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Setting Up a Sole Proprietorship in Turkey: A Comprehensive Guide

The transcontinental geography of Turkey, officially known as Turkey, makes it a prime location for multinational companies to set up their regional headquarters. 

Turkey enjoys an average GDP growth of 5.1% with good regional and domestic markets. Global companies also find a reason to invest in Turkey as half its workforce is under the age of 33 years and, at the same time, skilled and highly productive. 

Apart from this, Turkey offers a liberal investment climate with no barriers to FDI, strong protection for investors, and tailored and comprehensive incentive schemes to ease setting up a business. 

In this context, any entrepreneur willing to explore new markets can begin quickly by setting up a sole proprietorship in Turkey. To register a sole proprietorship in Turkey, all they need is a tax identification number (TIN), a local bank account, an entry in the Turkish Trade Registry, and verification of physical space (if applicable). 

Continue reading this page and learn more about how to register a sole proprietorship in Turkey. 

Who can be a Sole Proprietor in Turkey? 

A sole proprietorship is usually a one-person business. As a sole proprietor, there is no legal difference between you and your business, yet it is uncommon in Turkey. The country recognizes sole proprietorship under the two business structures as per the Turkish Commercial Code No. 6102: 

  • Collective partnerships (kollektif ortaklık); and
  • Commandite partnerships (or limited partnerships) (komandit ortaklık).

Entrepreneurs who wish to conduct self-employed activity in the form of a company with a legal personality may register their business under any one of the above structures.

All partners have unlimited liability in a collective partnership form of sole proprietorship in Turkey. At the same time, only some partners have unlimited liability In Commandite partnerships. 

Benefits of Sole Proprietorship in Turkey

Foreign entrepreneurs can leverage the golden opportunity to invest in Turkey by starting a sole proprietorship

For instance, anyone aged under 29 years and hasn’t opened an individual company anywhere can benefit from the Young Entrepreneur Incentive program. They can register themselves as self-employed in Turkey and avail of the following incentives by incorporating a sole proprietorship in Turkey. 

  • No obligation to pay social security premium (Bağ-Kur) for 12 months.
  • 75,000 TL of income is exempt from income tax annually for the first three years. 

Further, sole proprietorships are one of the most straightforward business structures because

  • Minimum tax obligations: Sole proprietorships which do not cross a threshold revenue need not manage extensive bookkeeping and maintain financial records. They may even claim VAT exemptions. It is sufficient for proprietors to pay progressive income tax between 15% to 40% as sole proprietorship taxes in Turkey. 
  • Easy banking options: The owner’s account can accept and make business transactions. Government banks like Ziraat Bank, Halk Bank, and Vakıf Bank are the most popular banking choice in Turkey. 

Documents Required for Registering Your Business in Turkey

The documents required for setting up a sole proprietorship in Turkey are as follows: 

Company documents

  • Get the company agreement ready with the founders’ signatures and approved by a public notary in Turkey
  • Documents showing proof of all non-cash assets like immovable properties, intellectual property rights, and other values. 
  • A valuation report on non-cash assets prepared by the courts may be necessary for a limited partnership business structure.  

Work permit & Residence permit

  • Any foreign citizen can manage a sole proprietorship in Turkey after receiving a valid work permit.
  • You need a copy of the employment contract, passport, photo, health insurance, and usual personal identification copies to apply for a work permit in Turkey. 
  • A residence permit is required to register as self-employed in Turkey.  
  • You will need to submit a bank statement proving you have a minimum of USD 300 each month along with the original copy of the work permit to get your residence permit in Turkey. Also, attach four passport photos and passport to get the residence permit.

Tax identification number

  • The tax identification number for any sole proprietorship is the owner’s tax identification number (TIN). 
  • The tax identification number is mandatory for Value-Added Tax (VAT) payments, invoicing, filing tax returns as separate entities, and managing payroll.  

Other Criteria for Registering a Sole Proprietorship in Turkey

All foreign shareholders, managers, or authorized representatives of any company in Turkey must obtain a potential tax number. They can obtain a potential tax number through the MERSIS System

Turkish Commercial Code requires registered companies to maintain books and records in accordance with the Turkish Accounting Standards. Setting up a sole proprietorship in Turkey must consider filing yearly/monthly tax declarations for applicable taxes, including but not limited to corporate tax, VAT, stamp tax, and withholding tax.

