In company formation in Brazil, it is key to plan so we’ve put together an indispensable step-by-step guide for each type of company.
One of the first steps when registering a company is to research the corporate name and trade name. The goal is to know if they are available.
Establishing the company’s physical headquarters and proving the viability of the location is also part of the process for companies with physical headquarters.
The creation of the Articles of Incorporation or equivalent is also part of the bureaucratic process of setting up companies in Brazil.
After the basic steps are taken, the entrepreneur needs to apply for the local tax ID (CNPJ), at the Federal Revenue Service.
Afterwards, you can then proceed with the other key processes. Among them, the application for the business license – a permit issued by the city hall where the company will be located.
Due to the complexity, the opening process will be better executed if, at least, it is accompanied by a professional in the area. Generally, an accountant or a counselor specializing in company formation in Brazil and foreigners opening companies in Brazil are the most suitable for the service.
5 factors in company formation in Brazil
1– Get to know the business registration bodies and the Brazilian Support Service for Micro and Small Enterprises – SEBRAE
In Brazil, Sebrae is the Brazilian Support Service for Micro and Small Enterprises. It acts as a private, non-profit social service entity that aims to train and promote the economic development and competitiveness of micro and small companies.
Sebrae is a great stimulator of entrepreneurship in the country. Depending on the entity, there are several types of companies in Brazil. Each company is made up of its own characteristics such as the number of partners, type of operation, and billing, among others.
See other important organizations:
- City Hall (CCM or IM) – Property Taxpayer Registration or Municipal Registration
- INSS – National Institute of Social Security
- JUNTA COMERCIAL – Nire (registration identification number and companies) or Registry of Legal Entities
- Federal Revenue – CNPJ: National Registry of Legal Entities
- Treasury Department – IE: State Registration
2– Choose the type of company
According to Sebrae, the types of companies that can be opened and consolidated, according to the company formation in Brazil are:
- Individual Entrepreneur
- Simple National
- Individual Limited Liability Company – Eireli
- Business Company
- Simple Society
3– For those who are going to undertake individually
In this type, the entrepreneur carries out a certain business activity on their behalf. Liability is unlimited and individual. In this case, the entrepreneur responds with their personal assets for the obligations assumed with business activity.
One can exercise activity in the industrial, commercial, or service sector in general, except the intellectual profession.
Individual Limited Liability Company – Eireli
In this type of company formation in Brazil, the entrepreneur also acts individually, that is, without a partnership.
Unlike the model (Individual Entrepreneur), at Eireli, the responsibility of the entrepreneur is limited to the value of the investment, in cash or goods, which is called the company’s share capital.
It is the type of company that establishes fixed monthly amounts for the MEI (Individual Micro Entrepreneur), as long as they are not a partner, owner, or administrator in another business institution.
To open a company in Simples Nacional, the entrepreneur must still have at most one employee and who does not have a branch of that company, among other requirements.
In the company formation in Brazil, it is important to emphasize that the foreign entrepreneur is limited to opting for the Simples Nacional Tax Regime since in this context it, the tax regime opted for is the presumed profit.
4– For those going into partnerships with other people
The performance of one or more partners is part of this type of company. The liability of companies belonging to a business partnership is limited to the share capital.
After choosing the type of company present in the company formation in Brazil, the type of existing company is chosen, namely S/A; Limited Company – Ltd, etc.
The type of Limited Partnership (Ltda.) is the most common kind of business among those adopted by entrepreneurs. This is because its operation is simpler and, mainly, for the protection of the personal assets of each partner.
This type of company acts collectively and can also be from two partners. The liability of the partners is unlimited; however, it is possible to adhere to the corporate type of Sociedade Limitada – Sociedade Simples Ltda., thus the liability of members will become limited to the working capital.
5– Have a trusted consulting firm specialized in setting up companies in Brazil
A complete consultancy is the best way for foreigners to know everything about company formation in Brazil.
Brasco Enterprises is an expert in consulting for foreigners who want to open a company in Brazil!
We are located in the USA and managed by Brazilians, aiming to help foreign investors to invest in businesses in Brazil in an assertive and highly profitable way.
Brasco offers advice on starting a business, feasibility analysis, compliance, mergers, and acquisitions, among other services in the business world and company formation in Brazil.
Consult us to learn more.