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Brazilians are known for their creativity and entrepreneurial spirit. This drives millions of people to dream of owning their own business every day. Some also think about formalizing an already existing partnership that hasn’t yet been registered.
In all these cases, it’s crucial to understand exactly what it takes to open a business in Brazil. As some may already know, this process is not simple and requires significant organization and financial readiness for anyone planning to embark on this journey.
In today’s post, we will cover all the necessary steps, highlighting the legal procedures to be followed, the documentation that must be gathered, and the importance of hiring an accounting service. Don’t miss it!
How Much Does It Cost to Open a Business?
According to a study by Firjan, the average cost to open a business in Brazil is around R$ 2,500. This amount only covers registration fees and notary charges, which can vary by more than 200%. This difference occurs because each municipality sets its own rates for the business registration process.
In addition to the registration costs, there are also indirect expenses, such as rent, property renovations, and accounting services. These investments are made before the company even starts operating, so they can be classified as startup expenses.
During this preparation phase, it’s crucial to ensure that the commercial location where your business will operate complies with the local zoning laws. Municipal zoning plans may prohibit certain activities from being conducted in specific areas of the city.
During the registration process, health inspectors and firefighters will verify whether the chosen location is suitable for the activities your business will conduct. Only after confirming this can the operating license be issued.
Know the Required Documentation
Here’s a list of all the necessary documentation to open a business in Brazil:
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1. Articles of Incorporation
The articles of incorporation of a company define the ownership shares of each partner in the company’s capital. It must also clearly specify the company’s activities and its tax regime, as well as detail each partner’s share of the profits.
Once this is done, you must verify whether the company’s name and business purpose can be used by conducting a search with the Board of Trade. This step requires the signature of a lawyer and the notarization of the contract.
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2. Registration with the Board of Trade
After finalizing the articles of incorporation, you must submit them to the Board of Trade along with your personal documents and those of the other partners. Only after this registration will your company officially exist.
However, this does not mean that your business can start operating right away. You also need to obtain a CNPJ, which can be requested on the Federal Revenue Service website by presenting the NIRE (Company Registration Identification Number) issued after the registration with the Board of Trade. Additionally, you must obtain an operating license, which we will discuss next.
3. Operating License
It is up to the municipal governments to issue operating licenses. This is the final authorization you need to officially open your business. To obtain this license, you must present proof to the appropriate municipal agency that your business is allowed to operate at the chosen location.
At the beginning of this article, we mentioned the importance of verifying the municipal zoning plan to ensure that your business can legally operate at the intended location. Checking this in advance will help you avoid delays and the hassle of having to relocate your business after having started the registration process.
Always Work with an Accountant
Opening a business without the assistance of an accounting service is highly discouraged, if not impossible. Organizing all the documentation and handling the registration process requires the expertise of an accountant. Additionally, selecting the right tax regime for your business is crucial.
A poor choice in this regard can lead to paying more taxes than necessary, which is not an ideal way to start a new business, right?
Not to mention all the regularization steps, which, as you’ve seen, involve numerous details. If you need everything to be done correctly and in a reasonable amount of time, you’ll definitely need the help of an accountant.
Conclusion
With today’s post, we hope to have provided clarity on all the steps involved in opening a business in Brazil. As you can see, this process requires a lot of organization and the help of a good accounting service to ensure everything is done in compliance with the law and the company’s interests.
Don’t forget that it’s not enough to formalize your new business—you must also ensure that the idea and project behind it are economically viable and sustainable in the long term. Consider the high failure rates of businesses in Brazil, with many not surviving past their fifth year.
Do you have any questions about the topics covered in today’s article? If so, please leave your question in the comments! We’d be happy to assist you further.
CLM Controller is here to help you every step of the way in opening your business. From choosing the right tax regime to ensuring compliance with all regulations, CLM Controller offers tailored accounting services for businesses of all sizes. Let us take care of the details so you can focus on growing your new venture.
