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Many entrepreneurs who want to operate in the business world are considering the option of establishing a sole proprietorship in Turkey. A sole proprietorship is a business model operated by a single person and made into a legal entity. In this article, we will provide detailed information about sole proprietorship in Turkey.

What is a Sole Proprietorship?

A sole proprietorship is a single form of partnership operated by only one person and that person manages and assumes responsibility for the business. Sole proprietorships in Turkey can register with the chamber of commerce just like capital companies. Sole proprietorships are a common option for entrepreneurs and small business owners who want to run their business alone.

Advantages of Sole Proprietorship Formation in Turkey

There are many advantages of establishing a sole proprietorship in Turkey:

  1. Easy Incorporation: Setting up a sole proprietorship is quite simple. Since it is operated by only one partner, management and decision-making processes are faster and simpler.
  2. Low Cost: The costs of setting up a sole proprietorship are generally lower. Accounting fees and notary book certification fees are generally lower according to the volume of business.
  3. Easy Closing: When the closure of the company is requested, this can be accomplished within 1 day. For example, in limited liability companies, a liquidation process of at least 4 months is required.

The Process of Establishing a Sole Proprietorship in Turkey

The process of setting up a sole proprietorship in Turkey includes the following steps:

1-Log in to E-state with your password.

2-Log in to the section titled “Establishment of Taxpayer Liability (Business Start Notification Request) by the Tax Offices for Real Persons” of the Revenue Administration.

3-After you fill in the fields according to your activity and proceed, the tax office will approve the registration of your company during the day or a day later and you can get your tax plate from the interactive tax office.  It is in your best interest to get an expert opinion when filling in these fields.

Sole Proprietorship Taxation in Turkey

The taxation system for sole proprietorships in Turkey is quite simple. Sole proprietorships declare their profits and income through their owners’ personal income tax returns. Tax rates on profits may vary depending on the annual income bracket.

We can illustrate this in a simple way as follows:

Tax rates are assessed on the profits generated within a taxation period. For example, if a sole proprietorship with an invoice transaction of 500,000 TL excluding VAT has an expense of 400,000 TL in accordance with the law, it will have a profit of 100,000 TL and will be included in the second tax bracket. Tax rates according to income are listed below:

0-70.000 TL – 15%

TL 10,500 for the TL 70,000 portion of TL 150,000, and 20% for the portion above this amount

TL 26,500 for the TL 150,000 portion of TL 370,000, 27% for the portion above this amount

TL 85.900 for the TL 370.000 portion of TL 1.900.000, 35% for the portion above this amount

TL 621,400 for the portion of TL 1,900,000 and 40% for the portion above TL 1,900,000

A sole proprietorship must also declare declarations such as provisional tax, withholding tax, value added tax, etc., which all businesses are subject to.