How to Register a Business in the US from Brazil

Step 1: Benefits of starting your US business from Brazil

Starting a US business from Brazil offers a multitude of advantages, making it an attractive option for Brazilian entrepreneurs. One of the primary benefits is access to a larger market. The United States is home to one of the world’s largest consumer markets, with hundreds of millions of potential customers. By establishing a business in the US, Brazilian entrepreneurs can tap into this vast market, expanding their customer base beyond the borders of Brazil. Additionally, the US offers a stable and conducive business environment with robust legal protections, which can provide greater security and confidence for business operations.

Another significant advantage is the wealth of resources and opportunities available in the US. From access to advanced technology and innovation hubs to a diverse talent pool, the US provides an ecosystem that fosters business growth and development. Brazilian entrepreneurs can benefit from myriad funding opportunities, including venture capital and angel investors who are more prevalent in the US market. Furthermore, the strong bilateral relationship between the US and Brazil can facilitate smoother trade operations and collaboration, creating a solid foundation for business success. These factors collectively make starting a US business from Brazil a strategic move that can lead to substantial growth and international expansion.

Step 2: How to start your US business from Brazil

To start a US business from Brazil, the first step is to choose the appropriate business structure. There are several types of business entities in the US, such as Sole Proprietorship, Limited Liability Company (LLC), Corporation (C-Corp or S-Corp), and Partnership. Many international entrepreneurs prefer to register an LLC due to its flexibility and simple regulatory requirements. After determining the business structure, you will need to select a state to register your business in. Popular choices include Delaware, Wyoming, and Nevada due to their business-friendly laws and minimal tax requirements.

Once you have chosen the state and business structure, the next step is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is necessary for tax purposes and for opening a US bank account. While you do not need to be physically present in the US to apply for an EIN, it is often advisable to hire a registered agent or a US-based legal service to assist with the process. Additionally, you might need to open a US business bank account to facilitate financial transactions. Some banks may require you to visit a branch in person, but others might offer remote account opening services, especially for international entrepreneurs.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in Brazil

Understanding Compliance Requirements for Running a US Business in Brazil

Expanding your US-based business into Brazil presents a wealth of opportunities, but it also requires a keen understanding of local compliance requirements. Navigating the regulatory landscape can be challenging, but knowledge of key considerations ensures a smoother transition and successful operation. Below are some important aspects to consider:

Business Registration

Before commencing operations, your business must be registered with the appropriate Brazilian authorities. This involves choosing a legal structure, obtaining a CNPJ (Cadastro Nacional da Pessoa Jurídica) number, and registering with the Board of Trade. Proper registration is crucial for legal operations and accessing banking and credit facilities.

Legal Structure

Selecting the right legal structure is imperative. The most common types are:

• Limitada (Ltda.): Similar to an LLC, this structure limits the liability of its owners.
• Sociedade Anônima (SA): Comparable to a corporation, typically suitable for larger businesses with the ability to issue shares.

Your choice will affect regulatory requirements, tax obligations, and managerial responsibilities.

Taxation

Brazil's tax system is known for its complexity. Key considerations include:

• Corporate Tax: Consists of Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL), approximately 34% combined.
• Indirect Taxes: Includes ICMS, PIS/COFINS, and ISS, varying significantly by region and industry.
• Transfer Pricing: Regulations are in place to prevent tax evasion through under or overpricing in intercompany transactions.

Labor Laws

Compliance with labor laws is rigorous and protects employee rights. Important areas include:

• Labor Contracts: May be temporary, indeterminate, or for specific tasks, each with its own regulations.
• Working Hours: Standard workweek is 44 hours, with specific overtime compensation requirements.
• Employee Benefits: Mandatory benefits include health insurance, transportation vouchers, meal allowances, and the 13th-month salary.

Environmental Regulations

Businesses must comply with federal, state, and municipal environmental laws. Permits may be required for activities impacting the environment. Non-compliance can result in hefty fines and operational restrictions.

Intellectual Property

Registering trademarks, patents, and copyrights with the Brazilian National Institute of Industrial Property (INPI) safeguards your intellectual property. This is essential for protecting your brand and innovations in a new market.

Data Protection

Recent legislation, the General Data Protection Law (LGPD), governs data privacy. It mandates stringent consent and data handling protocols and aligns closely with the EU's GDPR.

By understanding these considerations, US businesses can adeptly navigate the Brazilian compliance landscape, ensuring legal operations and paving the way for successful market entry.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in Brazil

Understanding Tax Obligations for Running a US Business in Brazil

Successfully managing a US business in Brazil requires a solid understanding of the tax implications involved. The taxation landscape in Brazil is known for its complexity, and it’s crucial to grasp the key considerations to ensure compliance and optimize financial performance.

1. Types of Taxes

Brazilian taxes can be grouped into several categories:

• Corporate Income Tax (IRPJ): Calculated on the company’s net income, with rates that can vary.
• Social Contribution on Net Profit (CSLL): An additional tax on net profits, supplementing the IRPJ.
• Value-Added Tax (VAT): Consisting of ICMS (state-level VAT) and IPI (federal-level tax on industrial products).
• Service Tax (ISS): Applied by municipalities on the provision of services.
• PIS/COFINS: Federal contributions for social integration and financing of social security, imposed on gross revenues.

2. Transfer Pricing

If your business transactions involve parent companies, subsidiaries, or related parties, Brazil’s transfer pricing regulations will apply. These rules are designed to ensure that the prices assigned to transactions between related entities reflect market conditions to prevent tax avoidance.

3. Withholding Taxes

Brazil imposes withholding taxes on various types of payments made to foreign entities, including dividends, interest, royalties, and technical services. The rates can fluctuate, and tax treaties between the US and Brazil may offer reduced rates or exemptions.

4. Tax Registration and Compliance

To operate in Brazil, a US business must obtain a Cadastro Nacional da Pessoa Jurídica (CNPJ) number, akin to a tax identification number. Compliance with federal, state, and municipal tax requirements is mandatory, and businesses should be prepared for the rigorous reporting and documentation standards.

5. Permanent Establishment Risk

US businesses should consider the implications of establishing a permanent establishment (PE) in Brazil. The existence of a PE could trigger local tax obligations on profits attributable to the Brazilian activities. Understanding the criteria for PE is essential to avoid unexpected tax liabilities.

6. Local Partnerships and Advisors

Navigating the tax landscape can be challenging, and collaborating with local tax advisors or law firms specializing in cross-border operations can be beneficial. They can provide guidance on compliance, filing requirements, and strategic planning.

Understanding these tax considerations will allow US businesses to better manage their operations in Brazil and ensure adherence to local tax laws. Tailored advice from experts will further smooth the process, ensuring that all legal obligations are met efficiently.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country