What Are you a PJ? What are the rights of this modality? [Complete Guide]

If you've ever looked for job openings or read advertisements for different opportunities, you've probably come across the term "PJ." But do you know what it means and what it means? how to be a PJ?

In this article, we want to bring you several tips on what it is, how it works, and how you can be a PJ so that you have different opportunities and still work more independently.

Follow the article to learn all the details about what PJ is.

What is PJ?

PJ is the abbreviation for Legal Entity, an entity with rights and obligations and legal personality. Brazilian law, anchored in the Civil Code and other regulatory provisions, establishes the regulatory framework for this category.

In practice, a legal entity is treated as a company, regardless of its size or sector of activity. This means that by obtaining a valid CNPJ (National Registry of Legal Entities), a professional is recognized as a legal entity when offering their services.

This legal registration gives the legal entity its own identity, allowing it to carry out commercial transactions, assume legal commitments and acquire rights in a manner distinct from its individual members.

Therefore, obtaining a CNPJ is an important milestone for those who wish to operate as a legal entity, being a fundamental requirement for establishing themselves in the Brazilian business scenario.

How does PJ hiring work?

A PJ contract works like a commercial agreement between two companies. The professional, a legal entity, provides services to the contracting company, which is also a legal entity.

The PJ hiring process follows these steps:

• The contracting company identifies the need to hire a PJ professional.
• The PJ professional registers with the contracting company, sending their personal and professional data and information about their company.
• The hiring company evaluates the profile of the PJ professional and decides whether to hire him or not.
• If the hiring is approved, the contracting company and the PJ professional sign a service provision contract.

A service provision contract requires the inclusion of essential elements for its validity and clarity. This document must identify the parties involved, detail the purpose of the contract, stipulate the service price, define the deadline for service execution, specify the payment method, and include the terms of termination.

In addition to the service provision contract, the contracting company and the PJ professional must also formalize the contract through an invoice or receipt.

After hiring, the individual contractor is responsible for providing the agreed-upon services, according to the contract specifications. The contracting company, in turn, is responsible for paying the agreed-upon service fee on the date and in the manner stipulated in the contract.

Hiring a legal entity offers some advantages over hiring a CLT employee, such as flexible hours and the ability to work multiple jobs. However, there are also some disadvantages, such as tax liabilities and the lack of benefits such as vacation, 13th-month salary, and FGTS (Unemployment Severance Fund).

Therefore, hiring a PJ is an interesting option for professionals seeking flexibility and autonomy at work.

What are the types of PJ?

Now that you know what a PJ is, you should understand that there are several categories you can fall into. Therefore, it's important to know which one you fall into so you can apply for your CNPJ correctly.

In general, the categories are MEI, ME, EPP, EI and EIRELI

What is PJ MEI?

MEI is a simplified taxation and formalization regime for small businesses. MEIs can be engaged in commercial, industrial, service-providing, or micro-industrial activities.

To become a MEI, the entrepreneur must meet the following requirements:

• Be over 18 years old;
• Not be a partner or owner of another company;
• Not have an annual turnover exceeding R$ 81 thousand;
• Have at most one employee hired.

MEI can issue electronic invoices (NF-e), hire an accountant and access special credit lines.

What is PJ ME?

A Microenterprise (ME) is a legal entity that falls under the Simples Nacional (Simples Nacional) system. Simples Nacional is a simplified tax regime that combines federal, state, and municipal taxes and contributions into a single tax collection document (DARF).

To qualify as an ME, the enterprise must meet the following requirements:

• Have an annual turnover of up to R$ 360 thousand;
• Not having an equity interest in another company;
• Not having branches;
• Have at most one employee.

What is PJ EPP?

A Small Business (EPP) is a legal entity that falls under the Simples Nacional (Simples Nacional) system. Simples Nacional is a simplified tax regime that combines federal, state, and municipal taxes and contributions into a single tax collection document (DARF).

To qualify as an EPP, the project must meet the following requirements:

• Have annual revenue of R$ 360 thousand to R$ 4.8 million;
• Not having an equity interest in another company;
• Have a maximum of 49 employees.

