resources. Another unique advantage of the Sharjah business setup is that the entrepreneurs and investors are provided with free warehouse facilities for a period of 2 months to store their goods. This blog has summarised the complex process of starting a business in Sharjah in 9 easy steps, including selecting a business activity, finalising the legal structure for your business, selecting the location to start a business in Sharjah, i.e., free zone or mainland, reserving a trade name, drafting a MOA and LSA agreement, applying for a business license with the Sharjah Economic Development Department, Opening a corporate bank account, looking for a office space and visa application for employees. You can follow these steps to start a business in Sharjah and commence your journey to a successful global business.

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