Alliance-dubai.net - UAE company costs - risks of cheap companies in UAE

UAE company costs - risks of cheap companies in UAE

UAE company costs - risks of cheap companies in UAE

Or why low cost companies can come at high cost?

If you are considering a possibility of registering a company in the UAE, you probably collect and analyse various information on the Internet, and make requests to different companies in order to get understanding of all the specifics and, of course, the company costs.

In this overview, we will analyse various situations we hear very often. We know not only the general information about such cases, but we are aware on these real situations from the first hand from those falling for such tempting offers. After getting in trouble, they often come to us and ask to put all the company’s affairs in order and to take care of its further administration.

When you compare the costs of similar companies of the same type, the prices can differ up to two or even three times. Naturally, you decide not to pay more when you can buy a cheaper company.

Let us look at the structure of the total costs of registering a company in the UAE. It consists of:

1. Direct costs of UAE company registration.

These are the amount of money that must be paid in the form of fees and charges to the government, registry, immigration department, etc. Such payments for the UAE companies depend on the type of a company and the place of its registration. Such costs can vary greatly depending on the type of the legal entity and its configuration. That is why you should first of all choose the necessary type of a company and compare the total costs on this type.

The most common situations, which are faced by clients, concerning this matter are:

When sending offers some consulting companies "forget" to add some of these costs, and inform their clients on such after client has paid the first invoice.

Another type of problems includes situations when the cheapest type of UAE company is offered to a client. In these situations, unfair consulting companies assure clients that this company type meets all their needs. When a company is registered, clients realize that the company cannot be used as planned.

2. Direct costs of services

on company registration. Any consulting company has its office, infrastructure and staff. It requires some certain spending. In order to be able to provide qualitative services, the company need competent personnel and additional supporting staff including a secretaries, drivers, etc.

If the total company margin on the amount of the state payments is minimal, the company cannot provide the required level of servicing. It results possible errors, delays, missed deadlines and, frequently, not fulfilling obligations.

3. Company margin on top of the UAE company factual costs.

In fact, it is the company’s profit. Three types of UAE companies can be singled out:

  • The discount companies that offer services at low margins. Such companies appear on the market as often, as disappear.
  • Companies that offer quality services at reasonable pricing. Such companies have not less than 10 employees and provide services to a larger number of clients.
  • Companies that set unreasonably high prices. Such companies serve a few clients who think that high price tag means quality. However, in practice, that is not true, as such companies have little experience (that is not surprising taking into account the fact that they register companies very rarely).

And at the end – a couple of more cases that you can face in UAE if you work with dishonest consultants.

Incomplete package of services and documents – consultants just dissemble a fact that the costs does not include all the necessary services. For example, they do not provide assistance when undergoing medical check and submitting the required documents for the UAE ID card in the case of opening a residence visa. Or they assist only at the initial stage of submitting documents to the bank and then the client is left alone without understanding of what to do next to complete the process of opening an account and activating Internet banking.

Once your company in UAE is registered, its further successful operations require continuous administration including amendments and changes to the company documents, day-to-day business matters, settling operational issues with the bank, filing accounting, legal aspects, applying for visas for owners and employees, and annual renewals.

High-quality and timely provision of all these services can be carried out only by a qualified and experienced company that possesses all the necessary resources including experience, qualified management and competent personnel.

Besides, we often deal with situations when the clients, who come to us from other consulting companies, have company documents in poor condition. The most common problems are the absence of various documents, unnecessary POAs issued without purpose (with all the potential risks), etc.

Let us summarize. If your choice of the consulting company for registering a legal entity in UAE is based solely on the cost matter, you take a very high risk to get in trouble for the abovementioned reasons. Besides, all the errors linked with registering a company can be fraught not only with the loss of money. The worse thing is the inability to use a company, what can result in possible direct losses in business, your time and nerves. That is why, when choosing a consultant, you should take into account not only the matter of costs, but the available experience of the company, as well as your general impressions – whether the employees give answers to all the questions at the earliest stages of communication, provide detail information on the total cost of services, etc.

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