EI, SLU, and Ltda: Which Type of Company to Open, and the Differences

The main difference between company types is liability for debts. In an empresário individual (EI, individual entrepreneur), the owner answers with all of their assets; in a sociedade limitada (Ltda, limited company) and a sociedade limitada unipessoal (SLU, single-member limited company), the partner's personal assets are, as a rule, kept separate from the company's.

Empresário individual (EI)

The individual entrepreneur carries out the activity in their own name, with no partners, under art. 966 of the Civil Code. According to the gov.br portal, they answer with all their assets for the debts and losses of the activity, including those of branches.

• There is no minimum capital requirement.
• Registration is done at the state Junta Comercial (state business registry), through the Redesim (national business registration network).
• It is not automatically a participant in the Simples Nacional.
• The MEI (Microempreendedor Individual, Individual Microentrepreneur) is a form of individual entrepreneur, with a revenue limit and its own rules.

Sociedade limitada (Ltda)

The Ltda is governed by art. 1,052 and following of the Civil Code and has partners. It arises from a contrato social (articles of organization), which defines the name, activity, capital, shares (quotas), and management. The partners' liability is limited to the value of their shares, and the gov.br portal states that it requires accounting with a balance sheet.

Sociedade limitada unipessoal (SLU)

The SLU is a Ltda with a single partner. It follows the same logic of limited liability and the same registration with the Junta Comercial. People who want to start a business alone and keep their personal assets separate from the company's usually compare EI and SLU.

The Eireli (Empresa Individual de Responsabilidade Limitada, individual limited liability company), the earlier model of a single-owner company with limited liability, no longer exists as its own type. Existing Eirelis were automatically converted into sociedades limitadas, according to guidance from the Departamento de Registro Empresarial e Integração (DREI, Department of Business Registration and Integration).

How to choose

1. How many owners: alone, EI or SLU; with partners, Ltda.
2. Business risk: activities with a higher risk of debts or lawsuits call for attention to limited liability.
3. Taxation: EI and Ltda can opt for the Simples Nacional, as long as they meet the rules. Corporations (sociedades por ações) and cooperatives (except consumer cooperatives) cannot.
4. Accounting obligations: an individual entrepreneur with annual gross revenue of up to R$ 81,000.00 is exempt from uniform bookkeeping and the annual balance sheet; the Ltda requires accounting with a balance sheet.
5. Size: the type of company and its size category (MEI, ME, EPP) are different things. An ME (microempresa, microenterprise) can be an EI, an SLU, or a Ltda.

Also keep in mind that the MEI can only be an individual entrepreneur, and anyone with another legal form, such as a Ltda, does not qualify.

Registration costs vary depending on the state's Junta Comercial. Before deciding, ask an accountant for a simulation of taxes and obligations for each type, using your activity and your expected revenue.

Frequently asked questions

Does the MEI protect my personal assets?

No. The MEI is an individual entrepreneur, and the owner answers with their assets for the debts of the activity.

Can I open an SLU without a partner?

Yes. The SLU is a limited company with a single partner.

Can an EI opt for the Simples Nacional?

Yes, if it meets the regime's rules. The election is not automatic.

Read also

• How to open a company and get a CNPJ: step by step
• Microempresa (ME): what it is and how to open one
• Pejotização: when a "PJ" contractor has an employment relationship