Types of companies that can be opened in Brazil: Discover the 6 categories

Know the types of companies that can be opened in Brazil is one of the first steps in the entrepreneur's journey.

This is because, by choosing the right category, you avoid unnecessary taxes and problems related to the release of activities.

In today's content, we'll learn about the 6 business categories provided for by Brazilian law. So, if you want to know which one fits your business plan, keep reading!

Why learn about the types of companies that can be opened in Brazil?

If you're in the process of starting a business, you've probably been surprised by the number of options available.

There are 6 categories in total, and deciding which type is right for a given business model is not a simple task, especially for those who are new to the field.

It is not uncommon for entrepreneurs to choose to open a MEI initially, as this is the simplest and quickest category for obtaining a CNPJ.

The point is that the MEI has specific rules related to the activity carried out and business partnership, as well as establishing a relatively low revenue ceiling.

For this reason, it is not a good idea for a large company to open an MEI, as revenue will likely exceed the limits, and activities will deviate from the category's rules, which could lead to problems with inspections.

This is just one example, but it helps us understand why it's important to learn about the types of businesses that can be opened in Brazil.

So, if you're thinking about starting a business, take a moment to read the content below. This will help you make the right choice.

6 types of companies that can be opened in Brazil

The business categories provided for by Brazilian law exist to ensure appropriate taxation and regulation for each type of company, activity, size and revenue.

After all, it would be unfair for a large company with 3 partners and a turnover of R$4 million/year to have the same tax rate as an individual entrepreneur with an annual turnover of R$20,000.

Furthermore, depending on the degree of complexity of a business, there are rules and laws to regulate activities and social responsibility.

For this reason, it is necessary to choose the category correctly, in order to avoid problems with inspection and taxation.

See below 6 types of companies that can be opened in Brazil, and their respective rules:

MEI – Individual Microentrepreneur 

The MEI (Individual Microentrepreneur) category was created to encourage the formalization of self-employed activities. Therefore, this type of business must comply with specific rules, such as:

• The MEI must not be the owner or partner of another company;
• A company in this category cannot have more than 1 owner or be a partnership;
• It is not possible to have branches of the business;
• The company must carry out one of the activities provided for by the MEI;
• Must comply with the revenue ceiling of R$ 81 thousand per year;
• Among other rules.

It's worth noting that MEIs are tax-exempt and only pay the DAS fee. Therefore, they're the ideal category for those who simply want to formalize their self-employment activity.

SLU – Single-Member Business Company 

If you want to open a company without partners and separate the business finances from your personal finances, it's worth checking out the SLU (Sole Proprietorship) category.

The purpose of this category is to make starting a business less bureaucratic. This way, entrepreneurs can open their business without having to introduce partners and investors, other than themselves.

And, considering that at SLU the company's finances are distinct from the entrepreneur's finances, this reduces the chances of personal losses in the event of legal damages.

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EI – Individual Company 

The Individual Company is nothing more than a category higher than the MEI, where the permitted revenue is between R$$ 81 thousand and R$$ 360 thousand per year.

In this way, self-employed professionals can formalize their individual professional activities while paying taxes proportional to the category.

It is important to note that as it is an Individual, this category does not allow more than 1 representative, although the owner may be a partner in other companies in the LTDA category.

Furthermore, in a Sole Proprietorship there is the possibility of opening branches, if you want to expand your business.

Ltda – Limited Liability Company

The Limited Liability Company is the most common among the types of companies that can be opened in Brazil, so many choose this model because it is more comprehensive.

The big difference with this category is that it allows partnerships and completely separates the company's assets from the partners' personal assets.

Therefore, if the company faces financial and legal problems, the partners will not have their personal assets confiscated to settle outstanding debts.

The revenue limit for this category is much higher, and the tax regime varies according to the business's total annual earnings.

SS – Simple Company

A Simple Partnership is a type of “non-business” company, as it occurs when two or more people come together to carry out intellectual activities, such as publishing scientific articles, studies, and others.

Furthermore, cooperatives also fall into this category, since the purpose of a Simple Society is to provide services on a personal, not a business, basis.

Therefore, we can consider a Simple Society to be a group of professionals involved in a scientific project, or even a group of workers in a cooperative.

It is important to note that this type of company may or may not have a CNPJ, and does not pay taxes, as the profits are generated by providing services as an individual. 

Therefore, taxes are only charged if these earnings as an individual exceed the Income Tax limits.

SA – Public Limited Company 

The Public Limited Company is one of the types of companies that can be opened in Brazil better known popularly.

This is because this is the category in which partners are called shareholders, since the share capital of the Public Limited Company is converted into shares.

To create this type of company, two or more shareholders are required, and the personal assets of each partner are not mixed with the company's assets.

In this type of business, there is no revenue limit, but tax rates vary according to annual earnings.

Furthermore, each partner's responsibilities vary according to the value of their shares. Therefore, the partner with the largest shareholding is called the majority shareholder and has greater influence on the company's decisions.

Finally, now that you know the 6 types of companies that can be opened in Brazil, it's easier to decide which category is ideal for your plans!

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