How Do You Choose the Right Company Type?
The choice between a limited liability, joint stock and sole proprietorship depends on the number of shareholders, liability and your future growth plans.
The first and most decisive decision when setting up a company is which company type to start with. That decision determines not only the formation cost, but also the limits of the shareholders’ liability, how easily shareholders can be added or shares transferred later, how the tax burden is calculated, and the accounting regime. Changing type afterwards is possible, but it costs time and additional transaction fees.
Who Is a Sole Proprietorship For?
A sole proprietorship requires the fewest formalities and suits those operating alone who want to start quickly. It is simple to set up — and just as simple to close. In return, the owner’s liability is not limited to the business, and as earnings rise a progressive income tax tariff comes into play.
What Does a Limited Liability Company Offer?
The limited liability company is the most common type of capital company in Türkiye. Shareholders’ liability is limited to the capital they contribute; they are not liable for the company’s debts with their personal assets. For public debts, however, shareholders are liable in proportion to their shares; it is important to understand that distinction at the formation stage.
When Does a Joint Stock Company Make Sense?
The joint stock company offers a better framework for multi-shareholder structures, businesses planning share transfers and ventures expecting to raise investment. Share transfers are, as a rule, more flexible, and it is open to further steps such as a public offering. In return, its governance bodies and the workings of the general assembly and board of directors are more formal and require closer follow-up.
What to Look At When Deciding
The right choice is made by looking less at the scale of the business today than at where it will be in three to five years: will the number of shareholders grow, will outside investment be raised, in which sector does the business operate and on which permits does it depend, how many employees will there be. Once the answers to these questions are clear, the company type becomes obvious in itself.
Before formation we discuss your activity and medium-term plan together, and explain the type that suits you and the formation process step by step.
Frequently asked about this topic
The questions we are asked most under Company Formation and Trade Registry Services.
Should I set up an LLC or a joint stock company?
This cannot be answered on its own. Your number of shareholders, the likelihood of raising outside investment, your share transfer plans and the permits your sector requires are all assessed together. In the meeting we go through these points and explain which suits you, with reasons.
Which documents are needed for formation?
The core documents are the shareholders’ identity details, address declarations, the lease or title deed for the premises to be used as the registered office, and signature declarations. Where there is a foreign shareholder, passports and apostilled documents are added. We draw up the list specific to your formation type.
Can I set up a company with foreign shareholders?
Yes. Foreign individuals or legal entities may set up a company in Türkiye. The process involves additional steps such as obtaining a potential tax identification number and having documents from abroad apostilled and officially translated.
What do I need to do after the company is set up?
After registration come ledger certification, tax office and SGK registration, e-invoice and e-archive applications, and obtaining the financial seal. We handle these as a continuation of the formation; all that is asked of you are signatures and approvals.