Company Formation

The key differences are liability and taxation. In a sole proprietorship, the owner is liable for business debts with all personal assets, and profits are taxed at progressive income tax rates. In a limited company, the partners' liability is, as a rule, limited to the capital they commit, and profits are subject to a flat corporate tax rate; in return, balance-sheet bookkeeping, general assemblies and more formal procedures are required. We recommend deciding once your expected earnings, number of partners and risk profile are clear.

A sole proprietorship is set up by filing a notice of commencement with the tax office; under Article 153 of the Tax Procedure Law, this must be done within 10 days of starting business. Traders engaged in commercial activity register with the trade registry and the chamber of commerce, while craftsmen and tradespeople register with the tradesmen registry and the relevant professional chamber. Self-employed professionals (such as lawyers, engineers, psychologists or software developers) do not register with the trade registry; tax office registration and, where applicable, their professional body registration are sufficient.

Under Presidential Decree No. 7887, from 1 January 2024 the minimum capital is TRY 50,000 for a limited company and TRY 250,000 for a joint-stock company (TRY 500,000 initial capital under the registered capital system). In a limited company, cash capital may be paid within 24 months of registration (Turkish Commercial Code, Art. 585). In a joint-stock company, at least 25% of cash shares must be paid before registration and the rest within 24 months after it (Art. 344). As these amounts can change, we confirm the current figures before formation.

You need the identity details of partners and managers (for foreign nationals, a translated passport and a potential tax number), the articles of association prepared through the MERSİS system, the managers' signature declarations, a receipt showing payment of the Competition Authority fee (four ten-thousandths of the capital), and a lease agreement or title deed for the business address. If capital is contributed in kind, a valuation report is also required.

Yes, as a rule. Under Article 4/1-b of Law No. 5510, partners in limited companies and partners who sit on the board of a joint-stock company are insured under Bağ-Kur (4/b, self-employed status). If you are also employed under an employment contract (SGK 4/a), Article 53 of the Law determines which status applies when more than one insurance status overlaps; we assess this together at the formation stage.

Obligations include opening the books (balance-sheet basis for capital companies), monthly VAT returns, the Withholding and Premium Service Return if you employ staff or pay rent, periodic advance tax, and the annual income or corporate tax return. SGK workplace registration is completed when the first employee is hired. Depending on turnover thresholds and your sector, e-Invoice, e-Archive and e-Ledger obligations may apply. Founders under 29 who become taxpayers for the first time should consider the young entrepreneur exemption under Article 20/B of the Income Tax Law, which applies to sole proprietorships.