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Starting a Business in Brazil

How to Establish a Sole Proprietorship in Brazil: Step-by-Step Guide

Brazil is a middle-income country that has seen tremendous economic growth over the last few years. Of late, the country is also finding favor as an investment destination from offshore companies. 

The largest Latin American economy, Brazil also ranks 9th on the list of largest economies globally. While Brazil ranks 124th globally on the Ease of Doing Business List by the World Bank, the government has reformed amply to attract foreign investors to the country. The country is now recognized as a newly industrialized country with the largest share of global wealth in South America. 

The country has, over time, liberalized its economy while also working towards bringing down the excess bureaucratic processes part of all Latin American business setups. Brazil has also steadily opened up its industries of late, and many are seeing a resurgence.

Setting up a sole proprietorship in Brazil can benefit companies wanting to expand businesses globally. It could be a direct access point to its vast consumer market thanks to a 214 million population. Read up on how to register a sole proprietorship in Brazil in detail.

Who can be a Sole Proprietor in Brazil? 

A sole proprietorship is a single-person entity that engages in the trade of goods or/and services. Since an individual owns and controls their business dealings, profits are part of the owner’s income.

Anyone can start a sole proprietorship in Brazil, irrespective of nationality. The entrepreneur or sole proprietor in Brazil must-

  • Not earn higher than R$360,000 per year if the entity is a Microenterprise and not higher than R$4.8 million per year if the entity is a small business.
  • Not participate with other businesses as an associate or title-holder.
  • Foreigners must have the National Immigration Registry Card, earlier called the RNE, or hold an amnesty visa for two years.

There is no additional liability on anyone else other than the proprietor. Establishing a sole proprietorship in Brazil is easy, but there are a few formal specifications to fulfill.

Benefits of Sole Proprietorship in Brazil

If you wish to register a business in Brazil as a self-employed or a proprietor, you can enjoy several benefits of being a sole proprietor.

  • Sole proprietorships in Brazil are easy to establish and maintain. The documentation is non-tedious and quick.
  • Additionally, proprietors can access several loans and schemes meant for small and medium-scale businesses.
  • Proprietors have control over each aspect of the firm.
  • The owner can enjoy all the profits thanks to no legal separation of proprietorship and person. The individual tax rates and rules are applicable for the taxation of sole proprietorships in Brazil.

Documents Required for Registering Your Business in Brazil

The documents needed to register a sole proprietorship in Brazil are as follows: 

  • Identity proof
  • Completed incorporation form and application to the National Department of Trade Registration
  • Registration with the National Register of Legal Entities
  • Documents demonstrating the entrepreneur’s business intention
  • Articles of association in Portuguese
  • Declaration of company name and details of trade

Special note 

  1. All documents need to be notarized.
  2. All documents need to be in Portuguese.
  3. A business license also needs to be obtained before sole proprietorship registration.
  4. There are no paid-up capital requisites that apply in this context.

Other Criteria for Registering a Sole Proprietorship in Brazil

To set up a sole proprietorship in Brazil, make sure you consider having the following in place-

  • A local bank account for all transactions
  • Brazilian tax  ID 
  • Registration with the VAT department
  • Registration with the Tax Office in the country
  • Social security registration
  • Annual business turnover record

Post-registration compliances

Once the formalities related to a sole proprietorship in Brazil are completed, ensure completion of-

  • Tax registration
  • Special permit sanctions

Taxation

The list of the primary business and personal taxes for a sole proprietorship in Brazil are-

  • Corporate tax at 15% 
  • Remittances tax at 6-25%
  • Sales tax at 17% 
  • Income tax at 7-27.5% at a progressive rate 
  • Social security rate at 28.80% for companies

How to Register a Sole Proprietorship Firm in Brazil?

The sole proprietorship company is called the Empresa Individual in Brazil. Follow these simple steps to understand how to register a sole proprietorship in Brazil-

Step 1: SEBRAE Check

  • Visit sebrae.com.br/atendimento and locate an office of SEBRAE to check if the trade or service you are setting up a sole proprietorship in Brazil for is allowed.

Step 2: Company name check

  • Ensure that the trade name you choose is available on the Board of Trade search tool. This reveals immediate results.

Step 3: Registration

  • Begin with registering with the Board of Trade, and choose the business type as a small business.
  • Registrations are needed for the following next-
  • Internal Revenue Service 
  • Secretary of State Treasury 
  • Register with the Municipality for a business license grant and authorization from related agencies in health, safety, and/or environment as applicable.

Step 4: Obtaining Tax Number for Social Security

  • Once the registration with the tax department is complete and you receive the relevant ID, submit the same to the Social Security authority.

Step 5: Open a local bank account

  • It is necessary for individuals to set up a bank account for sole proprietorships in Brazil for business transactions. 
  • Submit the Certificate of incorporation along with tax details registered to any bank in Brazil.

How can Multiplier Help?

When sailing through the intricacies of setting up a sole proprietorship in Brazil, you must understand and comply with the local rules and regulations. To ease the research and processing bits, you can outsource such tasks to Multiplier. It is a global employment solution for any business, including a sole proprietorship.

As you operate the business in Brazil, overall business management could pose a challenge. Multiplier offers EOR solutions to help ease any recruitment and related worries.

Frequently Asked Questions

Yes, a foreigner can open a business in Brazil by either establishing a subsidiary or a branch. They can also contact third-party to set up a business in the country.

Yes, it is compulsory for all documents related to setting up a sole proprietorship in Brazil.

Yes, it is, if the business is engaged in the supply of goods and services that come under the purview of taxes, such as-

  • IPI or imposto sobre produtos industrializados
  • Program of Social Integration or PIS
  • ICMS or Imposto sobre Circulação de Mercadorias e Serviços
  • COFINS or Contribution for the Financing of Social Security in Brazil

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