On June 27th, the day of Micro, Small and Medium Enterprises (MSME) is celebrated, established by the United Nations (UN).
In Brazil, these enterprises represent 99% of companies and account for 30% of the national Gross Domestic Product (GDP). On the global stage, the segment accounts for 90% of the market’s business and more than 60% of jobs, in addition to half of the world’s GDP.
“The date recognizes the economic and social importance of small businesses around the world. This year, the theme of the day is “Resilience and Reconstruction”, which highlights the vital role of these companies for a fair and sustainable recovery”. The definitions of micro, small and medium-sized companies depend on revenue and number of employees.
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Micro-enterprises have annual revenues of up to R$360,000 or employ up to 9 people in commerce and services or 19 people in the industrial sector. Small companies have annual revenues of up to R$ 4.8 million per year or employ 10 to 49 people in commerce and services or 20 to 99 people in industry. Medium-sized companies, on the other hand, have annual revenues of up to R$300 million and employ 50 to 99 people in the commerce and services sector, and 100 to 499 people in the industrial sector.
The rules for formalizing micro-enterprises and Small Businesses (EPP) regulated in Complementary Law No.
1st step – Hiring the Accountant
To carry out the entire bureaucratic process of legalizing the microenterprise or EPP, hiring an accountant at the beginning of the process is essential. “A professional qualified by the Regional Accounting Council (CRC), in addition to guiding you through the steps of opening the business, is the one who can prepare and sign the Caixa Book, a fundamental document that helps in the accounting registration of companies, as well as serves as an instrument for calculating taxes.”, guides Sebrae.
2nd step – Definition of the legal nature
There are different corporate modalities to start a company. See the options:
Sole proprietorship: this is the model in which there is no separation between the assets of the individual and the legal entity. That is, their private assets can be used to pay off corporate debts.
Sole proprietorship: In this modality, you respond only with the equity invested in your business. In this way, only the assets of the Legal Entity can answer for the debts and obligations of the company. The Sole Proprietorship also guarantees the possibility of constituting a LTDA company.
Individual Limited Liability Company (EIRELI): Another way to respond with just the equity invested in the company, however, the minimum share capital must be 100 times the minimum wage.
Limited Partnership: This is the most common modality, preferably adopted by small and medium-sized companies. In this case, the partners are only liable according to the value of their shares. By law, there is no need to have a stipulated minimum capital. For the payment of the capital stock, any assets subject to financial valuation, including real estate, are accepted.
Sociedad Anónima: This business partnership model is regulated by Law 6,404/76 (also known as the Corporate Law). The capital stock is divided into shares and, therefore, the liability of the partners and shareholders is limited to the issue value of the acquired shares.
Step 3 – Choose a name
The company name must be unique, no other company can use it. It is necessary to inform yourself about companies with identical or similar names to the chosen one. At this stage, do a search at the Commercial Registry of your state or at the Civil Registry of Legal Entities. After consulting the viability of the name, the registration of the Corporate Name can be done at the Board of Trade (each state has its respective website).
4th step – Choosing the business activity
With the Corporate Name defined, it is necessary to indicate the areas of activity of the company, since regulation and taxation depend on this factor. The instrument for classifying the activity is the National Classification of Economic Activities (CNAE).
5th step – Setting the location
Not all activities can be carried out anywhere. It is important to check if there is any impediment to the installation of the enterprise in the desired location. on the portal REDESIM it is possible to consult the feasibility for several municipalities.
6th step – Preparation of the Articles of Association
The Articles of Incorporation can be prepared by an accountant or lawyer. “It is the most important document when opening a company, as it must contain the objectives of the enterprise and a description of the corporate aspect. There are contract models available on the website of the Board of Trade in your state,” says Sebrae.
7th step – Registration of the company with the Board of Trade
Make a prior consultation to find out if it is possible to open the Legal Entity with the desired name, activities and location. The consultation can be made on the REDESIM portal. Then, you need to fill in the Basic Entry Document (DBE). Access to this step is through the Federal Revenue website.
With the DBE, it is possible to register the company with the State Board of Trade. This registration is what gives the company legal validity. The Board of Trade provides the Company Registration Identification Number (NIRE) upon approval of the documents. The National Register of Legal Entities (CNPJ) is also obtained at this stage.
Step 8 – Municipal and State Registration
In the case of REDESIM municipalities, registration is automatic and it is only necessary to unlock using the protocol number generated by the portal. In other cases, it is necessary to check the procedures with the local City Hall.
Step 9 – Social Connectivity
For payment purposes of the Severance Indemnity and Pension Fund (FGTS), it is necessary to carry out the Social Connectivity on the Caixa Econômica Federal website.
10th step (optional) – Trademark Registration
If you are going to publicize the brand, it is possible to register at the National Institute of Industrial Property (INPI). This step is optional and is not part of the registration with the Board of Trade or Notary.
For the UN, strengthening small businesses helps fight poverty, create jobs and safeguard the livelihoods of billions of people, including the working poor, women and youth.
“The Covid-19 pandemic has disproportionately affected the businesses of micro, small and medium-sized companies. Together, they are the soul of the economy of communities around the globe”, highlights UN Secretary-General António Guterres in a note.
According to the president of Sebrae, Carlos Melles, small businesses make Brazil a giant and are responsible for significantly moving the economy of the country and the world. “Micro and small companies, in Brazil and around the world, are the web that sustains any country. It’s the bakery, the clothing store, all segments of society. Brazil has been perfecting this environment of improving coexistence with micro and small companies. Today, we represent seven million micro and small companies and around 12 million individual micro-entrepreneurs and employ 55% of Brazilians with a formal contract”, highlights Melles, in a statement.
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