Freelancing in the UAE has become a serious option for many professionals in recent years; however, behind the freedom of choosing projects and working hours lies a set of costs that were typically covered by the company during employment.

Meghna Dixit, who has worked as a freelancer and digital strategist in Dubai for four years, says the biggest misconception about freelancing is confusing “self-employment” with “being free.” According to her, many people only realize after starting work that financial independence comes with its own costs.

For those who already have a valid residency visa, the cost of starting legal activities can start from a few thousand dirhams. However, if an individual needs a business license and residency visa, the total setup cost in the first year can exceed 40,000 dirhams.

For example, the GoFreelance license, belonging to the Dubai Development Authority, has a base cost of 7,500 dirhams, and the total cost for the first year, including the residency visa, usually amounts to around 15,000 to 18,000 dirhams. Other options also have significant price differences; for instance, a business license in Sharjah Media City starts at 5,760 dirhams, while the Flexi Desk package in DMCC for startups and entrepreneurs costs 43,780 dirhams.

However, the license and visa are just the beginning of the story.

When transitioning from employment to freelancing, costs such as health insurance, marketing and branding, training, software subscriptions, equipment, workspace, and accounting also fall on your shoulders. Professional liability insurance, electronic invoicing systems, and even costs related to using a vehicle for work can be added to this list.

Health insurance is one of the costs that many forget in their initial calculations. This cost can start from around 1,000 dirhams per year and can exceed 20,000 dirhams for some plans. Mid-range plans typically cost individuals around 3,000 to 7,000 dirhams per year.

On the other hand, freelancing can also make access to credit and loans more difficult. Since there is no fixed monthly income, banks assess self-employed individuals as higher risk. For obtaining a mortgage, it may also be necessary to provide three years of audited financial statements.

Experts recommend that those considering leaving their job to start freelancing should save at least six months of essential living expenses before resigning and budget based on their lowest income months, not their best months.
Source: National News