In this content, understand the concepts, see the differences of each type of company and some tips on how to choose the best of these schemes

MEI, ME, and EPP: do you know the difference between these types of companies? Understand the differences between them, the main characteristics, and how to choose the best one for your business.

Knowing the types of companies: MEI, ME or EPP

Brazil is one of the leading countries in entrepreneurship. Thus, whether out of necessity or opportunity, several new micro and small businesses emerge in the country every year.

Now get to know three types of companies: MEI, ME and EPP.

What is MEI - Individual Micro entrepreneur?

MEI stands for Individual Micro entrepreneur and is included in Complementary Law 123/2006. This regime was created with the objective of formalizing self-employed professionals and independent professionals, photographers, makeup artists and manicures, for example. In this modality, the regulation is simple and the professional can register through the website of the Entrepreneur Portal. In addition, there are also exemptions from various fees.

However, to act as MEI, the worker must have a turnover of up to R$81 thousand, cannot have partners and can only have one employee who receives a minimum wage per month or the minimum wage for the category.

It is also worth mentioning that, in this modality, the professional will be liable for all the company’s debts, unlimitedly. Therefore, equity is mixed between personal and business assets, in accounting terms. Another point of attention is related to the list of activities that are allowed to be MEI. After all, not all activities are allowed for this scheme.

MEI professionals are also assured of certain rights, such as social security benefits, such as maternity benefits, sick pay, retirement benefits and the like, being able to issue invoices and facilitating access to loans and opening bank accounts.

Regarding the duties, the Individual Micro entrepreneur must contribute, monthly, with the fixed rate destined to Social Security and ICMS or ISS, through a document called DAS - Collection Document of the Simples Nacional. If the micro-entrepreneur does not fit into this category, he/she may opt for ME or Micro-enterprise.

What is ME - Microenterprise?

The Microenterprise, or ME, is one whose economic activity does not have revenues exceeding R$360 thousand per year. Unlike MEI, which simply registers on the internet, yours is done at the Board of Trade.

Here, like the MEI, it only admits a single holder, who is also responsible for all the company’s debts. In this regime, personal and business assets are, for accounting, unified.

Regarding the number of employees, at ME, between 9 (for services and commerce) and 19 employees (for civil construction and industries) can be hired.

It is important to highlight that ME can join either Simples Nacional, Real Profit or Presumed.

What is EPP - Small Business?

A small business, small business or EP is one that annually invoices between R$360 thousand and R$3.6 million. In this modality, it is possible to employ 10 to 49 employees (if commerce or services), and 20 to 99 employees (industry and construction companies).

Like the ME, it can also opt, as a tax regime, for the Simples Nacional, Real Profit or Presumed. Despite the higher tax values, the EPP is also able to enjoy some tax advantages, such as paying less tax.

Differences between MEI, ME or EPP

Although they are different regimes, ME and EPP have some points that can confuse entrepreneurs. The MEI is easier to differentiate from the other two.

In summary, ME and EPP are regulated by the same law, which is the Complementary Law 123. It was responsible for instituting the Statute of Microenterprise and Small Business.

Regarding the classification, simple companies, individual registered companies and limited liability (EIRELI), can be classified as ME or EPP.

It is also worth mentioning that micro enterprises (ME) and small businesses (EPP) also have some similarities, such as choosing Simples Nacional, Real Profit, or Presumed and being formalized in the Board of Trade.

When we talk about a change in classification, as any company belonging to any of these modalities contributes to its revenue, it automatically moves to the next class.

Thus, if the MEI exceeds R$81 thousand per year, it will already be classified as ME; later, if ME earns more than R$360,000.00 in the same period, it will already be classified as EPP.

How to choose the best regime for your company?

Each business modality has its advantages and disadvantages, depending on the business objective. Thus, it is recommended to opt for MEI when the purpose is only to record activities and pay taxes, while self-employed.

Now, if the focus is on growing the company, reaching a turnover in excess of one million a year and having an operation with several employees, the ME and EPP are indicated.

However, do not give up specialized help, if you feel the need when choosing the best regime for your company.

The business world is full of acronyms, nomenclatures, and concepts. In this context, it is very important that every entrepreneur has basic notions, at least in relation to the related terms of their business.