Opening a company in Brazil is beneficial to entrepreneurs and investors as the country has shown vast progression in its economy, reducing poverty rates and achieving a vibrant increase of millions of middle and wealthy class consumers within recent years.
Incorporating your business in Brazil gives you lenient access to other markets in close regions of Brazil as the country is a member of varying global trade and business alliances. Also, Brazil automatically gives you access to one of the biggest local markets in the world.
Can a foreigner open a company in Brazil?
According to Brazilian law, a foreigner can open a company in Brazil, and he/she may form or have interests in companies in Brazil, resident or not.
But he/she must meet some requirements and carry out some bureaucratic processes.
A foreigner can also choose to retain most of the ownership while appointing a small or minor percentage to a local partner in charge of the local management.
A Subsidiary in Brazil
Setting up a subsidiary in Brazil gives many advantages – any foreign company can invest in, collaborate with, or become a shareholder of a Brazilian company to make the company a subsidiary. The Brazil subsidiary becomes completely covered by Brazilian subsidiary laws and can perform like any other Brazilian company.
The simplest and quickest way to set up a subsidiary for your company in Brazil is to form a brand new legal structure. You can select from nine types of corporate structures when creating a Brazilian subsidiary.
Main Steps to Open a Company in Brazil
Opportunities for making money in the Brazilian markets are multiple, but foreign participants must realize that heavy red tape and regulation are deeply rooted in Brazilian culture.
To register a business in Brazil, an investor will need to complete the following steps:
Name Availability
A search should be conducted at the trade board to confirm if the assigned name is available.
Formulating Articles of Association
The Brazilian Articles of Association (Contrato Social), is the official document that is mandated for formalizing a business partnership and is the main step for legally registering a company.
Comparable to other countries, the Articles of Association must define information about the company that is being created, who the partners are, how much each partner possesses, and what type of activities the company is going to carry out.
Registering with the Board of Trade
Registration with the Board of Trade will get you a Company Registration Identification Number (NIRE) which will be the base for additional applications.
Registering for the Company Taxpayer Number
After obtaining the NIRE, the following step is to register with the National Registry of Legal Entities (Cadastro Nacional da Pessoa Jurídica / CNPJ) in order to get the CNPJ number.
The CNPJ number is the most significant reference number for any Brazilian company.
Before you can register a business in Brazil, at least two company shareholders must acquire Brazilian tax identification numbers, recognized as the CNPJ for companies and the CPF for individuals.
Appoint a legal representative
You have to assign a legal representative in Brazil to represent your company, which will mean drafting and signing a Power of Attorney to give them the right to operate on your behalf.
Draft the company bylaws
To register a business in Brazil, you and your legal representative have to draft your organization’s bylaws and include information considering the nature and structure of the business, as well as details on internal procedures.
After drafting the bylaws, the business must be registered before the local Board of Trade and other significant local authorities.
Open a corporate bank account and Register the paid capital
With the business registered before the relevant authorities, you will be able to open a company bank account. After opening the corporate bank account, you have to register the paid capital with the Central Bank.
Registering for a Business License
The Business License (Alvará de Funcionamento), enables the company to carry out activities within a city. There are some exceptions for companies that don’t need a Business License, but in most cases comprising regular businesses, you will require a Business License.
State Registration
Some companies like those involved in manufacturing, and transportation services must also enroll in the State Registration. This registration aims to give notice to the State authorities of the beginning of actions of the company and similarly enable the newly formed company to collect and pay the State taxes on specific activities.
Municipal Registration
Service companies also required registration with the Brazil municipal authority in charge of the company’s area. This registration will provide notice to the municipal authorities of the beginning of business activities by the company, and it will also enable the company to pay municipal taxes.
Registration with Social Security
Registration with the Brazilian Social Security Institution (INSS) is mandatory within 30 days from when the company begins operation. Registration is mandatory even if the company has no employees.
Main Types of Companies in Brazil
There are various types of business forms in Brazil. But, the two most common are:
Limited liability company ( Sociedade Limitada/Ltda)
A Sociedade Limitada is easy to form and operate as very few customs are needed for its organization and management.
The Sociedade Limitada is governed by the managers, who run the daily operations of the corporation, and may also have a board of directors, which, if assigned, will be responsible for making main business decisions and governing the general affairs of the company. The administration structure of a Sociedade Limitada is ascertained in the company’s articles of association. Its incorporation document is known as “contrato social”.
Corporation ( Sociedade Anônima/S.A)
This legal entity is adequate for various types of businesses and investments.
The Sociedade Anônima is governed by the officers, who run the daily operations of the corporation, and by a board of directors, which is responsible for making primary business decisions and supervising the general affairs of the corporation.
The administration structure of a Sociedade Anônima is founded on the corporation’s bylaws and certain corporations. Its incorporation document is known as “estatuto”.
Although establishing a company in Brazil is highly beneficial, foreigners are likely to find it hard when dealing with Taxation, Labor Law, and Background check. So it’s recommended to have the right firm by your side to help you along the way.
Contact your Damalion expert now to register your company in Brazil.