What is PJ EI?

An Individual Entrepreneur (EI) is a type of legal entity that can be established by just one person. An EI has no partners, and therefore, the entrepreneur is personally responsible for all of the company's obligations.

The EI can be included in the Simples Nacional or another tax regime.

To become an EI, the entrepreneur must meet the following requirements:

• Be at least 18 years old;
• Not be a partner or owner of another company;
• Not having been convicted of a bankruptcy crime.

What is PJ EIRELI?

An EIRELI is a legal entity formed by a single shareholder. An EIRELI has limited liability, meaning that the shareholder's personal assets are not liable for the company's debts.

To establish an EIRELI, the entrepreneur must meet the following requirements:

• Have share capital of at least 100 times the current minimum wage;
• Not be a partner or owner of another company;
• Not having been convicted of a bankruptcy crime.

EIRELI can issue electronic invoices (NF-e), hire an accountant and access special credit lines.

Are there other categories of PJ?

In addition to the PJ categories we mentioned, which are the best known and most used in Brazil, there are two for larger companies, which are:

• Limited Liability Company (Ltda.): A legal entity formed by two or more partners. A Limited Liability Company has limited liability, meaning that the partners' personal assets are not liable for the company's debts.
• Public Limited Company (SA): a legal entity formed by an unlimited number of shareholders. A SA has limited liability, meaning that the shareholders' personal assets are not liable for the company's debts.

What are the rights of the PJ?

Once you understand what a legal entity is, it's also important to understand what legal entities are and aren't entitled to under labor laws. This makes it easier to understand how these categories work.

And, among the questions that always arise, one of them concerns holidays. Brazilian law does not provide specific rules for legal entities working on holidays. Therefore, the question of whether a legal entity can work on holidays is a contractual matter between the legal entity and its client.

Generally, service contracts between legal entities and clients stipulate that the legal entity is available to work on holidays if necessary. However, it's important for the legal entity and the client to negotiate this matter in advance to avoid conflicts.

Similarly, there are no specific rules governing the working hours of legal entities. What is specific is that, if the company has a registered employee (employee), they must work hours in accordance with labor laws.

Furthermore, it's important to note that, by law, legal entities do not have vacation time. Vacation time is a labor right guaranteed by the Consolidation of Labor Laws (CLT).

However, the CLT applies only to employees, who are individuals. Legal entities are not considered employees and are therefore not entitled to vacation time.

Now, let's see, in summary, what the PJ is entitled to and what it is not entitled to.

What is a legal entity entitled to?

The rights of a legal entity (PJ) are the rights that Brazilian law guarantees to a company. These rights are guaranteed by the Federal Constitution, the Civil Code, and other laws.

The main rights of a legal entity are:

• Legal personality: the PJ is a legal entity with its own rights and obligations.
• Private propriety: the legal entity may own assets, such as real estate, vehicles and equipment.
• Freedom of association: the PJ may associate with other companies or entities.
• Freedom to contract: the legal entity can contract services and products from other companies.
• Freedom of expression: the PJ can express their opinions and ideas.
• Protection against discrimination: the legal entity cannot be discriminated against based on its legal nature, field of activity or location.

In addition to these general rights, legal entities also have specific rights, which vary depending on the type of company. For example, microenterprises (MEs) and small businesses (EPPs) have tax benefits, such as the possibility of registering with the Simples Nacional (Simples Nacional) tax regime.

What does a legal entity not have the right to?

Legal entities (PJs), or companies, have rights guaranteed by Brazilian law, such as legal personality, private property, freedom of association, freedom of contract, and freedom of expression. However, there are also some rights that PJs do not have, such as:

• Labor rights: Legal entities are not entitled to vacation pay, 13th-month salary, FGTS (Unemployment Fund), unemployment insurance, or other employment benefits. These rights are guaranteed only to employees, who are individuals.
• Social security rights: Legal entities (PJs) are not entitled to retirement, sick pay, maternity pay, or other social security benefits. These rights are guaranteed only to employees, who are individuals.
• Political rights: Legal entities (legal entities) do not have the right to vote, be elected, or hold public office. These rights are guaranteed only to citizens, who are individuals.

