What is Individual Entrepreneur?

Individual entrepreneur, formerly known as individual firm, is a type of entrepreneur who acts as the sole owner of his business, which is an individual and without the presence of other partners.

The individual entrepreneur does not have legal personality as companies of companies, and registers with his own name in the corporate name, formalized at the commercial board of the city where the company is located.

The responsibilities of the common individual entrepreneur (IS) are not limited, that is, the equity and debts, personal or of the organization, are the same. If you want this legal separation of company assets, you must apply for the EIRELI category.

Individual Limited Liability Entrepreneur – EIRELI

The individual entrepreneur has the option of limiting his responsibilities, without the need to add a partner only for the constitution of a limited company, which was very common.

The Individual Limited Liability Company (EIRELI) category allows individual entrepreneurs to have the company’s capital separate from their staff. However, for this it is necessary to invest initially an amount equivalent to 100 minimum wages.

In the case of the Individual Entrepreneur and unlimited liability, there is no minimum capital for the constitution of the company and taxation can be through Simples Nacional, with the following classification:

Individual Micro Entrepreneur (ME) : with maximum annual revenue of US $ 360 thousand;

Small Business (EPP): with annual sales of up to US $ 3.6 million.

From these amounts, and up to US $ 78 million, there is also the possibility to opt for the Presumed Profit regime. Both schemes serve as a basic tax option available to the entrepreneur.

Individual Entrepreneur and MEI

The individual entrepreneur and the Micro Entrepreneur Individual (MEI), both are sole owners of their companies, however, there are differences between the two categories.

To be recognized as MEI, the entrepreneur cannot exceed the annual turnover of US $ 81 thousand, nor hire more than one employee. Its framework regarding taxation is differentiated, through SIMPLES.

The individual entrepreneur (ME or EPP), has no maximum number of employees or billing, and has the option to limit his responsibilities when he fits as EIRELI.

If the MEI company exceeds the annual value, it will be considered as a micro company. The opposite is also possible, in case the billing is reduced to less than the required limit.

Advantages and Disadvantages of the Individual Entrepreneur

The advantages of exercising business activities can increase if the entrepreneur knows how to choose from the available options, besides, there is no need to share the profits with other partners.

If he is an ordinary individual entrepreneur, he may have the main disadvantage of not separating responsibilities, and if he incurs many debts they affect personal finances.

The transfer to another holder, mainly through the sale of the company, is also not possible, except in case of death or by judicial authorization.

For good management, the entrepreneur has options that can increase his advantages between the existing categories and the taxation regimes.