Guide to Establishing a Company in Türkiye: Company Types, Step-by-Step Establishment Process, Costs, and Legal Dynamics

Turkey, with its geopolitical location, developed infrastructure, dynamic workforce, and easy access to global markets, is an attractive investment center for both domestic and foreign entrepreneurs. However, transforming an idea into a commercial activity is not simply about renting an office or launching a website. The first and most important step when entering the business world is to establish the correct legal framework for the business.

The company formation process, shaped within the framework of the Turkish Commercial Code No. 6102 (TTK), brings with it financial, legal, and administrative obligations. Choosing the wrong company type or submitting incomplete applications can lead to significant financial losses and legal sanctions that are difficult to remedy later on.

This comprehensive guide will cover all the legal processes, company types, current capital requirements, tax obligations, and post-incorporation operational steps that entrepreneurs wishing to establish a company in Türkiye need to know, down to the finest detail.

1. Types of Companies in Türkiye and Choosing the Right Structure

In Turkey, companies are generally Sole Proprietorships and Capital Companies . The scale of your venture, the number of partners, your revenue target, and most importantly, your risk perception are the key factors that determine which type of company you choose.

1.1. Sole Proprietorship (Individual Business)

This structure is ideal and easiest to set up, especially for entrepreneurs working alone and aiming for small to medium-sized turnover. Legally, the company partner and the company itself are considered the same person.

• Capital Requirement: There is no legal minimum capital requirement.

• Liability: This is the most critical point; the company owner fully and unlimitedly liable with all their personal assets for all of the company's debts.

• Taxation: As company profits increase, so does the tax rate (subject to a progressive income tax rate ranging from 15% to 40%).

1.2. Limited Liability Company (Ltd. Şti.)

This is the most preferred company model in Türkiye. It can be established with a minimum of 1 and a maximum of 50 partners. The partners' shares are registered in the commercial registry.

• Capital Requirement: According to the latest updates to the law, it is mandatory to commit a minimum of 50,000 TL in initial capital (the company's main assets at its inception) to establish a limited liability company

• Liability: Partners' liability is limited only to the capital share they have committed to the company. However, there is a legal exception to be noted: In cases involving state debts (taxes, social security contributions, etc.), limited company partners are also personally liable with their assets in proportion to their shares.

• Taxation: The company pays a flat-rate Corporate Tax on its profits.

1.3. Joint Stock Company (A.Ş.)

This model is most suitable for large-scale projects, startups planning to attract future investment, entities aiming for an IPO, or those seeking quick and bureaucracy-free share transfers. It can be established with at least one partner.

• Capital Requirement: The minimum capital requirement for standard joint-stock companies 250,000 TL. For privately held joint-stock companies that adopt the registered capital system, this limit is at least 500,000 TL .

• Liability: Partners are only liable to the company up to the amount of capital they have committed. The biggest difference from a limited liability company is that partners in a joint-stock company have no personal liability for the company's public debts such as taxes and social security contributions. Only the members of the company's board of directors are liable for public debts.

• Ease of Share Transfer: While share transfers in limited companies require notarization and registration in the trade registry, in joint-stock companies, share transfers can be made very quickly and inexpensively through endorsement by printing share certificates or temporary share certificates. Furthermore, if shares are sold after being held for two years, the profit obtained is exempt from income tax.

2. Comparison Table of Company Types

The table below clearly outlines the key legal differences between the three most common company models established in Türkiye:

Feature	Sole Proprietorship	Limited Company (Ltd. Şti.)	Joint Stock Company (A.Ş.)
Minimum Capital	No Limits	50,000 TL	250,000 TL
Number of Commons	At least 1 person	Between 1 and 50 People	Minimum 1 person (No upper limit)
Liability for Commercial Debts	With all his personal assets, unlimited	Limited by capital share	Limited by capital share
Liability for Public Debts	With all his personal assets, unlimited	Partners are personally liable in proportion to their share	Partners are not liable (Board of Directors is liable)
Share Transfer Method	Non-transferable (Must be closed)	Notarization and registration in the Commercial Registry	Endorsement or registration in the Share Register
Tax Type	Progressive Income Tax (15% – 40%)	Fixed Corporate Tax	Fixed Corporate Tax

3. Step-by-Step Company Formation Process

In Turkey, the process of establishing a limited liability company (Limited or Joint Stock Company) is largely MERSİS (Central Registry System) . Ensuring these processes are completed correctly and without errors, in accordance with the legal sequence, is critical to avoiding the rejection of the registration request.

