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Expats Owning and Operating a Business in Brazil

Author: Jim Newham
Submitted: February 2015

Brazil is a land of great potential for business people and investors. The country’s infrastructure has been considerably improved by its hosting of the World Cup, and is still improving in the case of Rio de Janeiro, which is hosting the Olympics in 2016. Restrictions on foreigners owning businesses in Brazil are light and there are plenty of opportunities.

Nevertheless, setting up a business in Brazil is undeniably difficult. The biggest problem is the phenomenal level of bureaucracy you may experience. Brazil was ranked a poor 120th out of 189 countries in terms of ease of doing business in the 2015 World Bank survey. Worse still, the country’s ranking for starting a business was a dire 167th. Additionally, those working in some sectors, such as publishing, will encounter further restrictions. The government is doing what it can to make things easier for start-up businesses, but these things take time.

Hence you should get as much free advice as you can, such as this webpage. Few people speak English well in BraziI, so ideally you should be at least at intermediate level in Portuguese before you get there. If not, it would be a good idea to have a fluent Portuguese speaker on your side, preferably one who is familiar with Brazilian business culture. For best results, make sure to do thorough research and start planning well in advance!

 

Immigration Matters

If you want to start your own business in Brazil, the first step is to ensure you have the legal right to live and work in the country. You will generally need to apply for a permanent visa as an entrepreneur before you can operate a business in Brazil. For more information on permanent visas and immigrating into Brazil in general, see our Immigration section.

 

Business Plan

Before starting your business, it is essential to create a business plan that will give you the best possible launch into the very competitive Brazilian market. First, make sure you have a clear view of what it is you want to do, and how feasible this business idea is. You will need to research the businesses that already operate in your field in the local area, and determine your potential customers and partners. Additionally, you should think through your best financing options.

Based on your research, you can then develop a full business plan of around 3-5 pages. This should set out your business objectives, target market and commercial strategy, and include potential obstacles and financial projections.

 

Legal Structure

Another important step is to decide which legal structure your business will adopt. A legal structure determines the benefits you enjoy and the nature of your legal, financial and tax obligations. The three most common business types in Brazil are self-employed, partnership and limited liability company.

Self-Employed (Empreendador Individual)

In 2009 a new legal structure was introduced, the Empreendador Individual (Indiviudal Entrepreneur or EI) The advantage of setting up your business as a self-employed person is that it is cheap and easy to set up. Furthermore, you have full ownership and control over the business, and that all after-tax profits are yours. On the other hand, you are personally liable for all the losses your business makes, and have additional responsibilities, such as keeping business records.

Partnership

There are two main forms of partnership in Brazil. A general partnership (sociedade em nome coletivo) is a group of at least two individuals and is the simplest form of Brazilian company. All partners are active in the business and are jointly responsible for the debts and obligations any of them may incur. A limited partnership (sociedade em comandita simples), is similar; there must be at least one general partner who accepts joint liability. In this structure there can also be limited partners who may not help in the general run the business and are only liable up to the amount of money that they initially invested.

Limited Liability Company (Sociedade Limitada)

The Brazilian limitada or LTDA is similar to the French SARL or German GmbH. It is the most common form of Brazilian company, as it is the easiest and cheapest to set up and the most flexible legal structure to operate under. There must be at least two members (shareholders); non-residents (individuals and corporations) can freely become members. Unlike with some countries, there is no minimum start-up capital. The company must be run by a Brazilian resident.

Other Structures

Other legal structures in Brazil include the corporation (Sociedade Anȏnima, SA.) This is a more public form of company, roughly equivalent to the corporation in other countries. An SA must have a management board and a fiscal council, both of which must have at least two Brazilian residents in it.

 

Setup and Registration

Once the above stages are complete, you should be ready to set up your company. There may be administrative procedures on three levels – federal, state and municipal – to negotiate. As mentioned above, setup is difficult and is going to take some patience. To help you, you will need the services of a lawyer and an accountant. For a list of translators and English-speaking lawyers, see this UK Government webpage.

There are twelve procedures to perform before company setup is complete, and these can take up to four months. The longest is obtaining an operation permit from your local municipality’s board of trade, which can take 90 days. Among other things, you will also need to obtain a national social security number and register for tax on federal, state and municipal levels. To read more about tax for expats in Brazil, see Taxation. For more information about setting up a business in Brazil, see this Learn 4 Good webpage.

 

Employing Staff

If you want to employ someone (including yourself) to work in your business you will have to register as an employer at the local tax office. However, in certain cases expat business owners must register by telephone or in person.

As employer, you will have to ensure that your business complies with Brazilian labour regulations. You should familiarise yourself with different types of contracts, minimum wage requirements, equal opportunity policies, work permits, insurance payments and recruitment options. Employees will also have to be entered into the Social Integration Programme (Programa de Integração Social) at the Federal Savings Bank. Note that if you employ freelance workers, you will not have so many legal obligations as they will be liable to pay tax and insurance themselves.

 

 

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