What is a Business Activity?
A business activity refers to any operation undertaken by a freelancer or an organization to either generate profit or to achieve a goal. Every freelance professional or a licensed company / non-profit organization has a business activity which defines their scope of work.
In the UAE, business activities are published by different licensing authorities like Dubai’s Department of Economic Development, Ras Al Khaimah Free Zone, Meydan Free Zone etc. The majority of the activities would be similar to each other with slight differences in the name.
The business activity classification is compiled globally under International Standard Industrial Classification of All Economic Activities (ISIC) and all the licensing authorities do benchmark their business activities with ISIC.
There are five different types of business activities that can be conducted:
- Industrial: This involves the production or manufacturing of goods within factories or industrial plants. For example: manufacturing of vehicles, computers, furniture, spare parts etc.
- Distribution: This involves the trading of goods from the manufacturers to retailers. The trading can be locally, regionally or globally. For example: Exporters of Rice, Distributors of cellphone/computers, Chemical Trading companies etc.
- Retail: This involves the buying and selling of goods and services in markets. It includes activities such as Superstores, Pharmacies, Clothing shops, Electronic Stores etc.
- Services: This involves the allocation of resources to achieve a particular goal. The services that are provided by the companies may be general for any industry or they may be niche oriented services. The idea is to provide intangible product with the aim to service the customer and then generate a profit for the company. These types of activities are conducted by Consultancy companies like BCG, Bain & Co, McKinsey or even financial services companies like banks for example: Abu Dhabi Islamic Bank, Dubai Islamic Bank, Sharjah Islamic Bank etc. Any other type of companies involved in an intangible product like insurance, R&D, media. E-Commerce, Education, non-profit etc.
It is really important to have defined business activities for the companies as they keep the Directors of the company focused towards the vision of the company and it also helps with the government to conduct compliance check with the companies as well in the area of Anti Money Laundering / Combatting Terrorism Financing (AML/CFT), Ultimate Beneficial Ownership (UBO), Know Your Customer (KYC), Economic Substance Regulation (ESR) etc.