When choosing to open a business, the individual or set of people who will be shareholders, should study and decide on the types and sizes of companies available in Brazil and which are more appropriate to what is in mind for the business model of the new project.
Those decisions could be made chosen from accurate and reliable information because the type of the company is directly related to the execution of activities, profitability, and visibility of the business.
Therefore, the company’s size has the purpose of fitting the company in one of the different kinds of the tax regime. And can be determined through factors such as business billing or the number of employees, for example.
To help in this decision-making, we will first talk about each of the types of companies present in Brazil and which are recommended for foreign investors seeking to establish a business in Brazil:
1. Individual Microentrepreneur (MEI)
Category of a company created to facilitate the regulation of individuals who work individually or with the help of at most one employee, giving the holder rights – such as retirement by the Brazilian Social Security (according to specific rules).
2. Individual Company (EI)
It was created for those who wish to undertake individually, without the presence of a partner. Therefore, the entrepreneur needs to give the new business its name (full or abbreviated).
In this modality, the entrepreneur assumes full responsibility for the debts contracted by the legal entity, that is, in case of labor and tax debts, for example, the individual must pay them with his property (or with those of the spouse, if the marriage is of partial or total communion of property).
3. Individual Limited Liability Company (EIRELI)
Unlike the previous category (EI), in the EIRELI modality, the entrepreneur only corresponds with the assets in the business’ name, in the debts calculated during the commercial activity, and then has limited liability.
To open this company, however – aiming at the safety of customers and suppliers – it is required to pay a minimum capital of 100 minimum wages (a process that can be carried out in kind or, for example, through fixed assets).
4. Simple Society (Simples Social)
The category, which depends on the existence of at least two individuals, allows the provision of services – on an individual basis, but through a partnership – related to intellectual, literary, scientific, and (or) cooperative activities.
The modality used by doctors, dentists, physiotherapists, lawyers (etc.), who choose to participate in a taxpayer ID to carry out their activities, issue invoices, and collect their taxes.
For companies and foreign investors seeking to conduct business in Brazil
Here, due to the size of investments when establishing itself in a new market, it is more common (and recommended) that companies that come to establish themselves in Brazil choose one of the formats that we will see below:
Limited Company – LTDA
In this category, two or more individuals unite with the intention of the undertaking.
It is a category widely used in the country because it is accessible and for providing the partners with limited liability since the Commercial Board will be in charge of governing the tasks and attributions of the company.
Corporation (S/A)
The category gives businesses the possibility of being divided into shares, which end up being responsible for providing their owners or shareholders with the right to receive part of the income.
In S/A, the responsibilities and control of the company are defined by the number of shares – that is, the largest shareholders have greater weight in decisions.
Corporations can be of two types: open (with their shares traded on stock exchanges) or closed (whose shares are not traded in the financial market).
Having commented above on the categories of existing companies, let us now talk about the sizes of companies.
Company sizes and billing intervals
Here, due to the size of investments when establishing itself in a new market, it is more common (and recommended) that companies that come to establish themselves in the
As there is not only a single method that determined the business size, it is worth mentioning that the list below is using the criterion practiced by BNDES, which is based on the annual income of the enterprise.
Microenterprise
The size of the Microenterprise allows the project to reach the ceiling value of BRL 360,000/year.
In addition to advantages in the tax process of the Internal Revenue Service, micro-enterprises have other benefits with various public and private programs. In general, taxes are reduced, and credit lines have lower costs and extended terms.
Small Business
A small company should have an annual turnover of more than BRL 360,000 and less than BRL 4.8 million.
Companies of this size, even with higher revenues, are still eligible for the option of taxation of the Simples Nacional system.
Medium Enterprise
It is considered a medium-sized company that invoices per year an amount between BRL 4.8 million and BRL 300 million.
Medium-sized enterprises must necessarily choose between Real Profit or Presumed Profit as a taxation system.
Large Company
It is classified as a large company that makes more than BRL 300 million per year. Large corporations are taxed according to the Lucro Real (Real Profit) option.
Also, about the size of companies, we have set here the main classification models used in Brazil:
1. BNDES (gross revenue/annual income)
As mentioned, BNDES (National Development Bank) presents a classification of companies according to Gross Operating Revenue or Annual Income. As the bank is promotional, segmentation is used to offer credit lines and specific programs for each size.
| BNDES Classification | Annual Gross Operating Revenue/Annual Income |
| Microenterprise | Less than or equal to BRL 360,000 |
| Small business | Greater than BRL 360,000 and less than or equal to BRL 4.8 million |
| Medium enterprise | Greater than BRL 4.8 million and less than or equal to BRL 300 million |
| Large company | More than BRL 300 million |
2. ANVISA (annual turnover)
The National Health Surveillance Agency (ANVISA) supervises companies belonging to the health sectors (such as production or marketing of medicines, cleaning, food, etc.).
The size, in this case, is determined according to economic capacity. The classification table used in this agency considers gross annual revenue, adding up to headquarters and branches.
| ANVISA Classification | Annual revenue |
| Group I Large Company | More than BRL 50 million |
| Group II Large Company | Equal to or less than BRL 50 million and more than BRL 20 million |
| Group III Medium-sized Company | Equal to or less than BRL 20 million and more than BRL 6 million |
| Group IV Medium-sized Company | Equal to or less than BRL 6 million |
| Small Business (EPP) | Equal to or less than BRL 4.8 million and more than BRL 360,000 |
| Microenterprise | Equal to or less than BRL 360,000 |
3. IBGE (number of employees)
The Brazilian Institute of Geography and Statistics (IBGE) determines the size of companies according to the number of people employed by the corporation. As already mentioned above, the choice of the type and size of the company directly affects the processes of operations and obligations before the country’s tax authorities and may be factors responsible for defining the success or failure of a business.