Many professionals think about starting a business at some point, but quitting a stable job to take the leap isn’t always practical. A side business can be a way to test an idea, build an income stream, or plan for long-term independence without giving up financial security.
In Dubai, this is possible, but there are rules to follow. Employees can start a business while working full-time, but certain legal requirements, such as obtaining a No Objection Certificate (NOC) from an employer, may apply. Some business setups allow employees to skip this step, depending on where and how the company is registered.
This article breaks down what employees need to know before setting up a business. It covers the key legal considerations, the process of getting a license, the benefits of running a business while employed, and what to do if an employer refuses to grant approval. Whether it’s a side project or the first step towards full-time entrepreneurship, understanding the process makes all the difference.
Can you legally start a business while employed?
Starting a business while keeping a full-time job in Dubai is possible, but there are rules that determine how and where you can do it. The most important factor is whether you need your employer’s approval, which depends on the type of business you’re setting up and where you register it.
Some free zones allow employees to start businesses without an NOC (No Objection Certificate) from their employer. These zones recognise that many professionals want to explore side ventures without quitting their jobs. Mainland businesses, on the other hand, typically require an NOC because UAE labour law prioritises employer rights. If your contract includes restrictions, you may not be able to start a business without permission.
Employment contracts often include non-compete clauses that limit employees from working in the same industry after leaving a job. Article 10 of UAE labour law states that if an employee has access to trade secrets or clients, an employer can enforce a non-compete clause for up to two years. Violating this could result in legal action or visa cancellation.
Before starting a business, check your contract. If an NOC is required and your employer refuses to provide it, you’ll need to explore alternative options, such as setting up in a free zone that waives the requirement or structuring the business under a spouse’s visa. The next step is understanding the setup process and the best way to register a business while staying compliant with UAE regulations.
Steps to start a business while employed in Dubai
Starting a business while working full-time in Dubai comes down to choosing the right setup and meeting the necessary requirements.
Choose the right business activity & jurisdiction
First, you need to decide where to register the business. Free zones offer tax benefits and other perks like a simplified setup process, no requirement for an NOC in many cases, and fewer restrictions on office space and visa quotas. They’re ideal if your business doesn’t need a local market presence and you plan to trade internationally or provide services remotely.
Mainland setups, on the other hand, allow you to trade directly in the UAE but usually require an NOC and a local sponsor for certain activities.
Obtain necessary approvals
Once you’ve chosen the setup, the next step is getting a trade license. Free zones and the Department of Economic Development (DED) handle licensing, depending on whether the business is registered in a free zone or on the mainland. You’ll need to submit a passport copy, visa copy, Emirates ID (if you’re a resident), business activity details, and any additional documents required by the authority.
Register the business & get a trade license
Once your application is processed, you’ll receive the business license. Free zones often provide a fast-tracked process, with many issuing licenses within days. Mainland businesses might take longer, depending on the approvals required.
Open a corporate bank account & ensure VAT compliance
Keeping personal and business finances separate is essential. A corporate bank account helps manage transactions and build credibility. If the business earns more than AED 375,000 annually, VAT registration with the Federal Tax Authority (FTA) is mandatory.
With the license and bank account in place, the business is officially operational, and you can focus on growth while managing your full-time job.
Starting a business while employed comes with clear advantages. It allows you to test your idea, build an extra income stream, and set yourself up for the future—without the financial pressure of quitting your job.
Benefits of starting a business while employed
Financial security
Keeping your job while launching a business removes immediate financial risk. There’s no pressure to replace your salary overnight, and you can reinvest earnings into growth instead of using them to cover personal expenses.
Flexibility to grow at your own pace
Not every business takes off right away. Having a steady income gives you room to experiment, refine your approach, and scale when the time is right. If things don’t go as planned, you still have a paycheck coming in.
Access to UAE’s business setup advantages
Dubai’s free zones make it easy to start small. Many offer low-cost licenses, full ownership, and no tax on personal income. You can set up a side business without worrying about high overheads or complicated regulations.
Building a secondary income stream
An extra source of income provides financial stability and long-term independence. Whether it’s a way to supplement your salary or a step towards full-time entrepreneurship, starting while employed lets you grow your business on your terms.
By taking a measured approach, you reduce risk and increase your chances of success. Once the business is stable, you’ll have the option to transition fully—on your own schedule.
What if your employer doesn’t approve your NOC?
Not getting an NOC from your employer doesn’t mean your business plans have to stop. There are other ways to set up legally in Dubai.
Choose a free zone that doesn’t require an NOC
Some free zones let you start a business without employer approval. Options like SHAMS, Ajman Free Zone, UAQ Free Zone, and Creative City Fujairah don’t ask for an NOC, making them a good choice if your company won’t grant one.
Use a spouse’s or family visa
If you’re on a family-sponsored visa, you don’t need employer permission to set up a business. You can apply for a trade license and operate as an independent business owner without the added step of getting an NOC.
Apply for a DED instant license
For businesses that qualify, Dubai’s Department of Economy and Tourism (formerly DED) offers an Instant License. This speeds up the setup process and lets you start trading immediately, though you’ll need to meet certain requirements based on your chosen activity.
Consider a freelance permit
If a full company setup isn’t necessary, a freelance permit might work. Many free zones offer freelance licenses for professionals in media, tech, and consulting. This allows you to operate legally as a sole practitioner without dealing with the complexities of setting up a full business.
Each option depends on your situation, but there are always alternatives. The key is choosing a path that aligns with your long-term business goals while staying compliant with UAE regulations.
About Worldwide Formations
Starting a business in the UAE while employed comes with a mix of challenges and opportunities. Having the right guidance can make the process far easier.
Worldwide Formations has helped thousands of entrepreneurs and professionals set up their businesses in free zones, on the mainland, and offshore. Their team handles the full process, from securing the right trade license to assisting with visas, corporate bank accounts, and compliance.
If you’re looking for a way to launch your business while keeping your job, they can walk you through the best options. Whether you need an NOC-free setup, a freelance permit, or a fast-track solution, their experts can find the right fit.
Get in touch with Worldwide Formations for a free consultation. We’ll help you start your business in the UAE the right way.
