There has been a growing number of self-employed people in Brazil between 2012 and 2018. In 2018, around one-third of Brazil’s workforce is self-employed; the remuneration is a direct result of the profits made from the goods and services provided.
If you aspire to become self-employed in Brazil, this is a guide with all the steps you need to take during the registration process. Other business models in Brazil allow you to structure a business having partners (such as sociedades limitadas or sociedades anônimas), but this article will focus on the alternatives you have available to organize your business individually.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
Qualifying as an Independent Contractor
An independent contractor can be either an individual or a legal entity. The independent contractor has full independence to work, has the possibility to work for other clients, and is free to determine the way the work should be done. Furthermore, the independent contractor relationship is regulated by the Brazilian Civil Law. It is advisable that companies who hire independent contractors establish a written agreement with the independent contractor.
Different types of business structures
Self-Employed Individual (Trabalhador Autônomo)
In this case, the activities are developed by the individual and not by a legal entity meaning no corporate registrations are required. The services provision by the Self-Employed Individual shall solely demand regular individual enrollments for tax and social security purposes with the Federal Revenue Service and, depending on the case, a municipal tax payer’s registration for the collection and inspection of the service tax due upon the services rendering.
The Self-Employed Individual (trabalhador autônomo) undertakes all the obligations and is personally liable for all financial commitments agreed without limitations.
Sole Proprietorship / Individual Entrepreneur (Empresario Individua - EI)
In the Empresário Individua business structure, the entrepreneur carries on business activity in their own name, as a business owner. The business and the owner are legally considered the same. The assets, liabilities, and income of the individual and the business are treated as the same. Therefore, in case of debts, the business owner is personally liable for unlimited financial commitments.
The business name can be the owner's civil name. It is also possible to add another name in reference to the economic activity or the way it is known in the business environment. There is a wider range of economic activities for your business. You can hire any number of employees you want.
The Empresário Individual can also be classified as Microenterprise (ME) with a maximum annual billing of R$360,000 or as a small business (EPP) with a maximum annual billing limit of R$4,8 million per year, for purposes of benefiting from Simples National plan, or, in case its gross income exceeds R$4,8 million per year, you may choose between the ordinary presumed profit regime (billing up to R$ 78 million per year) and actual profit regime (general, though bureaucratic tax regime).
Individual Micro-entrepreneur (Microempreendeor Individual MEI)
Similar to the Empresàrio Invididual, it's also a one-person business. There are, however, differences:
- The MEI can't exceed a specific revenue (you have to earn up to R$81,000 a year)
- The type of activities you can engage in as an MEI is limited by a list that you can find by clicking on this link.
- You can hire a maximum of one employee
- You can't be a partner, director, or owner of another company.
- MEI is subject to a special tax treatment provided in Complementary Law No. 123/06 (Simples Nacional plan), with a surplus exemption of specific federal taxes, e.g., income tax, social contribution on net profit and PIS and COFINS social contributions
You can register online as a MEI through Portal do Empreendedor which is a government website with information for business owners.