Source: Season, 17/11/2008

SURPRISE: Businessman Fucci, from São Paulo, set up an optician in 15 days. Unusual speed with documentation

The São Paulo publicist Bruno Fucci, 33, decided to change his life. In March 2007, after 12 years working in large companies, he says that he decided to resign and own his own business. He used the savings he accumulated during that period and, together with two partners, opened a franchise for an optician in the neighborhood of Tatuapé, on the east side of São Paulo. In total, the investment reached, according to him, R $ 300 thousand.

Fucci says that, contrary to what he imagined, the formalization of the enterprise, done with the support of an accountant, happened quickly. In just 15 days, all the paperwork was ready - the registration of the social contract with the Commercial Registry, the registration with the Federal Revenue to obtain the National Register of Legal Entities (CNPJ), the state registration and the operating license issued by the City Hall. Then, with the company already open, Fucci also registered his employees in the Social Integration Program (PIS) and in the Severance Pay Fund (FGTS). He claims that the whole process cost R $ 800, including the accountant's fees. "I was surprised," he says. "I thought it was going to be more expensive and take a lot longer."

Fucci's reaction to the speed of the process was predictable. Brazil was marked as a country that establishes obstacles for those who want to set up their own business. According to an annual study by the World Bank, Brazil is one of the worst countries for doing business, due to heavy bureaucracy and a complex and costly tax system. In the 2007 survey, which includes 181 countries, Brazil is only 127th in the list of the most friendly countries for entrepreneurs. Opening a business would take up to 152 days.

At the end of 2006, with the approval of the General Law on Micro and Small Enterprises, which instituted Supersimples, also known as Simples Nacional, things started to change. According to the Regional Accounting Council of the State of São Paulo (CRC-SP), the average time for opening companies today is 20 days for service providers and retail trade, 30 days for wholesale companies and 60 days for industries, due to the environmental impact assessment carried out by the state agency in the area. It is true that not all cities in the country have made this leap, but the case of São Paulo illustrates a phenomenon that occurs, to a greater or lesser extent, throughout the national territory.

Despite the advances, the time for opening companies is still high. In New Zealand, the first in the World Bank ranking, it takes a day to create a company. In Australia two days and Canada four. In Chile, one of the fastest among the emerging countries, the process takes 27 days. Even so, it can be said that there has been a lot of progress in this aspect in the country. “The time this process took has greatly decreased,” says Domingos Orestes Chiomento, vice president of the São Paulo CRC.

In addition to facilitating the opening of companies, Supersimples - a simplified tax system for smaller companies, with revenues of up to R $ 2,4 million per year - allowed for more rational management. The payment of taxes, fees and contributions in the three spheres of government - federal, state and municipal - started to be made in a single guide.

It is not by chance that the number of companies that close their doors has dropped significantly in recent years. According to a survey by Sebrae, the entity supporting micro and small entrepreneurs, the death rate of São Paulo companies was one in two until the second year of life. Today, it is one in four in the same period. Of course, the accelerated economic growth of recent years has helped. But streamlining processes has played an important role. “The General Law was a great advance,” says Guilherme Afif Domingos, secretary of Employment and Labor Relations in São Paulo and chairman of the State Committee for Bureaucratization.

Soon, new measures are expected to come into effect to make life easier for small business owners. Last week, the Senate Economic Affairs Commission approved Bill No. 128/08, which expands the General Law. The bill is expected to be voted on by the plenary in time to go into effect as early as 2009. Approved by the Federal Chamber, it includes in Supersimples businesses such as medical clinics, law firms, insurance brokers and journalistic and advertising service providers.

The project also creates the figure of the Individual Microentrepreneur (MEI), for businesses with revenues of up to R $ 36 thousand. They will be exempt from practically all taxes included in Supersimples and will pay a fixed amount of R $ 50 per month through a booklet. The creation of the MEI is expected to allow the legalization of a good part of the 12 million informal companies in the country. Entrepreneurs will also be able, with CNPJ in hand, to have access to bank credit.

In São Paulo, the state government developed the Entrepreneur's Poupatempo Portal. The service, which is ready to go online, should allow the opening of an individual company over the internet within 24 hours. However, due to the delay in the unification and computerization of the bodies of the three spheres of government, in particular the Commercial Boards, it should still take about six months for the system to work. In addition, the IRS asked for an additional period to make adjustments to its own system, in order to include the MEI. “It is the largest social inclusion project in the country,” says Afif. “The most difficult task in this process is to reduce bureaucracy, there is no point in computerizing the bureaucracy.”

In São Paulo, the average time to start a service company or retailer has dropped to 20 days

Brazil still lacks much to join the class of countries that make life easier for entrepreneurs. Despite the simplification of the processes for opening and operating micro and small companies, the Brazilian tax burden is still one of the highest in the world. A survey carried out by the Brazilian Institute of Tax Planning (IBPT) shows that the weight of taxes in the Gross Domestic Product (GDP) has increased by almost 50% since 1996 (check the chart below). Labor legislation doesn't help either - and it drives many companies to hire unregistered employees. According to Professor José Pastore, one of the greatest specialists in labor relations in the country, a company gets to pay in taxes 103% of the salary paid to the worker. That is to say: the company pays, but the employee only receives half. The other part goes to the government.

Anyway, for a country like Brazil, which had so many rules that made it difficult for businesses to flourish, the recent changes are an important advance in the direction of stimulating the entrepreneurial spirit. It is this spirit that brings innovation geniuses like Bill Gates, from Microsoft, Steve Jobs, from Apple, and Jeff Bezos, from Amazon, in the United States. “Unlike Bolsa Família, which is a social program that generates dependency, the incentive to entrepreneurship is a sustainable income generation program, which creates jobs and turns the economy around,” says Professor Marcos Hashimoto, coordinator of the Entrepreneurship Center of Ibmec in São Paulo.

(1) Data from the first semester
Source: Brazilian Institute of Tax Planning (IBPT)
(1) Hourly data
Source: prof. José Pastore

This article is part of the series Fazer e Aconteça, an initiative by Editora Globo to stimulate the entrepreneurial spirit in the country