Company Formation Procedure Sequence

 

4. Tax Liabilities and Financial Costs of Companies

Establishing a company grants the status of "taxpayer" to the state. The basic taxes and costs that a company in Türkiye is regularly obligated to pay are as follows:

4.1. Corporate Tax and Provisional Tax

Limited and joint-stock companies pay a flat-rate Corporate Tax on their net commercial profit. This tax is paid in advance as "Provisional Tax" in three-month periods throughout the year and offset at the end of the year.

4.2. Value Added Tax (VAT)

The difference between the VAT collected (VAT received) shown on the invoices issued by the company and the VAT paid (VAT paid) when purchasing goods and services is calculated each month. If the VAT collected by the company is higher, the difference must be declared and paid to the tax office by the 26th of each month.

4.3. Summary Tax Return (Withholding Tax)

This involves declaring and paying to the state taxes withheld from rent paid by the company for offices not owned by the company (at a rate of 20%), salaries of employees, and fees for services received from freelancers such as lawyers or financial advisors (tax withheld at source).

4.4. Regular Monthly Costs

Even if the company does not conduct any activity, there are fixed expenses that will be incurred each month:

• Stamp duty paid at the time of filing each declaration ,

• Certified Public Accountant (CPA) monthly consulting and accounting fee.

• If there are employees, the Social Security contributions that must be paid every month ,

• The Bağ-Kur premium that the company owner/manager is obligated to pay .

5. Company Formation for Foreign Nationals and Legal Entities

Turkey the "Principle of Equal Treatment" . According to this principle, foreign investors can establish companies under exactly the same conditions as domestic investors, without any discrimination.

Special Procedures and Conditions for Foreigners

While the process is largely similar for local citizens, foreign individuals must complete the following additional steps before incorporation:

1. Passport Translation and Notarization: A notarized Turkish translation of the foreign partner's passport must be prepared.

2. Obtaining a Tax Identification Number: If a foreign national does not have a foreign identification number (starting with 99) obtained from the immigration authorities in Turkey, a temporary tax identification number must be obtained from the tax office.

3. Work Permit Status: In order to actually work as a "manager" in a company established by a foreign partner and to legally reside in Turkey, a work permit must be obtained from the Ministry of Labor and Social Security.

Critical Employment Rule: For a foreign company partner to obtain a work permit, the company's paid-in capital must be at least 100,000 TL, and at least 5 Turkish citizens must be employed and insured within the company (the employment requirement may not be applicable for the first 6 months of the establishment phase).

6. Critical Steps to Take After the Company is Established

Commercial registry registration marks the birth of a company, but the following operational and legal integrations are necessary for it to begin operating:

• E-Transformation Applications: As soon as the company is registered, an e-signature or financial seal must be obtained to comply with the tax office system. Depending on the company's turnover or field of activity, e-invoice, e-archive invoice, and e-ledger applications must be completed through a financial advisor.

• Municipal Licensing Procedures: If the company has a physical shop, store, or manufacturing facility, it must obtain a Business Opening and Operating License and submit Environmental Cleaning Tax declarations to the relevant district municipality

• SGK Workplace Registration: If the company will employ insured personnel, a workplace registration number must be obtained from the SGK system and the workplace registration must be completed before the personnel's start date.

• Industrial Property (Trademark Registration): A company's name is only protected in the trade registry. To prevent others from imitating the company's products, services, or website brand, TÜRKPATENT (Turkish Patent and Trademark Office) .

7. Frequently Asked Questions (FAQ)

1. Is it possible to establish a company as a home office?

Yes, it's possible. Especially for sole proprietorships and sectors that don't require a physical warehouse, such as e-commerce, software, and consulting, you can register your home as the company headquarters. If the house is rented, withholding tax will be applied to the rent you pay; if the house is yours, no withholding tax is payable, but it is necessary to state this in the withholding tax return.

2. Is a virtual office legal, and can companies be established at these addresses?

Yes, it is completely legal. The Turkish Commercial Code requires companies to have a legal address where they can receive official notifications. Legal lease agreements with virtual office companies are accepted by the Trade Registry and Tax Offices. Tax inspectors also visit the virtual office address to confirm the inspection.

