Data from the World Bank's Doing Business 2018 report, which evaluates 190 economies around the world, show that Brazil is amongst the fifteen worst countries to start-up businesses, as the estimated time is 79 days, revealing the initial bureaucracy surrounding business activities.
The opening phase is usually critical because it requires series of decisions the entrepreneur is not always ready to take. At this point, it is necessary to evaluate what will be most advantageous. This includes choosing the form of registration, type of incorporation documents, adequate activity description, taxation option, and form, number of involved persons in the incorporation, accessory obligations, and other variables.
In order to assist those who intend to establish themselves as a legal entity, Domingues e Pinho Contadores listed a few points to consider since the business deployment.
The first step is to establish the company’s legal nature from defining the activity, market objectives, corporate structure, and number of employees. According to its size, the company may choose to start the operations as Limited Liability Company (Sociedade Empresarial Limitada - “Ltda”), Individual Company of Limited Responsibility (Empresa Individual de Responsabilidade Limitada - “Eireli”), Individual Entrepreneur (Empresário Individual - “EI”) or Individual Microentrepreneur (Microempreendedor Individual - “MEI”). Hitting this setting may yield benefits and less taxation.
The Brazilian tax burden is known as one of the highest in the world, and failing in choose the tax regime may affect business success. While this option may be annually reviewed, start activities under the most advantageous regime to the company’s primary objectives is recommended.
A series of calculations are needed to identify the most appropriate regime that will least compromise cash flow. Such calculations should consider all taxes applicable to the company's operations, also depending on variables such as number of employees, estimated profitability, activity practiced, etc.
Nacional Simple: aimed at companies whose revenues is less than BRL 4.8 million, per year
Presumed Profit: companies with annual revenues up to BRL 78 million.
Actual Profit: companies whose revenues are greater than BRL 78 million
The above choice, in addition to initially being directly conditioned to the expectation/income projection, should also be in line with other legal requirements, such as activities practiced according to National Classification of Economic Activities (CNAE), capital amount, number of employees, corporate structure, existence of revenues from abroad, etc.
The National Classification of Economic Activities (Classificação Nacional de Atividades Econômicas - CNAE) is a categorization of economic activities coordinated by IBGE - Brazilian Institute of Geography and Statistics, which covers all the economic activities carried out by the productive units in Brazil. This standardization contributes to the taxes agencies control and to the national statistics quality.
This classification is important because it establishes which taxes the company should pay and which accessory obligations it should file from the beginning of the activities. Therefore, the CNAE selection should be very well aligned with the business objectives in the opening phase.
Another point of attention is the place for business’ facilities. The entrepreneur should previously consult at the city hall in order to verify and confirm if the desired address meets or not the rules for company’s commercial activity. This consultation is utmost and, in some locations, is a mandatory step, even to avoid problems in the business formalization phase in all its spheres - federal, state, and municipal.
The regulatory issue requires additional attention from the entrepreneur. The ideal is to have a specialized orientation to fit in this particular aspect, as some business branches must meet series of extra requirements from class and governmental agencies.
Regulated activities requires the endorsement from its respective class organ for operation, as it happens, for example, in the health, accounting, engineering, architecture and real estate brokerage sectors.
Another example is the regularization of companies and products subject to Sanitary Surveillance, such as food, pharmaceutical and general health, hygiene, cosmetics, and boats.
Some business activities are also subject to prior approval by government agencies and entities for registration at the Business Boards. This is the case of banking, credit unions, insurance companies, and foreign companies. In addition, according to each Federative Unit, some activities are subject to specialized audits and follow stricter analysis rules to legalize state registration.
Domingues e Pinho Contadores is specialist in policies and requirements of each sector, making easier the journey of those who want to play in segments with specific particularities.
A well-planned business from the early stages is more likely to be stable in the market and become more competitive. Therefore, when formalizing an activity, companies should invest in this initial moment, counting on an advisory on legal and regulatory aspects and advantages of each business model.
Domingues e Pinho Contadores has specialized team ready to assist your company.
Contact us by the e-mail email@example.com
Av. Rio Branco 311, 4º e 10º andar - Centro
CEP 20040-903 | Tel: +55 (21) 3231-3700
Rua do Paraíso 45, 4º andar - Paraíso
CEP 04103-000 | Tel: +55 (11) 3330-3330
Rua Teixeira de Gouveia 989, sala 302 - Centro
CEP 27910-110 | Tel: +55 (22) 2773-3318