Being one of the largest economies in Latin America, Brazil offers exciting possibilities to companies seeking to expand their business into the Latin American market. Opening a company in Brazil is beneficial to entrepreneurs and investors as the country has shown enormous progression in its economy. But before starting the process of forming a company in Brazil it is crucial to be familiar with some of the basic concepts around rules and practices connected to the company and the registration process. Outline below is some of the essential requirements for opening a company in Brazil.
- Determined the type of company you would like to register
One of the basic requirements in starting a business in Brazil is choosing the right type of legal structure for the company to be incorporated. For that, it is crucial to consider how many people are going to be involved, as well as how much the initial capital will be.
The most common types of companies in Brazil are the Limited liability company (Sociedade Limitada/Ltda) and Corporation (Sociedade Anônima/S.A). A sociedade limitadacan have one or more shareholders, while sociedades anônimas require a minimum of two. But Sociedades limitadas are much faster to register.
Other types of companies in Brazil include Silent Partnerships (SCP), Consortium, Single Holder Limited Liability Entity (EIRELI), and Branch Office of Foreign Corporations.
- Select a suitable name for the Brazilian company
A company in Brazil must have a name. The corporate name assigned to the business must be unique and must also include the type of activity the business will perform. Company names cannot include improper words or expressions which may be offensive or unethical, among other things. The selected type of legal entity also needs to be indicated in the company name.
The owner of the company may check the company name with the State Commercial Registry Office to make sure that the name chosen is not already registered.
- Management and Administration
You have to select a company’s executive director. This can be residents and non-residents.
You also have to choose the shareholder for the Brazilian company, as Brazil does not have many double tax agreements in force and presently does not impose taxes on the payment of dividends. So assigning the right entities to hold the shares in the Brazilian company can have major tax benefits.
Not that the identity of the shareholders must be known before the company can be incorporated.
- Appoint a trustworthy Legal Representative in Brazil
According to Brazilian law, it is important to appoint a legal representative who will represent the company before local authorities, partners, and clients. A Power of Attorney will be required to appoint the legal representative to carry out the company process locally. Requirements to have a local legal representative are usually the most challenging for foreigners who plan to form a company in Brazil. The legal representative does not need to be an owner of the company but must either be a Brazilian citizen or have a permanent Brazilian visa.
- Selecte accountants to be registered in Brazil
This is usually done post-incorporation. All Brazilian companies must hire the services of an accountant to keep the company’s books. Also obtaining the necessary corporate and accounting book is done by the accountant. The accountant also makes all required tax filings.
- Decided on the locations where the business will be operating in Brazil: Municipal Registration
Companies offering services in Brazil require registration with the municipal authority in charge of the company’s area. This registration will give notice to the municipal authorities of the beginning of business activities by the company, and it will also permit the company to pay municipal taxes. State Sales Tax and Municipal Services Tax are among the taxes to be paid.
- Select an address to be used as the company’s office
All companies formed in Brazil require a unique registered fiscal address. If a permanent office for staff is not needed, the services of a company offering virtual office addresses may be used.
For operations where there are numerous companies registered at the same office address, it is common to stipulate which room each company is registered to, as this makes each fiscal address unique.
- Disclose the full chain of control of the Brazilian company Federal Revenue Department
Brazilian law imposes that foreign shareholders of Brazilian entities disclose the ultimate beneficial owners (UBOs) to the individual or publicly listed holding company.
- File for registration of a Brazilian trademark
As soon as you form a view that you may sell products or services in Brazil, it is recommended that you file trademark applications. These applications can be made by any individual or foreign entity, it can also be made by the Brazilian company. The Brazilian National Institute for Intellectual Property has a unified database of all trademark applications and registrations.
- Licenses requirements
Licenses will be required depending on the goods or services the company will provide. The Business License will enable the company to carry out activities within a city. It is important to receive all required permits and licenses from the local Municipality before the company starts operations. This phase requires a couple of examinations and revisions of the commercial establishment to ensure its safety and compliance with all local regulations.
Licenses requirements for import
Note that not all Brazilian companies are allowed to import goods from abroad. So before a Brazilian company can import goods, it must be registered on the Foreign Trade Integrated System and collect a special kind of license, of which there are two types available:
Limited License: this only allows the company to import goods with a value of up to USD 150, 000 over a six month period, and
Unlimited License: this is for companies seeking to import goods above the USD 150,000 limit. These companies must prove their financial capacity to get an Unlimited License.
- Decided on the bank that will hold the company’s account
As part of a company formation, you have to choose a bank to open the company’s account with.
A corporate bank account is usually needed for the business share capital but is also needed to keep the company’s and personal assets separate. Note that due to internal bank controls, all Brazilian banks mandate that the full chain of ownership of the Brazilian entity be disclosed as a condition of opening a bank account.
Timeframe for Completion
Forming a company in Brazil is not an integrated procedure and therefore it is impossible to provide an exact timeframe for the completion of the process. But the whole process of incorporating a new entity in Brazil usually takes 60-90 days.
How to register a company in Brazil
As with any endeavor, planning and research are important. Before setting up your company in Brazil, you must know which details and documents you need to provide the authorities. To get this done easily, you need the right association by your side. Your Damalion expert is always available to help on this aspect.
If you want to learn more about the company incorporation process in Brazil or if you are ready for your business registration in Brazil, let’s go ahead and contact your Damalion experts now.
