What is a Sole Proprietorship? What are the types of sole proprietorships? How to create a sole proprietorship?

What is a sole proprietorship What are the types of sole proprietorship How to establish a sole proprietorship

A sole proprietorship is defined as a commercial enterprise that may consist of a single person or a small number of partners. This business structure, where partners are held personally responsible for income, expenses and debts, is particularly preferred by young entrepreneurs and new business owners due to its advantages of quick, easy and inexpensive establishment. .

The benefits of starting a sole proprietorship are:

  • Compared to joint stock companies and limited liability companies, the cost of starting a sole proprietorship is lower.
  • Since a small number of documents are required when setting up a sole proprietorship, the whole process is usually completed in 1-2 business days.
  • Since it is subject to the progressive tax system, the initial kazanIt provides a low-income tax advantage for low-income businesses.
  • Fees for financial advisors and accounting services paid monthly are lower than for other types of businesses.
  • Closing a sole proprietorship is as simple as starting it. The closing process is usually completed within 1-2 business days.

What are the types of sole proprietorships?

There are different sole proprietorship structures in Turkey, where the relationships between partners are determined by law. According to the Turkish Commercial Code, the types of sole proprietorships are:

  • Collective society: There is no upper limit to the number of partners in collective societies made up of at least two partners. Under this corporate structure with legal personality, which was only established with the real partnership, the partners have unlimited subsidiary liability to creditors. In other words, debts that cannot be paid by the company pass on to the partners. It should also be noted that there is no capital requirement to set up a collective society.
  • Anonimous society : The limited partnership stands out as one of the sole proprietorships where the partners have varying degrees of liability to creditors. During the establishment phase, a written agreement is made stating that one of the partners is limited and the other is indefinitely liable for the debts. While only natural persons can be associated with unlimited liability, limited liability partners can be natural or legal persons.

In addition to these, there is another type of sole proprietorship called “Ordinary Company”, which is governed by the Turkish Code of Obligations instead of the Turkish Commercial Code. This associative structure, made up of at least two people, does not have its own legal personality and trade name. As the company does not have legal personality, the partners are held primarily responsible to creditors.

How to create a sole proprietorship?

The sole proprietorship is quickly set up within days after completing the necessary paperwork and start-up costs. You can read the steps needed to start a business from the tax office or e-government in the following topic.

The cost of establishing a sole proprietorship varies depending on the amount of payments to be made for the following services and documents:

  • Declaration of signature of the notary public,
  • Tax office contract stamp duty,
  • Company formation and electronic ledger registration service fees,
  • If the accountant will handle the process, the fee paid to the notary for the power of attorney.

In addition to these, after the incorporation of the company, the stamp duty, the insurance premium and the withholding tax of the VAT declaration must be paid each month. Also, depending on the type of your business, you may need to use a POS cash register. With İşbank POS solutions, you can find out which type of POS suits you best and enjoy many benefits.

What you need to do to start a sole proprietorship

Now that you are aware of the cost and requirements for incorporation of a sole proprietorship, you can proceed to the incorporation stage by gathering the necessary documents. You can establish the company by going to the tax office where your business address is affiliated or online.

Documents required to establish a sole proprietorship with the tax office:

  • Copy of identity document,
  • 2 passport photos,
  • Declaration of notarized signature,
  • 2 residence certificates.

If there is an accountant or financial adviser to handle the application process on your behalf, you must obtain an accountant’s power of attorney from a notary public.

Here are the steps to follow to start a sole proprietorship online:

  1. Log in to the interactive tax office (https:/ivd.gib.gov.tr) affiliated with the tax administration with your e-government password.
  2. After logging into the platform, select Start Transaction > Liability Transactions > Task Start Notice from the left menu.
  3. In the first stage of creating the company, you must enter the address and the activity code of your place of work. Depending on the type of your business, you can list your home, virtual office, or rented store as the address. You can find your company’s activity code by searching the Internet for the NACE code.
  4. In the next step, you need to enter the number of workers you will employ, whether your workplace is rented, details about it, and the frequency of payments subject to withholding. If you are wondering what is withholding tax, you can read our article on this subject.
  5. Then choose the method of taxation of your company. At this point you will come across two options as simple method and real method. You can obtain the advice of your accountant to determine the most appropriate taxation for your activity.
  6. Enter your start date.
  7. In the last step of creating a sole proprietorship, you need to select notification channels for email notification.

A few days after completing all of the application steps, you will receive a notification indicating the polling date for your business address. After the check by the tax officials, you can obtain your company’s tax plate by entering the Interactive Tax Office again.

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