Freelancer Permit vs Trade License
Difference between Freelancer Permit and Trade License in the UAE
The thriving economy of the UAE is ideal for several individuals looking to start their career. Whether you are planning to work independently or set up your business, the first step is to get a license. The UAE offers two kinds of permits, a freelancer permit, and a trade license.
Based on your goals and business structure, you will need to apply for one of these. A business setup consultant in Dubai can help ease this process by helping you with the paperwork and other legal compliances.
Here, we help you determine which permit is best suited to your start-up.
Freelancer Permit
A freelancer permit is issued to individuals who are looking to work independently. Here, an individual is the sole person responsible for the job. They interact directly with clients and do not have any team or additional office members.
Typically, a freelancer permit is given to individuals starting their career in media, writing, education, consulting, and more. This permit is a wonderful way for individuals to get recognised and build a network. Should they desire, they can even upgrade to a trade license later.
It is important to note that freelancers are only allowed to work for other companies, which means they can work for multiple companies and receive their remuneration. However, they cannot take individual contracts and are restricted from opening a corporate bank account.
Some of the free zones that provide freelancer permits include Fujairah Creative City, Dubai Knowledge Village, Twofour54 [Abu Dhabi], Dubai International Academic City, Dubai Production City, and more. for more details on how to apply for your permit, reach out to one of the top consulting firms in Dubai.
When to opt for a freelancer permit?
A freelancer permit is best for an individual looking to start their business by themselves. This permit allows you to set flexible working hours and directly interact with clients allowing you to create a brand name. Additionally, it is more economical than a trade license. As one does not require a physical office space or the cost of setting up a business, these permits are faster to process and less expensive.
Trade License
A trade license is given to a person for conducting business in the UAE. This license requires a physical office, legal documents to establish a business entity, and a local sponsor. A trade license is required for business activities such as imports, exports, manufacturing plants, real estate, and more.
Professional service companies can also opt for a trade license. These may include marketing and design, consultancy firms, law firms, and medical establishments. A trade license requires a lot more paperwork than a freelancer permit. To ensure you have all the right documents and are legally compliant, be sure to connect with a top business setup consultant in Dubai.
When to opt for a trade license?
A trade license is ideal for people who need to hire employees or require another team member. As a business is established as a separate legal entity, it also gives the individual better liability protection by separating personal and business assets. Finally, this license allows the scope for expansion and growth as well as builds credibility among clients.
Freelancer Permit vs Trade License
It is important to note that freelancers are only allowed to work for other companies, which means they can work for multiple companies and receive their remuneration. However, they cannot take individual contracts and are restricted from opening a corporate bank account.
On the other hand, a trade or commercial license grants the entity legal status allowing them to open a corporate bank account, undertake contracts, hire employees, and engage in trade transactions.
In terms of costing, freelancer permits are generally more cost effective, however in certain jurisdiction, the gap between the freelance permits and trade license may be narrowed.
For an individual looking to start their career with limited finances, a freelancer permit works best. However, any commercial operation would require a trade license to be able to legally work in the UAE.
As you reflect on your business needs, do you have any questions? Reach out to us for a free consulting session to explore the best options for your professional journey.
