How to Establish a Sole Proprietorship in Turkey?

A. Introduction

Starting a company is the dream of many. However, founding a company involves more than just dreaming. It requires correctly managing numerous legal, financial, and administrative processes. Professional legal support can save both time and money. At TNC Law & Consultancy, we provide you effective and efficient legal support both nationally and internationally. We are here to solve any problems you may encounter during the company formation process and to help you operate your business securely.

B. What is a Sole Proprietorship?

A sole proprietorship is formed by one person or a small number of partners, where the liability is unlimited in ordinary partnerships and secondary for limited partners in collective and limited partnerships (Turkish Commercial Code [TCC] 236-237, 317). The primary reason these partnerships are called "personal partnerships" is the emphasis on the partners' personal and identity characteristics throughout the partnership process.

Sole proprietorships are smaller scale and easier to establish compared to other types of companies. Listed under TCC 124/2, sole proprietorships are categorized into three sub-types: collective, limited, and ordinary. They require a commercial license to operate.

The transfer of partnership shares requires the consent of all partners due to the importance of trust within the partnership. The unanimity rule generally applies for amending the partnership agreement, and every vote counts equally in partnership decisions (TCC 226/3, 309).

Partners have absolute control rights, and the death of a partner could potentially dissolve the partnership.

C. How to Establish a Sole Proprietorship?

To establish a sole proprietorship, you first need to prepare the necessary documents and apply to the relevant institutions. Required documents include:

• Application form

• Copies of ID card (2 copies)

• Passport photos (2 copies)

• Signature declaration from a notary (2 copies)

• Residence certificate (2 copies)

• Rental contract or property deed copy

• Power of attorney and signature declaration from an accountant or financial advisor (if applicable)

After preparing these documents, you can submit a business startup notification to your local tax office or through the e-Government Interactive Tax Office. Following the tax office inspection, you can obtain your tax plate. You can then register with the relevant chamber of commerce, apply for social security and retirement fund registrations, and complete e-signature and e-invoice applications.

D. Costs of Establishing a Sole Proprietorship

The cost of establishing a sole proprietorship varies depending on the type of business, capital, field of activity, and accounting expenses. Generally, the costs include:

• Capital (varies depending on the business)

• Notary fees (uniform nationwide but subject to change)

• Accounting fees (varies based on the accounting firm's location and professionalism)

• Trade and tax chamber fees

• Social security and retirement fund premiums

E. Advantages of Establishing a Sole Proprietorship

Advantages of establishing a sole proprietorship include:

• Faster and simpler setup process compared to other company types

• Ability to use a home address as the business address

• Tax exemption on income up to 75,000 TL for first-time sole proprietors under 29 years old (Young Entrepreneur Support)

• Difficulty in transferring partnership shares prevents unwanted ownership transfers

F. Why Should You Seek Legal Support When Establishing a Sole Proprietorship?

Seeking legal support when establishing a sole proprietorship is crucial both during the setup process and in preventing potential future issues. If you are considering establishing a sole proprietorship, TNC Law & Consultancy offers the following services:

• Preparation of necessary documents and applications to relevant institutions

• Calculation of costs and tax procedures for establishing a sole proprietorship

• Ensuring compliance with legal regulations concerning sole proprietorships

• Protection of your rights in commercial disputes, debt collection, compensation claims, and other legal issues

• Advising on partnership structure, capital increases, and transfers

If you need legal support for establishing a sole proprietorship, contact us. Our expert lawyers will provide the best solutions and help you confidently manage your business.