Time to Meet the MEI

Since 2009, Brazil has helped individuals who want their own small business. We’re talking about the Microempreendedor Individual (or MEI), a business form that is often chosen by first-time entrepreneurs due to the simplicity of its corporate and tax structures.

Creating a MEI is a straightforward process that anyone can do online. In fact, foreigners are welcome to open their own MEI, although they’ll need to be a resident in Brazil. The first step is to check the list of activities that are allowed for this type of business. Then, you’ll fill out a form online to get the company’s taxpayer ID (CNPJ).

MEIs have a few restrictions. First, there’s an R$81,000 (approximately US$16,200) cap on annual revenue. Second, owners of MEIs can’t be members or administrators of other companies. Finally, the owner of a MEI must be an individual entrepreneur, although you’re free to hire one employee.

Perhaps the greatest benefit of a MEI is the ease of calculating and paying taxes. Unlike other tax regimes, revenue and profit simply don’t matter here. Instead, taxes are paid based on a fixed monthly amount depending on whether the company sells goods or services (or both). For example, this year, a service company that’s a MEI will pay R$57.25 (approximately US$11.45) in monthly taxes.

All is not perfect though. The limited liability protection offered by other entity types, like the limitada, does not apply to MEIs. So before you take the plunge, make sure you’ve considered both the benefits and the risks.