More than 4.2 million companies were opened in Brazil in 2024, the highest number ever recorded in the historical series, according to data from Sebrae. This growth demonstrates the country’s entrepreneurial spirit, but it also hides a challenge: around 30% of these companies close before they are five years old. Among the main causes are a lack of planning and the wrong choice of business type. Many entrepreneurs, anxious to get their ideas off the ground, end up overlooking important decisions that have a direct impact on the sustainability of the business.
One of the most important steps when formalizing a company is defining its legal form. This choice influences everything from the liability of the partners to the tax regime.
Learn about the main types of companies in Brazil below:
Sole Microentrepreneur (MEI)
Aimed at self-employed professionals and small entrepreneurs, the MEI is a simple and inexpensive form of formalization. It allows you to earn up to R$ 81,000 per year and hire one employee. It is ideal for those starting out but has limitations in terms of the activities allowed and the possibility of growth.
Sole Proprietor (EI)
The EI is a form of company in which the owner carries out business activities in their own name, without the need for partners. There is no separation between personal and company assets, which implies unlimited liability for business obligations. It is suitable for entrepreneurs who wish to act individually in larger activities.
Single Person Limited Company (SLU)
Created to allow a single person to open a company with limited liability, the SLU is a modern and safe alternative to the EI. It does not require partners or minimum share capital, and protects the entrepreneur’s personal assets.
Limited Liability Company (LTDA)
One of the most common forms in the country, the LTDA is made up of two or more partners, whose liability is limited to the value of their shares. It has great management flexibility and is suitable for small to large businesses.
Corporation (S.A.)
Suitable for companies wishing to raise investment on a large scale, the S.A. has its capital divided into shares and can be publicly traded (with shares traded on the stock exchange) or privately held. Shareholders’ liability is restricted to the value of the shares they hold.
Simple Partnership
Aimed at regulated intellectual or professional activities, such as doctors, lawyers and accountants. It focuses on the provision of services and can be pure (with no business organization) or limited (with a liability regime similar to the LTDA).
Choosing the right type of company is not just a legal requirement, it’s a strategic step that can determine the success or failure of a business. That’s why it’s essential to seek advice before formalizing your company.
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