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SOLE PROPRIETORSHIP ESTABLISHMENT
SOLE PROPRIETORSHIP ESTABLISHMENT: A GUIDE TO SETTING UP A SOLE PROPRIETORSHIP IN TURKEY
Establishing a sole proprietorship is a quick and straightforward process for entrepreneurs. It is an ideal option, especially for small-scale businesses and single-person ventures. Sole proprietorships are notable for their low capital requirements, flexible management structures, and minimal bureaucratic procedures. This model is preferred by both local and foreign investors as a quick entry into the business world.
The advantages of establishing a sole proprietorship include the ability to set it up with just one person, easy management, and simplified tax declarations. Furthermore, this type of business requires less formalities compared to other types. When the number of employees and the size of the company are limited, a sole proprietorship can operate at lower costs. However, the disadvantages include the personal liability of the business owner for company debts. Therefore, seeking expert advice is crucial for making the right decision.
The process of establishing a sole proprietorship begins with registration at the trade registry. Next, an application is made to the tax office to obtain a tax identification number. Finally, the company’s field of activity is determined, and the necessary documents are completed. At Özay Accounting and Financial Consulting, we manage every step of the sole proprietorship establishment process for you and ensure all legal requirements are met.
DOCUMENTS REQUIRED FOR THE ESTABLISHMENT OF A SOLE PROPRIETORSHIP
When setting up a sole proprietorship, it is essential to prepare the necessary documents for the company’s establishment and trade registry registration.
IDENTIFICATION DOCUMENT
If the business owner is a Turkish citizen, a copy of the ID card containing the Turkish ID number must be submitted. For foreign nationals, a copy of the passport is required. The identification document is critical for obtaining accurate information about the business owner.
RESIDENCE CERTIFICATE
A residence certificate is required for individuals residing in Turkey. This document verifies the accuracy of the residential address and may be necessary during legal processes. It is mandatory for all transactions requiring address information during the company’s establishment.
SIGNATURE DECLARATION
A document that officially verifies and authorizes the business owner's signature. Signature declarations, especially for all official transactions and documents related to the company, must be obtained from a notary and included in the company establishment process.
ACTIVITY CERTIFICATE
A document specifying the field of activity of the company. When setting up a sole proprietorship, you must obtain an activity certificate containing information about the sector and business area you will operate in. This certificate is especially required for trade registry registration and provides official approval of the company’s area of activity.
STEPS TO ESTABLISH A SOLE PROPRIETORSHIP
Setting up a sole proprietorship involves a few fundamental steps. These steps are as follows:
TAX OFFICE REGISTRATION
The first step in establishing a sole proprietorship is applying to the tax office to obtain a tax identification number in the name of the company. The tax number is mandatory for conducting business activities. After the tax office registration, the business owner is notified of tax obligations. During this step, the type of activity, the business owner's identification details, and address information are recorded.
TRADE REGISTRY REGISTRATION
After obtaining the tax number, the next step is registering with the trade registry. The trade registry is the official record that certifies the legal existence of the company, and this process includes the company’s title, area of activity, and address details that will be used in all official documents. This registration is also necessary for public disclosure of the company and other legal procedures. To complete this registration, a business plan suitable for the company’s field of activity should be prepared, and the required documents must be submitted.
BANK ACCOUNT OPENING
The company’s bank account will be used for all financial transactions and is essential for maintaining business activities. To finance business operations and deposit the company’s capital, a bank account must be opened in the name of the company. During this process, the bank may request the company’s establishment documents and tax identification number. After opening the account, the company’s accounting transactions can be regularly maintained, and financial operations are conducted through the account.
ADVANTAGES AND DISADVANTAGES OF ESTABLISHING A SOLE PROPRIETORSHIP
Although establishing a sole proprietorship offers many advantages, there are also some disadvantages:
ADVANTAGES
- Quick and Easy Setup: Sole proprietorships are the fastest and easiest to establish compared to other types of companies. They require fewer documents and procedures.
- Low Cost: The establishment costs of a sole proprietorship are relatively low. The capital requirement is minimal compared to other types of companies. This is a significant advantage, especially for small and medium-sized business owners.
- Flexibility: Sole proprietorships offer great flexibility in business management. The ability of the owner to make decisions independently allows for faster and more flexible management processes.
DISADVANTAGES
- Unlimited Liability: The personal assets of the sole proprietor are at risk for company debts.
- Tax Burden: Sole proprietorships are subject to income tax, and the tax burden may increase with higher income.
- Limited Image: Sole proprietorships are often perceived as smaller and less professional compared to larger companies or corporate firms. This can create a trust issue with major clients and business partners.
POINTS TO CONSIDER WHEN ESTABLISHING A SOLE PROPRIETORSHIP
There are some important points to consider when establishing a sole proprietorship:
PREPARE A GOOD BUSINESS PLAN
Preparing a solid business plan that defines your company’s area of activity and objectives is fundamental to starting a successful business.
TRACK YOUR TAX OBLIGATIONS
It is essential to follow your tax obligations as a sole proprietorship. Seeking support from a financial advisor can be highly beneficial in this regard.
COMPLETE THE REQUIRED DOCUMENTS ON TIME
Ensuring that the documents are prepared accurately and completely facilitates a quick and legally compliant process.
At Özay Accounting and Financial Consulting, we manage the process of setting up a sole proprietorship seamlessly and efficiently for you. From collecting the required documents to trade registry registration, we are with you at every step. Contact us today to begin establishing your sole proprietorship.
Phone: 0 532 261 18 19
Özay Accounting - Istanbul Financial Advisor - Sole Proprietorship Establishment