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Frequently Asked Questions About Sole Proprietorships

  What documents are required to establish a sole proprietorship?

Your ID card, residence permit and a signature statement obtained from a notary are sufficient for the first step. Then, your accountant with whom you have made an agreement can go to the tax office and open your business.

  Do I have to have a workplace to establish a sole proprietorship?

If the service or product you will offer to your customers does not require a workplace, it can be done without a significant expense. However, every company must have a business address. To overcome this obligation, you can show the house you live in as your business address or you can rent a virtual office at a very reasonable price compared to normal offices.

  If I use my home-office as my business address, what expenses can I record as expenses?

Since your workplace will be your home, you can show all the expenses that you have to bear related to your business, such as electricity, water, natural gas bills of your house, internet bill if you use it for your business, cleaning expenses, food expenses, etc. as expenses.

  What taxes will I pay if I establish a sole proprietorship?

• Stamp Tax
• VAT (Value Added Tax)
• If your workplace is rented, Withholding Tax
• Monthly Bağkur (Social Security) Premium payment due to being the owner of the company
• If you have an employee, their insurance payment
• Annual Income Tax (This tax is paid in 4 installments called Temporary Tax within the year.)

  Can I open a business while working as an insured employee?

Working as an insured employee in a workplace does not prevent you from establishing a company. On the contrary, it will be more advantageous for you. Since your regular 4/A insurance premium is already paid, you do not have to pay 4/B Bağ-kur premiums as those who work as insured employees in another workplace.

  I was working as an insured employee in a workplace and left to establish a sole proprietorship. Will my previously paid premiums be lost when I start paying 4/B social security premiums?

If you left your previous workplace before establishing a sole proprietorship, in other words, if you are not working as an insured employee when the company is established, you must pay 4/B (Bağ-kur) premiums. However, these 4/B insurance premiums to be paid do not invalidate your previously paid 4/A premiums.

For example, let's assume that your 1500-day 4/A premium has been paid before the establishment of the company. This 1500-day premium is included in your retirement calculation, but you will retire from 4/B, not as 4/A.

  Can I establish a sole proprietorship while I am retired?

Being retired does not prevent you from establishing a company. On the contrary, since you are already retired, you do not have to bear the 4/B premium expenses like those who work as insured employees in another workplace.

  Do I have to open a bank account in the name of my company to establish a sole proprietorship?

Since you are a sole proprietorship, you do not need to open a bank account on behalf of your company. You can also use your own account for your company. If you were a Limited or Joint Stock Company, then you would need to have a bank account on behalf of your company.

  Can partnerships be established in sole proprietorships?

Partnerships in sole proprietorships are established under the name of "ordinary partnership". Tax calculations are made separately for each partner according to their share ratios.

  Can I add a title to my sole proprietorship?

Sole proprietorships are established by accountants directly in the name and surname form. However, if the company owner wishes, he/she can add a title by going to the tax office with a petition.

  Can I convert my sole proprietorship to a Limited or Joint Stock Company?

Sole proprietorships have relatively lower costs compared to other companies in terms of taxation at relatively low incomes. Sole proprietorships are taxed according to their income, i.e., lower incomes are taxed at a lower tax rate, while higher incomes are taxed at a higher tax rate. However, the tax rate of Limited and Joint Stock Companies is fixed regardless of income. This makes sole proprietorship advantageous for those with low income, while Limited and Joint Stock Companies are more advantageous for higher incomes. Therefore, many company owners who have established their companies as sole proprietorships may consider converting them to Limited or Joint Stock Companies after their income increases.

In this article, we have compiled the answers to the most frequently asked questions about sole proprietorships. You can reach our other article on establishing a sole proprietorship here. If you cannot find the answer to the question you are looking for in our article, you can contact us anytime via the chat on our website or by calling our phone number.