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HOW TO ESTABLISH A PERSONAL COMPANY? WHAT ARE THE REQUIRED DOCUMENTS?

What is a Private Company?

Commercial Companies are regulated in Article 124 of the Turkish Commercial Code (“TTK”), and in accordance with the first paragraph of the relevant article, commercial companies; It consists of collective, commandite, joint stock, limited and cooperative companies.

In accordance with the second paragraph of the said article, in the TCC, collective and limited liability companies are considered as individuals; Joint stock, limited and limited liability companies with capital divided into shares are considered capital companies.

According to the first paragraph of Article 125 of the Turkish Commercial Code, commercial companies, including sole proprietorships, have legal personality. So, how much is a sole proprietorship divided into?

What are the Types of Private Companies?

There are two different types of sole proprietorship companies according to their functioning and purposes:

1. Collective companies

According to Article 211 of the Turkish Commercial Code, a collective company; It is a company established between two or more real persons for the purpose of operating a commercial enterprise under a trade name, and the liability of any of its partners is not limited to the company's creditors.

2. Limited Companies

In accordance with Article 304 of the Turkish Commercial Code, a company established for the purpose of operating a commercial enterprise under a trade name, where the liability of one or more of the partners towards the company's creditors is not limited and the liability of the other partner or partners is limited to a certain capital, is a limited liability company.

• Partners whose liability is not limited are called general partners, and those whose liability is limited are called limited partners.
• Limited partners must be natural persons. Legal entities can only be limited partners.

Sole Proprietorship Tax Rates

Sole proprietorships may sometimes be in a disadvantaged position because they are income tax payers. This is because the tax brackets are highly variable and are subject to a progressive taxation system ranging from 15% to 40%. Moreover, these rates may be increased or decreased from time to time by legal regulations. In other words, the higher the company's turnover, the wider or narrower this range in the tax bracket can be.

The tax rate that varies depending on the income bracket in sole proprietorship companies is as follows:

You can follow the Official Gazette to find out the current tax rates.

What is Sole Proprietorship Tax?

Private companies; It is obliged to declare and pay four different types of taxes: provisional income tax, stamp duty, value added tax (VAT) and withholding tax.

Stamp duty is automatically added to other taxes, while VAT is declared monthly and paid or refunded depending on the difference between purchases and sales. Withholding tax is paid in advance on a monthly or quarterly basis and declared with a withholding tax return. Depending on the number of workers, companies with more than 10 employees must make tax adjustments monthly, and companies with fewer employees must make tax adjustments quarterly.

The basic tax, which varies depending on the amount of profit and must be declared by March 25 every year, is income tax. This tax is paid in two installments between March and July. Provisional taxes are paid with provisional income declaration in February, May, August and November. In other words, taxes calculated quarterly can be deducted from annual income taxes. Stamp taxes are paid regularly every month.

How to Have a Private Company Title?

In accordance with Article 42 of the Turkish Commercial Code, the trade name of the collective company includes the name and surname of all partners or at least one of the partners and a phrase indicating the company and its type.

The trade name of ordinary or limited partnerships whose capital is divided into shares includes the name and surname of at least one of the limited partners and a phrase indicating the company and its type. The names, surnames or trade names of the limited partners cannot be included in the trade names of these companies.

What is the Annual Turnover Limit of a Private Company?

As of 2024, sole proprietorship turnover limit; It was determined as 890,000 ₺ for buying transactions and 1,270,000 ₺ for sales transactions.

How to Establish a Private Company?

To open a sole proprietorship company, you must first apply to the tax office. Nowadays, thanks to e-Government and MERSİS, this application process can also be carried out online.

You must prepare the necessary documents and fill out the application form either physically or digitally. After this application, officers come to your workplace address that you specified in the form and carry out checks. After the inspection, your business will be officially opened.

Documents required to open a sole proprietorship company:

• TR ID card and its photocopy
• Passport photo
• Deed or lease of the place where commercial activity will be carried out
• Application form to be filled out via e-Government / MERSİS
• Notarized signature declaration

e-Devlet üzerinden şahıs şirketi kurma süreci ise şu şekilde ilerler:

• You can log in to the interactive tax office using your e-Government login information.
• On the screen that opens, click on the "Transactions" tab, then "Registry notifications" and finally "Work start notifications" from the menu on the left.
• The digital form that appears on the screen that opens, consisting of five steps about the workplace and field of activity, is filled in.

After these procedures, an information message will be sent to your phone informing you of the attendance date. After the inspection by the officers, your sole proprietorship establishment process is completed.

How much does it cost to open a sole proprietorship company?

Although the costs are quite low compared to other company types, they vary every year due to changing notary fees and stamp taxes. Therefore, you can learn the current cost of opening a sole proprietorship during the opening process.

What Should You Do After Opening a Private Company?

After opening a sole proprietorship company, you must publish an establishment announcement in the Tradesmen Registry Gazette or Trade Registry Gazette, in line with the field of activity of your company. Similarly, you should become a member of the chamber of tradesmen or chamber of commerce in line with your field of activity. In order to make your work easier, we recommend that you also apply for e-invoice or e-archive, as the Revenue Administration has made the use of electronic invoices mandatory for taxpayers.

What are the Advantages and Disadvantages of a Sole Proprietorship?

Establishing a sole proprietorship is advantageous in some ways and disadvantageous in some ways. Among its advantages, we can point out that it is low cost, accounting expenses are less than other company types, establishment and closure processes can be carried out in one day, it can be easily transferred to another company status, and if the profit margin is low, the tax bracket is also low.

As a disadvantage, the company's reputation is weak compared to other types of companies, the tax bracket may increase to an unexpected level if the earnings suddenly increase due to the gradual tax system, and the company's debts; We can show that all partners in general companies and general partners in limited companies are considered responsible for all their assets.

The information contained in the content has been prepared according to the publication date.

 Easy and Fast Private Company Establishment with Ifasturk

The process of establishing a sole proprietorship can sometimes be complex and challenging. However, thanks to Ifasturk's expert team, you can complete this process much easier and faster. Choose Ifasturk to prepare all the documents you need and follow the application processes. With our professional consultancy services, you can establish and grow your business smoothly. For more information, contact Ifasturk now!

 Affiliated Links

• Private Company Monthly Expenses – 2024
• What Should Be Considered When Establishing a Private Company?
• What Works Can a Private Company Do?
• Private Company Closing Process
• Frequently Asked Questions About Sole Proprietorship

Mesut SENEL | Ifasturk CEO

Independent Accountant Financial Advisor