You have 2 ways to become an independent contractor in Brazil.
If you want to start a business, or already work for yourself and earn up to R $ 81 000 per year, you could be an MEI (Individual Microentrepreneur).
If your potential earnings are over R $ 81 000 per year, registering an MEI or EIRELI is the only way to earn money legally and safely.
Our recommendation to become an independent contractor in Brazil begins with the successful registration of these systems. As an independent contractor, you must complete registration so that the money you earn is done so legally and can be lawfully defended in the event of a problem in the contract between you and the business owner.
If you don’t have any registration, you can’t earn more than 10.000BRL in 365 days. If you want to earn more, you have to prove your work. Therefore, MEI or EIRELI registration is most necessary to be an Independent Contractor.
The Brazilian government is very strict in this regard. You need to register to avoid any problems.
Individual Microentrepreneuer (MEI) in Brazil
The MEI is a hassle-free legal entity with several benefits for the entrepreneurial citizen. If you want to start a business or already work for yourself and earn up to R $ 81 thousand per year, you can be an MEI (Individual Micro entrepreneur).
For MEI registration;
• You can’t be a participant as a partner, administrator, or holder of another company;
• You can hire a maximum of one employee;
• Perform one of the economic activities provided for in Annex XI, of Resolution CGSN nº 140, of May 22, 2018, which lists all activities permitted to the MEI.
How much does it cost to be MEI independent contractor in Brazil?
The individual microentrepreneur will have as expenses only the monthly payment of Simples Nacional.
Trade or Industry: R $ 53.25 Provision of Services: R $ 57.25 Trade and Services together: R $ 58.25
The calculation for individual microentrepreneur in Brazil:
The calculation corresponds to 5% of the monthly minimum wage limit and an additional R $ 1.00 (one real), as ICMS, if you are a contributor to this tax and/or R $ 5.00 (five reais), as an ISS, if you are a taxpayer of this tax.
Benefits of Being an Independent Contractor in Brazil With MEI System
• You may be entitled to maternity allowance;
• Entitled to paid leave for health problems;
• Being MEI, you are included in Simples Nacional and will be exempt from federal taxes (Income Tax, PIS, Cofins, IPI, and CSLL);
• With CNPJ, you can open a bank account and have access to credit with cheaper interest rates. You can have a fixed address to facilitate the acquisition of new customers;
• It has Social Security coverage for you and your family. It also has the technical support of Sebrae to learn how to negotiate and obtain prices and conditions in the purchase of goods for resale, obtain a better term with wholesalers, and a better profit margin.
MEI Registration step-by-step
- Click this link and go formalize
- Sign-in or Sign-up Brasil Cidadão account
- Authorize data access
- If prompted, enter the voter registration number or the income tax receipt number for the past two years
- Fill the form with the requested data
- Fill out the declarations and complete your registration
Become an Independent Contractor in Brazil with the EIRELI system.
EIRELI (Individual Limited Liability Company) is a business format that can consist of just one partner. This modality is a legal representation in which only the holder, who is the sole owner, has limited liability with the obligations of a company.
EIRELI Registration step-by-step
- Find an accountant you trust
- Elaboration of the social contract (In the case of EIRELI, it is called the Constitutive Act)
- Registration with the Commercial Registry / CNPJ / State Registration
- Municipal registration
- Location and operation license
- Licenses and registration with state and municipal regulatory bodies
- Class Body (if necessary, depending on the activity)
- Digital certificate
Benefits of Being an Independent Contractor in Brazil With EIRELI
- There is no R $ 81 000 limit.
- Limited Liability
- The branches of activity permitted for an EIRELI are extensive and cover all rural, industrial, commercial, and service activities.
- At EIRELI, the entrepreneur is able to choose the most appropriate taxation model for the size of his business
EIRELI VS MEI
In the case of MEI, there is also no need to have a minimum share capital value. And, as in the Individual Entrepreneur and EIRELI, there is no requirement for a partner. Even with an employee, the Individual Microentrepreneur’s billing is limited to R $ 81,000.00 per year.
In this case, the entrepreneur collects only a monthly fee, which can vary from R $ 51.95 to R $ 57.95 (values from 2020). Thus, it is totally exempt from Cofins, PIS, Income Tax, IPI, and CSLL. In addition, the MEI has access to various social security benefits, such as sickness benefit, maternity benefit, and retirement. However, in addition to the restriction on billing, MEI can only hire one employee and there are many restrictions regarding activities.
P.S.: Remote Team does not make any absolute guarantees for the up-to-dateness and accuracy of the material written here.