Friday 29 August 2014

Brazil officially in recession

Thursday 28 August 2014

Starting a business in São Paulo : To register or not to register?

Today was the last day for one of my first official employees. Sonia started off being our fantastic helper at home, she helped me with daily chores, cooking and looking after my children.


As she watched my cupcake business grow (she recommended her step-daughter who was my first official hire), she voiced her interest in helping me more with that side rather than the house. She even tried to quit so she could follow her dream of baking and selling from home herself, which was put on hold when some heavy rain damaged their house and they are in the middle of renovations (which means she needs a regular salary). So she officially moved over to the cupcake business earlier this year. Unfortunately it has not worked out for numerous reasons and I have had to let her go.

If you hire on an ad-hoc basis you can pay under the table. If you hire part-time on a weekly basis (i.e. semi-permanent) you need to register your hire, as well as full time. There is an official trial period of up to 3 months and I highly recommend that you write in their work book 'Carteira de Trabalho' that they have 3 months (you can elect for a shorter trial period). If you fire them within the 3 months you are liable to fines 'multas' but you can fire them on the 90th day of their trial without any fines. After this trial period has expired it's a whole different ball game which I've gone through, luckily with the help of my accountant so I can't give you a step by step guide here but can advise his services (see his details below).

By law, employees are guaranteed a pay increase every September (** will check the rate) but because I am firing Sonia within a month of this guaranteed pay increase there is a fine I have to pay out, which in reality is one extra month. There are different rates / fines if you dismiss them and pay out the notice (i.e. they leave the same day) or if you dismiss them with advance notice (30 days) so they work out their notice. They also have the right to leave work 2 hours early each workday during their notice or leave 7 days earlier - to give them the opportunity to look for another job.

Against advice, Sonia worked out her notice and she only missed 2 days of work surprisingly! She is / was obviously a big part of our family (since our second daughter was 2 months old) so we have left on friendly terms. The main point I want to make is to follow the rules and make sure everything is paid out, and signed for because every ex-employee has the right to sue within 2 years of being fired!

My advice if you are going to hire full time staff make sure you register formally and do everything by the book. Yes. the taxes are high but the end cost will be the same and less of a headache. You will be liable for "vale transporte" and "vale refeição" = travel and lunch money, and together this will be a minimum of R25 per employee.  Below is a sample salary slip for one of my staff. And here is the contact of our fabulous accountant who helped with registering the company, employees, other taxes and available for any documentations we have.

Tel: 11-2281-96-99

TIM: 11-98652-00-06