When starting a small business, one of the first and most important decisions you need to make is how to legally structure your company. In Brazil, three of the most common options are MEI (Microempreendedor Individual), Simples Nacional, and ME (Microempresa). Each one has its own rules, advantages, and limitations.
Choosing the right option can save you money, simplify your taxes, and give your business room to grow. In this article, we’ll explain the differences between MEI, Simples Nacional, and ME so you can make the best choice for your business.
What Is MEI?
MEI (Microempreendedor Individual) is the simplest and easiest type of legal registration for small entrepreneurs in Brazil. It was created to encourage informal workers to become formal entrepreneurs.
Who Can Be MEI?
To register as an MEI, you must meet the following criteria:
- Annual revenue limit of R$ 81,000 (approximately R$ 6,750 per month)
- No participation in other companies as owner or partner
- Have at most one employee earning the minimum wage or the category’s wage
- Work in one of the more than 450 activities authorized for MEI
Advantages of MEI
- Low monthly tax (fixed amount around R$ 70 to R$ 80)
- Simple and fast registration process
- Exemption from federal taxes like IRPJ, PIS, Cofins, IPI, and CSLL
- Access to social security benefits (retirement, sick leave)
- Possibility of issuing invoices
Disadvantages of MEI
- Revenue limit of R$ 81,000 per year
- Only one employee allowed
- Limited list of authorized activities
MEI is ideal for self-employed professionals, small service providers, street vendors, and anyone starting a small business with low revenue expectations.
What Is Simples Nacional?
Simples Nacional is a tax regime created to simplify the collection of taxes for micro and small businesses. It consolidates eight federal, state, and municipal taxes into a single monthly payment.
Who Can Choose Simples Nacional?
- Microenterprises (ME) with annual revenue up to R$ 360,000
- Small Businesses (EPP) with annual revenue up to R$ 4.8 million
Unlike MEI, Simples Nacional is not a type of company—it’s a tax regime that can be chosen by ME, EPP, or other eligible businesses.
Advantages of Simples Nacional
- Simplified tax payment (single payment)
- Reduced tax rates compared to other regimes
- Lower bureaucratic burden
- Access to government credit lines and benefits
- Possibility of hiring more employees
Disadvantages of Simples Nacional
- Tax rates may increase according to revenue and business type
- Some professions and activities are excluded
- Need to maintain formal accounting
Simples Nacional is recommended for businesses that have grown beyond MEI limits but want to keep tax and bureaucratic simplicity.
What Is ME (Microempresa)?
ME (Microenterprise) is a company classification based on revenue, defined by Brazilian law. It can adopt different tax regimes, including Simples Nacional, Lucro Presumido, or Lucro Real.
Requirements for ME
- Annual revenue limit up to R$ 360,000
- No restrictions on number of employees (but labor laws apply)
- Any legal entity (individual entrepreneur, limited company, etc.)
Advantages of ME
- Possibility to opt for Simples Nacional (with its benefits)
- No restriction on number of employees
- Flexibility to expand the business beyond MEI limitations
Disadvantages of ME
- More bureaucracy compared to MEI
- Higher accounting and tax costs
- Obligatory accounting records and tax declarations
ME is suitable for small entrepreneurs who are expanding and need more flexibility than MEI offers.
MEI, Simples Nacional, or ME: Which One Should You Choose?
To make the right choice, you need to analyze:
1. Revenue If your revenue is up to R$ 81,000 per year, MEI is the easiest and cheapest option. If you exceed this limit, you’ll need to migrate to ME under Simples Nacional or another regime.
2. Activity Type Some professional activities are not allowed for MEI. If this is your case, ME or EPP will be necessary.
3. Business Growth Plans If you plan to hire more employees, open branches, or grow revenue significantly, starting directly as ME can make your transition easier.
4. Bureaucracy Tolerance MEI is almost free from bureaucracy. ME requires accounting records, monthly tax payments, and more formal obligations.
5. Tax Optimization Simples Nacional usually offers lower taxes and more simplicity. Lucro Presumido or Lucro Real may be suitable for larger companies with specific revenue and expense structures.
Summary Table
| Option | Revenue Limit | Employees | Tax Regime | Bureaucracy | Suitable For |
|---|---|---|---|---|---|
| MEI | Up to R$ 81,000/year | 1 | Fixed monthly tax | Very low | Small individual entrepreneurs |
| ME | Up to R$ 360,000/year | No limit | Simples, Presumido, or Real | Medium | Growing small businesses |
| Simples Nacional | Up to R$ 4.8 million/year | Depends on company type | Simplified unified tax | Medium | MEs and EPPs |
Choosing the Right Legal Structure Will Help Your Business Grow
Making the right choice between MEI, Simples Nacional, or ME is essential to ensure tax savings, regulatory compliance, and sustainable growth. Analyze your current business situation and your future plans carefully. If necessary, consult an accountant to receive personalized guidance.
Choosing the right path from the start will save you time, money, and headaches—and allow you to focus on what really matters: growing your business.