Starting a Business: MEI, ME or EPP—Which Should You Choose?

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

Compare the most common business types in Brazil and find out which one is best for your business.

Comparing MEI, ME and EPP

The Individual Microentrepreneur (MEI) category is meant for people who earn up to R$ 81.000 in annual revenue, have no more than 1 employee, and work in specific permitted activities. The Microenterprise (ME) category allows annual revenue of up to R$ 360.000 and up to 9 employees (commerce/services) or 19 (industry), and it can opt into the Simples Nacional (Brazil’s simplified tax regime for small businesses). The Small Business (EPP) category covers annual revenue between R$ 360.000 and R$ 4,8 million.

Each category has its own tax, labor, and social security rules.

Check out the firm’s article on Social Security Contributions for Business Owners: Rates, Pró-Labore and MEI.

Tax Regime

The MEI pays a fixed monthly amount (DAS, the Simples Nacional payment slip). An ME and an EPP can opt for the Simples Nacional, Lucro Presumido (presumed profit) or Lucro Real (actual profit). The Simples Nacional combines several taxes into a single payment slip, with rates ranging from 4% to 33% depending on revenue and business activity.

The Individual Microentrepreneur (MEI) category is meant for people who earn up to R$ 81.000 in annual revenue, have no more than 1 employee, and work in specific permitted activities.

Choosing the right tax regime can mean significant savings, so it is advisable to consult an accountant.

Frequently Asked Questions

What is the difference between MEI, ME and EPP?

An MEI earns up to R$ 81.000 per year and can have 1 employee. A Microenterprise (ME) earns up to R$ 360.000 per year and can have up to 9 employees in commerce or 19 in industry. A Small Business (EPP) earns between R$ 360.000 and R$ 4,8 million per year. Each category has different tax rules.

Learn more about Unpaid Overtime: How to Collect From the Company.

How much does it cost to open and maintain an MEI?

Registering as an MEI is free and is done through the Entrepreneur Portal (Portal do Empreendedor). The fixed monthly cost (DAS) is approximately R$ 75,60 (commerce/industry), R$ 79,60 (services) or R$ 80,60 (commerce and services), based on 2026 figures. An MEI cannot have partners.

Which tax regime should an ME or EPP choose?

An ME and an EPP can opt for the Simples Nacional, Lucro Presumido or Lucro Real. The Simples Nacional combines taxes into a single payment slip, with rates from 4% to 33% depending on revenue and business activity. The right choice can generate significant savings, so it is advisable to consult an accountant.

Detailed Comparison of MEI, ME and EPP

Choosing the right business type is a strategic decision that directly affects taxation, ancillary reporting obligations, and the business’s capacity to grow. The Individual Microentrepreneur (MEI) category is the simplest and most economical option, suited to people who are just starting out and whose revenue stays within the annual limit set by law. An MEI pays a fixed monthly contribution that includes INSS (Brazil’s National Social Security Institute) contributions, ISS (municipal services tax) and ICMS (state tax on the circulation of goods and certain services).

The Microenterprise (ME) category is meant for businesses whose annual revenue exceeds the MEI limit. An ME can opt for the Simples Nacional, which combines several taxes into a single payment slip with progressive rates. An ME can hire more employees, issue all types of invoices (nota fiscal), and engage in activities that an MEI is not allowed to perform.

The Small Business (EPP) category serves businesses with higher annual revenue while still allowing them to opt for the Simples Nacional. An EPP has advantages in public procurement, such as tie-breaker preferences and access to procedures reserved for small businesses. Moving from one category to another happens automatically based on the company’s revenue.

Step by Step: How to Open Your Business

The first step is to decide on the type of business and the legal structure best suited to it. Next, choose the economic activity codes (CNAEs) that the business will carry out and define the address of its headquarters. For an MEI, registration is done online through the Entrepreneur Portal, free of charge and immediately.

For an ME or EPP, the process involves drafting the articles of organization (contrato social, or the application for a sole proprietorship), registering with the Commercial Registry (Junta Comercial), obtaining the CNPJ (national corporate taxpayer number) from the Federal Revenue Service (Receita Federal), obtaining state and/or municipal registration, and getting the business operating permit (alvará de funcionamento). Depending on the activity, specific licenses may be required, such as a health permit or an environmental license.

Tax Regime and Tax Planning

Choosing the tax regime is one of the most important decisions when opening a business. The Simples Nacional is the regime most widely used by micro and small businesses because it combines several taxes into a single payment slip (DAS) and offers progressive rates that start at low percentages. However, not every economic activity can opt for the Simples Nacional.

Businesses that do not qualify for the Simples Nacional can opt for Lucro Presumido or Lucro Real. Lucro Presumido is suited to businesses whose profit margins exceed the margin presumed by law, while Lucro Real is mandatory for businesses with revenue above the legal limit and for certain sectors of the economy. An accountant’s guidance is essential to identify the most advantageous regime.

In addition to federal taxes, the business must pay attention to state (ICMS) and municipal (ISS) obligations, which vary by location and by the activity carried out. State and municipal tax benefits, such as incentives for setting up businesses in certain regions, can mean significant savings and should be considered when planning the opening of the business.

Business Owner Obligations After Opening

Once the business is formally registered, the entrepreneur takes on a number of legal obligations that must be met on an ongoing basis. An MEI must pay the DAS slip (Documento de Arrecadação do Simples Nacional, or Simples Nacional Collection Document) every month and file the Annual Simples Nacional Declaration (DASN-SIMEI) by May 31 of each year, reporting the previous year’s revenue.

For an ME or EPP that has opted for the Simples Nacional, the obligations include paying the DAS every month at a rate that varies with revenue and business activity, keeping regular accounting records, complying with labor obligations (if there are employees), issuing invoices for all transactions, and submitting the ancillary declarations required by the federal, state, and municipal tax authorities.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.