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Being an Individual Micro Entrepreneur Has Many Often Overlooked Advantages, Like Discount on Car Purchase and Social Security Contribution
The Covid-19 pandemic caused an unprecedented health and economic crisis worldwide. In Brazil, high unemployment, with a rate of 14.4 million unemployed in the second quarter of 2021, according to the Brazilian Institute of Geography and Statistics (IBGE), led many people to seek an alternative source of income. Many found that alternative in individual micro entrepreneurship (MEI).
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According to the Ministry of Economy, out of 3,359,750 companies opened throughout 2020, 2,663,309 were registered as MEI, a number that represents an increase of 8.4% compared to 2019. Currently, micro entrepreneurship accounts for 56.7% of the total businesses in the country.
What Is an Individual Micro Entrepreneur?
An Individual Micro Entrepreneur, or MEI, is a self-employed professional who has a National Register of Legal Entities (CNPJ). The category was created to regularize the situation of informal professionals.
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Micro entrepreneurs include various service providers, artisans, hairdressers, manicurists, sellers, etc.
To Fit into the MEI Category, It Is Necessary To:
- Have an annual revenue of up to R$81,000, or R$6,750 per month;
- Have at most one hired employee who receives a minimum wage or the floor salary of the category;
- Not have ownership or partnership in another company.
How Much Does It Cost to Be a Micro Entrepreneur?
To be an individual micro entrepreneur, it is necessary to pay the Simples Nacional (DAS), which is nothing more than a shared tax collection, billing, and inspection regime. Below, check the amount for Simples Nacional for the MEI’s areas of operation:
- Commerce or Industry: R$56;
- Service Provision: R$60;
- Commerce and Services Combined: R$61.
This amount is calculated based on the minimum wage. Therefore, even if your revenue increases, the tax amount will not change and will be adjusted annually according to the minimum wage.
However, even if there is no revenue, the MEI must continue to pay the Simples Nacional. Failure to pay the contribution generates charges and may even lead to the micro entrepreneur being expelled from the category.
The MEI Not Only Regulates Informal Professionals but Also Has a Series of Benefits.
Issuance of Invoice
One of the great advantages of being a MEI is the possibility of issuing invoices. This allows the micro entrepreneur to sell products or provide services to companies that can only make payments upon presentation of an invoice.
Additionally, another advantage is being able to participate in bids and offer products and/or services to the federal government or public institutions.
The CNPJ also facilitates negotiation with suppliers. Through it, it is possible to buy directly from the manufacturer, thus reducing production costs. You can also control your invoices with a good ERP system that helps you manage your business more easily.
Social Security Benefits
Another great advantage of the MEI is social security coverage provided by the payment of the Simples Nacional. However, the counting of contributions only takes effect from the first DAS payment. The social security benefits are:
- Retirement due to age and disability;
- Sickness benefit;
- Prison benefit;
- Maternity pay;
- Death pension (family).
To access these benefits, however, it is necessary to keep payments up to date and contribute with the required number of installments for each social security category, which varies between 1 month and 15 years (in the case of retirement).
Banking Services
The MEI has access to various indirect banking services. The main one is the microcredit lines offered by banks aimed at the micro entrepreneur.
Interest rates are lower compared to regular credit lines, and the requirements for credit approval are easier and correspond to the MEI’s reality.
The credit offered is lower than that directed to companies. Additionally, bureaucracy is reduced, providing advantages for both financial institutions and micro entrepreneurs. The MEI also has access to other financial services, such as:
- Debit or credit card;
- Debit or credit machines;
- Business insurance;
- Receivables anticipation;
- Investment options in legal entity accounts.
- Discount on Car Purchase
Discount on Car Purchase
Micro entrepreneurs are entitled to purchase vehicles with discounts ranging from 2.5% to 30%. This benefit is granted by manufacturers through a discount on ICMS, the Tax on Circulation of Goods and Services.
The manufacturers participating in the program are Renault, Chevrolet, Volkswagen, and Fiat.
MEI Receives Technical Support from SEBRAE
Being a micro entrepreneur also means having technical support from the Brazilian Service of Support for Micro and Small Enterprises (SEBRAE). With SEBRAE, the MEI can:
- Clear doubts about entrepreneurship;
- Learn about negotiations, prices, and conditions for your business;
- Obtain better terms in negotiations with suppliers.
- Low Tax Costs
The amount paid in taxes for those who are MEI is much lower than that paid by companies. In addition, the taxed amount is calculated based on the minimum wage, not changing with income increases.
Employee Registration
Those who are MEI also have the benefit of hiring up to one employee, who must receive a minimum wage or the floor salary of the category. The hiring cost is 11% on the payroll, with 3% referring to social security charges and rates, and 8% for FGTS.
How to Register as MEI?
The benefits are many, and having a CNPJ is also easy. Before starting the registration for MEI, you must register on the Federal Government Services Portal. Next, gather the following documents:
- CPF;
- Voter registration card or receipt of the last income tax return (IRPF);
- Residential or commercial zip code;
- Phone number.
Once this is done, log in to the Entrepreneur Portal and click on Formalize to have your CNPJ registered.
Now that you have an idea of your rights, know that, in addition to everything, planning is essential for your success.
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