Starting and operating a business in Brazil can be complex and require an in-depth understanding of all the rules and regulations.
To operate locally, companies must navigate the long process of incorporation through five major steps with smaller tasks involved during each step. The entire process of incorporating a new entity in Brazil can take 60-90 days, plus the time needed to open on a bank account.
1. Planning to ensure preparedness
The first step in incorporating your business in Brazil is planning and gathering all of the necessary information you will need to provide to authorities through the rest of the processes. You must define the type of entity you want your business to operate under in Brazil. There are a few options, corporation, LLC or a branch. Another newer option is called an Eireli. This is a corporation with only one shareholder and a minimum capital requirement. About 90% of the businesses in Brazil choose to become limited liability companies. The type of entity you chose is based on the activities and the future plans for the company in Brazil. These plans must be defined ahead of time, including the specific activities and where they will be performed in the country. This is imperative as each municipality has different tax codes and rules depending on type of activities and will become relevant when registering at the municipality authorities.
During the planning stage, businesses must also choose an address for their business to operate from that is compatible with the activity of the business. For example, an industry cannot operate in a commercial or residential area. In order to register the articles of incorporation, an address must be listed which is why this task must be completed prior to registering.
Another requirement in Brazil is to pick a corporate name for your business that contains the type of activity that your business will conduct. If you will starting a construction firm, the word building or construction needs to be present in the name. Although, when registering, you will be able to indicate a brand name that will be used commercially that does not need to describe the activity.
The articles of incorporation must also include the amount of corporate capital that will be used to start the company and when the capital will be paid. This means the company must decide these amounts of money and time during the planning phase.
2. Register the articles of incorporation
After the planning stage is complete, the information to complete the articles of incorporation will be ready and the forms can be submitted to the Board of Trade. Depending on the state, there are varying costs associated with the registration. The articles of incorporation must include the:
- name of the entity
- address of the business
- company name
- administrator of the company (must be a Brazilian resident).
3. Registering at the public authorities
The next step in the incorporation process requires registration at many different authorities with mandatory registrations at the Federal Revenue Bureau, the municipal authority and the state authority. Depending on the activities of the employees, the company must also be registered with individual unions. Specific types of businesses also require other registrations at different public authorities, like lawyers, accountants, pharmaceutical companies, etc. There are varying fees and procedures for registrations at every authority, which adds to the complexity and time it can take.
4. Register the company at the Brazilian Central Bank
This step is very important and mandatory for business with foreign shareholders. Companies will be issued a Tax Payer ID Number which will be used for any remittances to Brazil. This process can be completed online but all of the information about the Ultimate Beneficial Owner (UBO ) must be provided.
5. Opening a bank account
While this is the last step in the process of incorporation, it is very complex and takes a lot of time. With an extensive KYC procedure by the bank, this process can take anywhere from a few days to up to three months to open a bank account depending on your relationship with the bank and your financial situation.
The documents needed to open a bank account are:
- documents from the shareholders
- articles of incorporation
- taxpayer ID.
We can help
TMF Brazil can guide your business through the entire process of incorporation. We know how important each step is and how not getting it right can impact your business and tax burden. Our experts excel at navigating through each step of the process and make sure all documentation is correct for all the relevant authorities leading to a much faster turnaround for your business. Instead of the usual 60-90 days to incorporate a business in Brazil, our experts can cut the time down to 15-20 days. Our local knowledge makes us the perfect partner for your business needs in Brazil. Talk to us.
Want to learn more about doing business in Brazil? Download the free country profile.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.