The UAE is one of the largest business hubs on Earth, with a booming market and tons of opportunities for investors and entrepreneurs. But for business setup in Free Zones, you are required to own and maintain a banking account to make transactions and conduct business. Opening a Free Zone bank account can be a bit of a process, but MSZ Consultancy is here to help with the expertise you need to succeed.
Having a bank account in the UAE is crucial for running a business. It allows you to carefully manage your company’s finances while taking advantage of some of the best tax rates in the world. As a result of these secure banking systems and zero responsibilities, many investors from all around the world choose the UAE as a prime location to set up their new businesses.
Why Does Your Free Zone Company Need a Bank Account?
No matter what field you’ve chosen, or where you’ve decided to set up shop, you’ll need to secure a bank account for your business. And here’s precisely why:
1. Tracking of Expenses
Having a separate account for personal and company banking is crucial as it will help you keep your expenses clear and track your purchases. While possible, it's not advisable to use a personal account to conduct business.
2. Card Payments
Credit card and debit card payments are the preferred payment methods these days. And as your business grows, you'll need to ensure your company can accept this form of payment. Accepting credit or debit payments is only possible with a business account, however. This is one of the primary reasons for securing a business account for your company.
3. Building Company Credibility
Having a Free Zone bank account is essential for showing a level of legitimacy and professionalism for your company. Additionally, if a customer needs to pay by check, you'll be able to easily process the payment with a business bank account.
4. Identity Protection
Once up and running, your business will certainly process many transactions each day. And each one of these transactions carries a risk of having to contend with fraudulent activities. But having a business account can help you protect your identity and minimize liabilities while conducting business.
5. Partnerships
Suppose you've assigned another party or individual to care for your business transactions. In that case, it's a good idea to maintain a separate bank account to protect your privacy and track business transactions.
Benefits of Having a Free Zone Bank Account
There are many reasons that forming a bank account is a great choice for your business. A business account gives you the ability to:
- Maintain confidentiality and protect personal information.
- Use all forms of currency, as well as joint account options.
- Guaranteed reliable transfer of capital, locally and internationally.
- Have access to international banks and services with ATM services.
- Enjoy zero taxation.
- Own a credit card with unrestricted purchase options.
- Have access to personal, business, and other types of loans.
Free Zone Company Bank Account Requirements
Before you can open a bank account in one of UAE’s many Free Zones, there are several requirements:
- A company must appoint a POA or provide a UAE visa for the owner.
- A bank statement for the past six months for the parent company or the applicant's personal account.
- 3-5 invoices to correspond with the transactions on your bank statement.
- Reference letter from your bank where the applicant does business. This is optional and generally up to the discretion of the concerned banking institution.
- Authorized documents used for the business formation in the UAE.
- ID’s for the owner.
Free Zone Bank Account Features
There are tons of features and benefits to opening a business bank account in a Free Zone.
- Free Zone companies can receive money from anywhere and spend it locally.
- Free Zone company bank accounts can accept money locally.
- Free Zone businesses are issued debit and credit cards.
- Free Zone companies are exempt from VAT charges incurred during port-to-port businesses. However, if the goods are sold within the UAE, the company must register for VAT.
Documents Required for Opening a Free Zone Bank Account
When opening a Free Zone bank account, it’s important that you perform the necessary research to ensure a smooth process. Below, we’ve listed a few of the important documents you’ll need to open a bank account in one of the many Free Zones:
1. Bank Statements
The government authorities need to have a rudimentary knowledge of the shareholder's income. Therefore, you'll need to provide a bank statement from your private account that displays your salary, bonuses, and any other sources of income. If your bank statement does not demonstrate that you hold adequate funds for sustaining your business, or if you fail to provide additional bank account info, the bank could reject your account request. Even with adequate funds, failing to provide a comprehensive list can result in outright rejection by the banking institution.
2. Resume of Account Holders
This resume will emphasize your professional experience and educational awards. Additionally, you’ll need to provide a company profile.
3. Corporate Documents
These documents will describe the main objectives of the company, as well as plans for growth and developing specialized expertise around your business activities.
4. Proof of Physical Existence
You’ll also need to provide proof of a physical presence. Generally, this can be achieved by providing utility bills that show your active address.
MSZ Consultancy is a team of professionals and business experts that can help you find the most suitable bank account for your business needs. We have the expertise to guide you through the process step by step to ensure minimal hassle and the quickest turnaround times. Get in touch with our expert consultants today for a free consultation. Give us a call today at +971 52 544 1248 to supercharge your business possibilities!
Frequently Asked Questions
Business formation in the UAE and banking account setup can be a daunting process! And you’ve surely gathered a few questions along the way. To help you make sense of it all, we’ve put together some of our most frequently asked questions!
1. Is it possible to open a Free Zone bank account remotely?
No. It's impossible to open any business bank account remotely in the UAE. A fundamental requirement of their central bank is that account holders must be physically present when opening a Free Zone account.
2. What is a Free Zone in the UAE?
Free Zones are economic areas for businesses to sell goods and services while taking advantage of considerable tax and customs discounts.
3. How many Free Zones are in the UAE?
There are currently 45 Free Zones in the UAE, but this number constantly evolves as the region develops.
4. Can we secure loans, debit cards, or credit cards with any UAE banks?
It's possible to have debit cards accompany most accounts in UAE banks. But you'll need to deposit money into your bank before you can qualify for a credit card. For business loans, you'll need to have a company at least a year old with records that display a productive business plan.
