%402x.svg)
A Sole Proprietorship in Turkey is a simple, single-owner business structure. Unlike a Limited Liability Company, it has fewer legal and financial obligations, making it an ideal choice for small businesses, freelancers, and individuals who want to operate independently.
What Taxes are Sole Proprietorships Subject to?
In terms of taxation, companies are divided under two main headings:
- Capital Companies: Subject to corporate tax.
- Sole Proprietorships: Subject to income tax.
Sole proprietorships are subject to a progressive tax system based on profits. As of 2024, income tax rates are as follows:
Up to 110,000 TL: 15%
16,500 TL for TL 110,000 of TL 230,000, more: 20%
40,500 TL for TL 230,000 of TL 580,000: 27%
135,000 TL for TL 580,000 of TL 3,000,000: 35%
982,000 TL for TL 3,000,000 of more than TL 3,000,000: 40%
How to Establish a Sole Proprietorship?
Establishing a sole proprietorship is much easier than other types of companies because the process usually proceeds online.
Documents Required for Setup:
- Power of attorney to be given to the accountant.
- Signature declaration to be obtained from a notary public.
- Workplace lease contract or photocopy of title deed.
Set Up Period:
- The set up process is usually completed within 2-3 days.
Tax Obligations of Sole Proprietorships
- Income Tax: As a sole proprietor, your business income is considered personal income and taxed according to Turkey’s progressive tax rates. Income tax rates range from 15% to 40%, depending on annual income.
- VAT (Value-Added Tax): Certain goods and services are subject to
VAT. This can vary between 1%, 8%, and 18%, depending on the type of goods or services. - Social Security Contributions: You will also need to contribute to Turkey’s Social Security system (SGK), based on your income.
Other Financial Responsibilities
- Annual Financial Statements: Though not as extensive as other business types, you may still need to prepare simplified financial records for tax purposes.
- Bookkeeping Requirements: Keeping accurate financial records is essential, and some may opt to work with an accountant to ensure compliance with Turkish regulations.
What should be the address of a sole proprietorship?
You have three options for the address of a sole proprietorship:
- Office Address: By keeping a physical office.
- Home Address: By showing your home as a workplace.
- Virtual Office: Without a physical office, with address allocation.
Can Insured Employees Establish a Sole Proprietorship?
Yes, insured employees and civil servants can also establish a sole proprietorship.
Normally, when establishing a sole proprietorship, it is obligatory to have a Bağkur. However, if you say that you are working somewhere and want to establish a sole proprietorship, you do not need to make Bağkur according to the SSI legislation and your insurance at the workplace will continue.
What is the Sole Proprietorship Setup Fee?
For the year 2024, sole proprietorship setup costs vary approximately between 2,200 TL - 2,500 TL. There are costs such as personal signature declaration, accountant attorney fee, accountant fee. There is a business opening fee when the establishment is made with an accountant.
Are Sole Proprietorships E-Invoice Taxpayers?
Sole proprietorships can be e-invoice taxpayers. Businesses with an annual turnover exceeding 5 million TL are subject to e-invoice obligation. E-invoice replaces paper invoice and makes transactions easier.
%401x.svg){kind=icon}
