Choosing the right tax category is crucial for small entrepreneurs in Brazil. Many business owners start as Microempreendedor Individual (MEI) but later consider switching to Simples Nacional as their revenue grows. But which one is more cost-effective?
In this article, we’ll compare MEI and Simples Nacional, analyzing taxation, benefits, and when it makes sense to transition to ensure maximum savings.
1. Key Differences Between MEI and Simples Nacional
| Category | MEI (Microempreendedor Individual) | Simples Nacional |
|---|---|---|
| Annual Revenue Limit | Up to BRL 81,000 | Up to BRL 4.8 million |
| Taxation | Fixed monthly tax (DAS) | Progressive tax rates (4%–33%) |
| Can Hire Employees? | Yes, 1 employee max | Yes, unlimited employees |
| Invoices (NF-e) Required? | Only for B2B sales | Mandatory |
| Social Security Benefits | INSS included in taxes | Employer must contribute separately |
| Accounting Requirement | No accountant needed | Accounting required |
2. Tax Comparison: MEI vs. Simples Nacional
🔹 MEI Taxation:
- Fixed monthly payment (DAS): BRL 70.60 – BRL 76.60.
- Covers INSS, ICMS, and ISS, eliminating the need for extra tax filings.
🔹 Simples Nacional Taxation:
- Taxes range from 4% to 33%, based on revenue and business activity.
- Tax calculation includes IRPJ, CSLL, PIS, COFINS, ISS, ICMS, and CPP.
- Requires monthly tax reports and proper bookkeeping.
💡 Key Insight: MEI is cheaper and simpler, but Simples Nacional allows higher revenue and business expansion.
3. When Should You Transition from MEI to Simples Nacional?
✔ If Your Revenue Exceeds BRL 81,000/year – Exceeding this limit means you must transition to a Microempresa (ME) and pay higher taxes.
✔ If You Need More Employees – MEIs can hire only one employee, while Simples Nacional has no hiring limits.
✔ If You Want to Work with Larger Companies – Some corporations only do business with companies under Simples Nacional.
4. Which Option Saves You More Money?
- If your revenue is under BRL 81,000, staying as an MEI is the best option to pay the lowest taxes.
- If you plan to grow, transitioning to Simples Nacional allows business expansion with more clients, employees, and higher revenue limits.
Final Thoughts
MEI is ideal for small entrepreneurs who want low taxes and easy management. However, if your business grows beyond the MEI limit, Simples Nacional provides a structured way to scale legally.
The best choice depends on your revenue, business model, and future growth plans.