Additional permits are required to register a sole proprietorship in Turkey in the following industries: 

  • Aviation
  • Banking
  • Energy
  • Financial intermediary institution
  • Insurance
  • Private education
  • Marine
  • Mass media
  • Telecommunication

How to Register a Sole Proprietorship Company in Turkey

Follow the below steps to set up a sole proprietorship in Turkey: 

Do your research

  • Sole proprietorships are unincorporated businesses owned by an individual.
  • Turkey recognizes two business structures resembling a sole proprietorship: a Limited Partnership and a Collective Company.  
  • You can choose between the two business structures to register a sole proprietorship in Turkey.  

Register with the local tax authority 

  • Using the tax identity number, the concerned state department will issue a tax registration certificate that confirms zero tax liability. 
  • The tax registration certificate will act as proof of incorporation of your sole proprietorship in Turkey. 

Applying to the Turkish Trade Registry

  • You must fill out the application with the Trade Registry, depending on the province where the company is to be incorporated, 30 days before starting operations of your sole proprietorship. 
  • You may appoint a manager or a local representative to coordinate registration with the local authorities.

Registering on MERSIS System

  • The Central Registry Number System (MERSIS) introduced by the Minister of Commerce is regularly used by almost all trade registry offices in Turkey, including Istanbul and Ankara. 
  • The trade registry offices in different regions require MERSIS System registrations to obtain potential tax numbers or incorporate a company and establish a branch office.

Open a current bank account

  • A separate bank account for a sole proprietorship in Turkey will separate company expenses from personal expenses. 
  • Documents related to incorporation, business registration, and tax identities may be required to open a current bank account in Turkey. 

Contributing towards social security payments

  • A registered self-employed in Turkey pays social security premiums monthly to avail of socioeconomic benefits as per the Turkish labor law. 
  • The minimum monthly social security premium amount is 1.476,18 TRY. The due date of the social security premium payment is usually the last day of each month.
  • The premiums can be paid via internet banking of government banks and interactive tax offices. 

Draft a plan for hiring & managing employees

  • While there are no administrative formalities to fulfill before hiring employees, you need a strategy for hiring and compliance with the sole proprietorship Turkish law. 
  • Develop an in-house team of human resource (HR) experts or follow standard templates to draft employment contracts, conduct background checks, manage payroll, and ensure compliance with the labor code in Turkey. 

How can Multiplier Help You Carry Out Business in Turkey? 

Anyone can incorporate a sole proprietorship in Turkey. The laws do not mandate minimum requirements for the number of employees or capital to establish a business entity. However, sole proprietorship taxes in Turkey and legal liabilities are directly linked to the owners. 

Further, entrepreneurs must have a comprehensive understanding of national and regional laws to register a sole proprietorship in Turkey. Hiring employees, payroll management, and team management will require significant investment in time and effort. 

We recommend that entrepreneurs and global businesses look beyond registering a sole proprietorship in Turkey legally and adopt contemporary Employer Of Record (EOR) solutions like Multiplier.  

Multiplier can eliminate the need for setting up a sole proprietorship and managing employees on the payroll. 

Multiplier is a global employment solution designed exclusively for sole proprietors looking to expand globally. It offers reliable EOR solutions to manage recruits, onboard employees, and undertake HR responsibilities in Turkey. 

The highlight among EOR services is that one-click payroll processing can make seamless payments to your international employees and freelancers

Now manage any legal entity with 100% compliance with the Turkish business rules and regulations with Multiplier!

Frequently Asked Questions

You can start a sole proprietorship with any number of employees, physical space for an office, and corporate company documents just by the letter of attorney. However, you will have to visit Turkey at the final stage to obtain the documents and open a bank account.

Contemporary EOR solutions such as Multiplier have eliminated the need to register a sole proprietorship yet successfully run business activities  in over 150+ countries.

No, not all businesses in Turkey are registered as sole proprietorships. Turkish Commercial Code mandates businesses in telecom, banks, financial institutions, and insurance be incorporated only in the form of Joint Stock Companies.

As a registered self-employed in Turkey, you pay your taxes through personal income tax on your total taxable income after deducting social security charges and professional expenses.

The personal income tax rates for the tax year 2022 (income generated in 2021) are:

  • Up to TRY 22,000: 15%
  • From TRY 22,001 to TRY 49,000: 20%
  • From TRY 49,001 to TRY 180,000: 27%
  • From TRY 180,0001 to TRY 600,000: 35%
  • Above TRY 600,000: 40%

If a sole proprietorship in Turkey is registered with a VAT number, they can deduct or claim that taxes are paid accordingly.

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