The Individual Microentrepreneur (MEI) is an affordable option for those who want to formalize a small business and gain advantages such as social security coverage and reduced tax burdens. However, many people register as MEI without knowing all the rules, which can lead to fiscal and financial problems.

If you want to avoid complications and ensure the safety of your business, check out this article on the 5 main consequences of being irregular as MEI and the best alternatives for safely entrepreneurship.

Who can be MEI?

Before opening a CNPJ as MEI, it is essential to understand who actually fits into this category. MEI is an option for individual microentrepreneurs who earn up to R$ 81,000 per year (or about R$ 6,750 per month). Additionally, the business must belong to one of the sectors permitted by the government, and the entrepreneur cannot have a stake in another company as a partner or administrator.

If you exceed the allowed earnings or engage in an activity that is not on the MEI list, it is important to evaluate other options for business classification.

5 Consequences of being an irregular MEI

1. Loss of social security benefits

One of the biggest attractions of MEI is the possibility of contributing to the INSS and having access to benefits such as retirement, sick pay, and maternity leave. However, if you become irregular, either due to late payment of the DAS (National Simple Tax Document) or exceeding the allowed earnings, the entrepreneur loses these rights and may have difficulties in regularizing their situation in the future.

2. Fines and retroactive charges

If the MEI exceeds the revenue limit and does not properly deregister, they may be automatically classified under another tax category, resulting in retroactive tax charges and fines for inadequate tax collection. This charge can compromise the company’s finances and create debts that are difficult to settle.

3. Risk of exclusion from the Simples Nacional

MEI is part of the Simples Nacional regime, which allows for a simplified taxation system. However, if the rules are not followed, the Federal Revenue may exclude them from this regime, forcing them to adopt a more burdensome tax format, such as Presumed Profit. This may result in a significant increase in taxes and accounting bureaucracy.

4. Difficulty in obtaining credit

Many banks and financial institutions offer exclusive credit lines for MEIs. However, cadastral irregularity may impede access to these benefits, making it difficult to obtain capital to expand the business. The lack of documentation may also compromise the entrepreneur's credibility with suppliers and partners.

5. Risk of having the CNPJ canceled

The government may automatically cancel the CNPJ of a MEI that has been irregular for more than two consecutive years, either due to non-payment of contributions or failure to submit the Annual Declaration of the Simples Nacional (DASN-SIMEI). If this happens, the entrepreneur loses the formalization of their business and may have difficulties opening a new company in the future.

Alternatives for those who do not fit into MEI

If you have realized that MEI is not the ideal model for your business, there are other options that allow for regularization without compromising your operation:

• Microenterprise (ME): If the revenue exceeds R$ 81,000 annually, the Microenterprise may be a viable option. With a revenue limit of R$ 360,000 per year, it allows for the hiring of more employees and greater fiscal flexibility.

• Small Company (EPP): For companies that earn between R$ 360,000 and R$ 4.8 million per year, the EPP is a format that offers tax advantages and access to more favorable credits.

• Individual Entrepreneur (EI): An option for those who wish to operate alone, without revenue limits, but with specific rules regarding taxation and asset liability.

• Limited Liability Company (LTDA): If you have a partner, the LTDA is an ideal choice to ensure asset protection and greater credibility in the market.

How to regularize your situation and keep your business safe

If you are irregular with the MEI or wish to migrate to another tax regime, it is important to seek professional guidance. Beorange can assist you in this process by offering specialized accounting consulting to:

• Regularize debts and avoid fines;

• Analyze the best tax option for your business;

• Monitor fiscal obligations and keep your company always in compliance.

Do not take unnecessary risks. Contact Beorange and ensure that your company is always regular and prepared to grow safely!