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Main categories of company for opening in BrazilPosted 30/09/2022
One of the best ways of making investment in Brazil is opening a company. However, before setting up a business in the country, it is important for investors to know that the opening of a business is not just about having a CNPJ.
For legal and accounting reasons, there are several types of companies and sizes of companies, in addition to legal natures that may vary according to the type of business and the revenue forecast.
In short, Brazil currently has the following business modalities: individual micro entrepreneur, micro enterprise, individual companies or partnerships. In terms of classification, organizations can opt for Simples Nacional, Lucro Real (Profit Real) or Lucro Presumido (Presumed Profit), according to the annual invoicing value.
But in this article by Europartner, an accounting firm in Brazil, we will clarify more details on this subject, Follow along!
Investment in Brazil: what is the best type of enterprise to open?
Setting up a company as a form of investment in Brazil is an interesting and strategic option. The country has a growing economy nowadays, with emphasis on agribusiness and industry.
In addition, consumption of innovative products also increases in the South American country, which attracts the attention of major national and foreign brands. Because of this, opening a business in the region is a good deal, but it is a step that requires a lot of care.
And it all starts with the choice of tax regime. In this respect, there is no best or worst tax regime. After all, it all depends on the characteristics of the company you intend to start in Brazil and the types of companies that best suit you – always thinking about the organization’s revenue level.
Types of companies to open for investment in Brazil
Let’s get to know the most common corporate types in Brazil:
The MEI – individual micro entrepreneur – is the company model suitable for professionals who work alone, but wish to formalize their business through a CNPJ (National Registry of Legal Entities).
With the formalization of the company, the professional has the possibility to issue an invoice for the sale of products or services. The opening of this type of company is relatively easy, fast and without bureaucracies.
But there are some conditions for the MEI to act. For example, the MEI member cannot be a partner in another business. In addition, the annual gross income must not exceed R$ 81,000.
It should be noted that this simplified business model allows the micro-entrepreneur to use some types of CNAE and, through the payment of the monthly DARF, can collect taxes such as INSS, ICMS and ISS.
EI – Individual Entrepreneur
The Individual Company (EI) is the model intended for companies whose corporate structure is made up of only one person. In fact, in this type of company, the partner is not exactly a partner, but the sole owner.
Precisely for this reason, it is not possible to separate the personal assets of the owner and the assets of the Sole Proprietorship. That is, in case of corporate debts, the owner’s assets can be taken to settle the debts.
Sole Proprietorship Limited (SLU)
It is similar to the Sole Proprietorship, since the owner can dispense with having a partner, but with a special advantage: the entrepreneur’s assets are separate from the company’s assets.
Therefore, in a business debt condition, the owner’s assets are not compromised. Another certainly positive point is that there is no minimum value requirement to compose the Share Capital.
The Limited Company (LTDA) is the type of company that most entrepreneurs who have partners use.
The company is constituted by means of a Articles of Association and is limited to the company’s share capital. For this reason, there is no commitment of personal assets in case business debts arise.
A simple proprietorship is the type of company recommended for self-employed professionals, such as
- Insurance brokers
Within the Simple Proprietorship, there are still two modalities:
- Private Unlimited Company: does not separate the personal assets of the partners from the company’s assets;
- Limited Liability Partnership: distinguishes the assets, not allowing the personal assets of the partners to be taken.
The Limited Company (L.C.) is a corporate model in which the partners divide the capital in shares, instead of dividing in quotas.
In addition, L.C.s are classified into two modalities, namely:
- Open capital: sells its shares on the Stock Exchange;
- Closed capital: there is no sale of shares to the general public. The sale is intended for other partners already involved or “guests”.
Company sizes for investment in Brazil
The size of a company is defined according to the annual gross income. In the case of ME (Microenterprise) it must present annual gross income of up to R$360 thousand. In addition, industries can hire up to 19 employees; trade and service companies are allowed to hire up to 9 employees.
In the case of EPPs (Small Companies), annual gross sales can range from R$360 thousand to R$4.8 million.
As you can see, there are many options for types of companies, and this creates confusion among investors who intend to open a business in Brazil.
However, the Europartner team is available to answer your questions and offer all the necessary guidance for setting yours investment in Brazil in an organized, planned and risk-free manner.Author's post: Europartner Accounting