A Guide to Starting a Business in Brazil
Starting and running a business in Brazil requires you to effectively navigate the incorporation process. We have prepared this guide, where we will be dividing this process into five brief and clear steps, specifying the tasks involved at each step. Remember that it could take approximately 60-80 days to get your entity incorporated in Brazil and open a new bank account.
Starting a Business in Brazil:
Step 1 –Ensuring Preparedness:
This is perhaps the most comprehensive and vital of all the five steps that we will be discussing. At this initial stage, you will be compiling all the essential documents and information that you will be required to provide at different points throughout the entire incorporation process.
At this point, you need to also determine the legal structure that you will use for your business in Brazil – the main options that are available are LLC, branch, and of course, corporation. Brazil has also initiated a newer option called ‘Eireli’, which is a kind of corporation with lower share capital requirements and containing just a single shareholder.
Approximately 9 out of every 10 businesses in Brazil decide to go with the limited liability structure, since this structure ensures that the owners’ personal assets remain protected in case of solvency. You must ensure that the type of businesses that you decide to initiate is aligned with your business activities and any future plans. Make sure that all your plans – including your specific business activities and potential business locations – are formulated well before you proceed with anything else. This is because tax rules and codes vary between municipalities as well as the kind of business activities one undertakes in Brazil. These rules and codes will become applicable once you get yourself and your business registered with the local municipality.
The planning phase also involves determining a business address which is aligned with the business activity. For instance, you cannot operate an industrial business in or close to a residential or commercial area. You will need a business address at the time of getting your Articles and Memorandum of incorporation registered, which is why you must have a confirmed business address before proceeding towards registration.
The Articles will also include the initial corporate capital amount, as well as the date of capital payment. Once again, this means that you need to decide the amount and payment date for the capital beforehand.
Step 2 – Getting the Articles registered:
Once you are done with the planning phase, you should have all the information available to prepare the Articles of incorporation. Once the Articles are ready, you can get them registered through the Trade Board. The registration cost will depend upon the state in which you are getting your Articles registered. Your Articles need to contain the following information:
- The entity name
- The business address
- Shareholder details
- The company name
- Details of the company administrator (needs to be a resident of the country)
Step 3 –Getting the business registered with the public authorities:
The third step in this process is getting the business registered with several different authorities, including the state authority, federal authority, and the FRB (Federal Revenue Bureau). Depending upon your employees’ activities, you might even need to get the business registered with specific unions. Some businesses, such as accounting, law, and pharmaceutical businesses, need other registration with various public authorities.
Every registration has a specific procedure and cost associated with it.
Step 4 – Getting the business registered with Brazil’s central bank:
This is a particularly important step – and a mandatory one for any businesses having foreign shareholders. The company will be given a TPID (Tax Payer ID) that it will use for all Brazilian remittances. Although you can complete this step online, you must make sure that you are providing all the details about the UBO (Ultimate Beneficial Owner) – incomplete or inaccurate information will lead to your application being rejected.
Step 5 – Opening a business bank account:
This is the final step in the Brazilian business incorporation process, but should not be taken lightly since it can prove to be time-consuming and complex. Since Brazilian banks have a complicated KYC procedure, opening your business bank account can take a minimum of a couple of days and a maximum of three to four months. The precise time period it takes will depend largely upon your financial condition and relationship with your chosen bank.
Regardless, you will require the below documents to get a bank account for your business transactions:
- Shareholder documents
- Articles of Incorporation
- Tax Payer ID
Brazil’s excellent business infrastructure and large consumer markets make it a highly attractive spot for current and prospective entrepreneurs. If you want to learn more about the incorporation process in Brazil – and make the process easier, smoother, and shorter – please feel free to reach out to us.
In the meantime, please use this guide to familiarize yourself with all the major steps involved in starting a business in Brazil, and get the ball rolling.