In addition to these rights, legal entities may also have specific restrictions depending on their type. For example, microenterprises (MEs) and small businesses (EPPs) have annual revenue and employee limits.

Is MEI a legal entity?

Yes, MEI is classified as a Legal Entity (PJ). The acronym MEI refers to Individual Microentrepreneur, a specific category within the legal entity category.

The MEI (Individual Micro-Individual Entrepreneur) represents a simplified taxation and formalization regime for small businesses. Its scope encompasses a variety of sectors, including commerce, industry, service provision, and micro-industry.

To become a MEI, the entrepreneur must meet certain criteria:

• Be over 18 years old;
• Not having a partnership or ownership in another company;
• Present annual revenue of less than R$ 81 thousand;
• Have at most one employee hired.

MEI has several benefits, such as the issuance of electronic invoices (NF-e), the possibility of hiring an accountant and access to special credit lines.

It is important to highlight that, despite being considered a legal entity, the MEI is not equivalent to an employee.

The partners of an MEI are classified as entrepreneurs, therefore, they are not covered by labor rights, such as vacations, 13th salary, FGTS (Unemployment Fund) and unemployment insurance.

Furthermore, MEIs enjoy specific advantages, such as membership in the Simples Nacional (Simples Nacional) system, simplifying tax and contribution payments. This fundamental distinction highlights the MEI's unique nature within the business world.

Who can become a PJ?

To be a legal entity, you must meet the following requirements:

• Be over 18 years old: a person must be at least 18 years old to open a business.
• Not being a partner or owner of another company: the person cannot be a partner or owner of another company, as this may generate a conflict of interests.
• Not having an annual turnover higher than the permitted limit: the company's annual revenue must be within the limits permitted for the chosen legal entity category.
• Not having a conviction for bankruptcy crime: the person cannot have been convicted of a bankruptcy crime, as this may affect their credibility.

In addition to these requirements, the individual must also choose the type of business they want to open. There are different types of businesses, each with their own characteristics and requirements.

How to open a legal entity?

Now that you know what a legal entity is, you need to learn how to become one. To do so, in addition to meeting the requirements above, you must register as a legal entity.

If you want to be a MEI, registration is as follows:

• Access the Entrepreneur Portal here.
• Create an account Gov.br if you don't have it.
• Choose the “Formalize” option.
• Fill out the registration form.
• Receive the Individual Microentrepreneur Status Certificate (CCMEI).

It's important to remember that there are no registration fees to become a MEI. After opening your PJ, you must obtain approval from the municipality where you operate so you can operate without any problems.

For other categories of PJ, you must access the website Federal Government here, make a preliminary inquiry, enter your details, and review all the operating license requirements. This way, you'll register and obtain the necessary documentation to obtain your CNJ (National Register of Legal Entities) and allow your company to operate smoothly.

Is it worth being an individual contractor?

The decision to become a Legal Entity (PJ) depends on a series of factors involving the individual profile, the characteristics of the business and the desired professional objectives.

In general, choosing to be a legal entity can bring advantages to those who want more autonomy and freedom in managing their own business, are potentially seeking to earn higher compensation compared to formally registered employees, or intend to serve a specific market that may not be explored by traditional companies.

However, this choice isn't without its challenges. Being a legal entity means taking on more responsibilities, including handling all of the company's legal and tax obligations.

Furthermore, professionals in this position are more exposed to risks, such as customer default and more intense competition.

It is also important to remember that being a PJ implies giving up common labor benefits, such as paid vacation, 13th salary, Severance Indemnity Fund (FGTS) and unemployment insurance.

Therefore, the choice to adopt the status of Legal Entity requires careful analysis, considering both the potential advantages and the specific challenges of the individual and business context.

Therefore, analyze it carefully and if you see that it is valid, you should contact the official government agencies and formalize your business.

Did you enjoy this? Then take advantage of becoming an individual contractor and enjoy all the benefits of this category. And see more tips on our page.