Articles of association or business application: what’s the difference?
When someone decides to start a business in Brazil and formalize their business, one of the first questions that arises is which document to use to legalize their business activity: a company by law or a business application. Although both are instruments for registering companies, they have important differences regarding their legal nature, the type of company they represent, and the form of incorporation. Today, you will learn about articles of association or business application.
In this article, we will explain in detail what each of these documents is, who issues them, when they should be used, and whether one can replace the other. If you are in the process of opening your business or want to better understand how these formalities work in Brazil, continue reading.
If you would like legal assistance from our team, please send us a message on WhatsApp.
What is the difference between a company’s articles of incorporation and a business application?
The main difference between a company’s articles of incorporation and a business application lies in the company’s legal form and the number of partners involved.
The articles of incorporation are the constitutive document used to formalize companies with two or more partners, such as limited liability companies (LTDA), corporations (S/A), and others. It establishes the company’s operating rules, defines the partners’ identities, their shareholdings in the capital stock, how the company will be managed, and how profits and losses will be shared.
The business application is a document exclusively for sole proprietors—that is, those who carry out economic activities in their own name, without partners. It formalizes the business owner’s registration with the Board of Trade, creating the legal status necessary to obtain a CNPJ (National Register of Legal Entities) and legalize commercial activities.
Summary of differences:
| Articles of Incorporation | Sole Proprietorship Registration Form |
|---|---|
| Used by companies with two or more partners | Used by a sole proprietor |
| Defines rules of partnership and partners’ ownership interests | Formalizes the operation of a business without partners |
| Complex document with several clauses | Simple, standard document |
| Allows capital to be divided among partners | Capital contributed entirely by the sole proprietor |
| Mandatory registration with the Board of Trade | Mandatory registration with the Board of Trade |
Therefore, the choice between the articles of incorporation and the sole proprietorship application depends directly on the type of corporate structure desired.
Who issues the articles of incorporation and the sole proprietorship application?
Both documents must be prepared and signed by the interested party(ies) and filed with the Commercial Registry of the state where the company will be headquartered. This state agency officially registers and grants legal existence to the company.
Articles of Association
The articles of association must be drafted by the founding partners themselves or by a lawyer, if required by local law or the complexity of the company. After drafting, they are registered with the Board of Trade, upon payment of the corresponding fees.
In general, the articles of association must contain:
- Business name;
- Headquarters address;
- Corporate purpose (activity to be carried out);
- Share capital;
- Division of shares among partners;
- Management rules;
- Definition of management powers;
- Profit distribution and dispute resolution clauses.
After approval by the Board of Trade, the company acquires legal personality and can apply for a CNPJ (National Registry of Legal Entities) with the Federal Revenue Service.
Business Application
The business application is a standard form provided by the Board of Trade itself. The business owner fills out their personal information, company address, share capital, and description of the economic activity. Once completed and signed, the document is also filed with the Board of Trade for registration.
Unlike the articles of association, the entrepreneur’s application does not contain contractual clauses, since there is no corporate relationship or division of capital between partners.
When to use an article of association and when to use a business application?
The definition of the appropriate document depends on the business structure:
- If there are two or more partners: formalization must be done through an article of association. This is because it is necessary to establish the rules of coexistence and division of responsibilities among the partners, in addition to defining the share capital and management rules;
If the entrepreneur is going to operate alone: they must use the business application. This document is useful for those who wish to open a business as a sole proprietor, assuming full rights and obligations of the business. - It is worth remembering that, although it is currently possible to open a sole proprietorship (EIRELI)—which was abolished by Law No. 14,195/2021—previous registrations remain valid. Currently, the alternative for sole proprietors who wish to limit their asset liability is the Single-Member Limited Liability Company (SLU), which already requires an article of association, even with only one partner.
Examples of when to use each document:
Articles of Incorporation:
- Retail business with two partners.
- Consulting firm with three partners.
- Technology company with investor participation.
Business Application:
- Clothing store opened by a single entrepreneur;
- Independent service provider who decides to formalize their business;
- Small family business operated by only one person.
Does a business application replace a company’s articles of association?
No. A business application does not replace a company’s articles of association, as they serve different purposes.
A business application is used only by individuals who operate as sole proprietors. In this format, the business owner is responsible for the company’s debts and obligations with their personal assets, as there is no legal separation between the individual’s assets and those of the business.
A company’s articles of association are essential for any business, even when there is only one partner, in the case of single-member limited liability companies (SLU). They regulate the company’s activities, protect the rights of its partners, and establish the rules of the business relationship.
Therefore, the two instruments should not be confused: one does not replace the other when used in different legal and business contexts.
Conclusion
Understanding the difference between the articles of incorporation and the business application is essential for anyone wishing to start a business in Brazil and properly formalize their business. Choosing the appropriate document ensures legal certainty, avoids tax issues, and protects the entrepreneur from future litigation and conflicts.
In short:
- Use the articles of incorporation if you have two or more partners, or if you opt for a Single-Member Limited Liability Company (SLU);
Use the business application if you operate as a sole proprietor, with no partners, assuming full responsibility for the business’s obligations. - Both documents must be registered with the Board of Trade and are essential for obtaining a CNPJ (National Registry of Legal Entities), issuing invoices, and legally operating your business.
If you’re unsure about which model to adopt or how to properly prepare the document, it’s recommended to seek the support of a lawyer or accountant specializing in business law. This will ensure the registration process is secure and in compliance with legal requirements.
If you’re planning to open a business, now you know which path to take to formalize your business. Take the opportunity to learn about the types of companies and tax regimes available in Brazil, ensuring your choice is the most appropriate for your project.
If you would like legal assistance from our team, please send us a WhatsApp message.
