Many small business owners in Brazil start as MEI (Microempreendedor Individual) but eventually consider transitioning to Simples Nacional as their business grows. However, is it really worth it?
In this article, we’ll analyze the advantages and disadvantages of upgrading from MEI to Simples Nacional to help entrepreneurs make the best decision.
1. Key Differences Between MEI and Simples Nacional
✔ MEI – Best for solo entrepreneurs earning up to BRL 81,000 per year, with low fixed taxes and minimal bureaucracy.
✔ Simples Nacional – Ideal for growing businesses, allowing higher revenue and employee hiring, but with higher taxes and more obligations.
| Feature | MEI | Simples Nacional |
|---|---|---|
| Annual Revenue Limit | Up to BRL 81,000 | Up to BRL 4.8 million |
| Taxes | Fixed monthly tax (DAS) | Progressive tax rates (4%–33%) |
| Employee Limit | 1 employee | Unlimited employees |
| Invoicing (NF-e) | Mandatory for B2B sales only | Mandatory for all transactions |
| Accounting Requirement | Not required | Accounting needed |
2. When Should You Upgrade from MEI to Simples Nacional?
✔ If your revenue exceeds BRL 81,000 per year.
✔ If you need to hire more than one employee.
✔ If you want to work with larger companies that require Simples Nacional registration.
3. Pros and Cons of Upgrading
✅ Pros
✔ Ability to grow revenue beyond BRL 81,000.
✔ Freedom to hire more employees.
✔ Easier access to business loans and contracts.
❌ Cons
❌ Higher taxes compared to MEI.
❌ More complex accounting and tax reporting requirements.
4. Final Recommendation
💡 If your business is growing, transitioning to Simples Nacional is the next logical step. However, if you are still within the MEI limits, staying in this category keeps taxes lower and operations simpler.