3. Can someone who is employed and insured (4A) by another company start their own company?

Yes, they can. There is no legal obstacle for a person insured under the 4A status to establish a company, join the board of directors of a joint-stock company, or become the director of a limited liability company. The biggest advantage is that as long as the person is employed elsewhere, they do not have to pay additional Bağ-Kur (4B) premiums. However, if the person's current employment contract contains a "non-compete clause" or a clause prohibiting employment/establishment of another business, the employer can terminate the employment contract for just cause.

4. How can I benefit from grants, incentives, and support when starting a company?

In Turkey, the largest support provider for newly established companies KOSGEB(Small and Medium Enterprises Development Organization). It is critical for entrepreneurs to complete KOSGEB's digital Entrepreneurship Training before establishing their companies. After the company is established, they can apply to the "Entrepreneur Support Program" to receive establishment support, personnel support, and machinery and equipment grants. Additionally, TÜBİTAK (for technological ventures) and the Ministry of Trade (for exporting companies) offer significant incentives.

5. What is the requirement for joint-stock companies to have a lawyer?

According to Article 35 of the Lawyers Act No. 1136, joint-stock companies with a capital five times or more than the legal limit (currently 250,000 TL) (i.e., 1,250,000 TL or more) are required to employ a contracted lawyer. Companies that fail to comply with this rule are subject to heavy administrative fines imposed by the Public Prosecutor's Office for each month of non-compliance. Limited companies, however, are exempt from this obligation regardless of their capital.

6. What should be considered when choosing a company name?

The company name you choose must not have been previously registered by another company in Türkiye. A company name check must be conducted through the MERSİS system. Sector additions following the core part of the name (e.g., Construction, Food, Textile) should indicate the company's main field of activity. Furthermore, the use of words like "Turkish," "Turkey," or "National" in the company name requires permission from the Council of Ministers (Presidency).

7. How long does the liquidation (company closure) process take?

While establishing a company is relatively quick, closing (liquidating) a limited liability company is a much longer process. According to legal regulations, after the liquidation decision is registered in the commercial registry, notices are issued to creditors. A waiting period of at least 3 months is mandatory from the date of the last notice. Therefore, the official closure of a limited liability or joint-stock company takes an average of 4 to 6 months. Sole proprietorships, however, can be closed in a single day.

8. Can a limited company partner go to jail for company debts?

No. According to Article 38 of our Constitution, "No one shall be deprived of their liberty solely on the ground of inability to fulfill a contractual obligation." Partners cannot be imprisoned for the company's commercial debts, bank debts, or debts to the market. However, disciplinary imprisonment may result if the company has been subject to enforcement proceedings due to debt, if no asset declaration has been made, or if a breach of commitment (promising to pay during enforcement proceedings and failing to do so) has occurred. Furthermore, elements such as tax evasion (issuing fictitious invoices, etc.) are directly subject to criminal prosecution.

9. How to change the company address after it has been established?

Changing a company's address is a commercial registry process. For address changes within the same commercial registry (within the same province), a decision by the board of directors/managers is required and registered with the commercial registry. For address changes between provinces, the clause regarding the company's headquarters in the articles of association must be amended (changed), and the company must be re-registered with the commercial registry of the new province. The address change must be reported to the tax office, and an inspection must be carried out at the new address.

10. Is it possible to establish a Limited Liability Company or a Joint Stock Company with a single shareholder?

Yes. The old Turkish Commercial Code required a minimum of two partners for limited liability companies and a minimum of five partners for joint-stock companies. However, according to the current Turkish Commercial Code No. 6102, a single natural or legal person (another company) can establish a limited liability or joint-stock company alone, own 100% of its shares, and manage the company independently.

8. Conclusion and Legal Advice for Entrepreneurs

In Türkiye, establishing a company may seem like a simple process completed in a few days from the outside, thanks to the digitalization of bureaucratic steps. However, behind the established structure lie lifelong obligations under the Turkish Commercial Code, the Code of Obligations, the Labor Law, and the Tax Procedure Law.

Incorrectly drafted partnership agreements, and the lack of clearly defined boundaries of authority within the company (such as the powers of directors), can lead to the company becoming paralyzed (physically impossible) in the event of future disputes between partners. Therefore, instead of simply completing accounting entries during the company formation phase, working with a professional corporate lawyer and an expert financial advisor is the safest way to legally protect the future of your venture.