To open a sole proprietorship, your ID, an address document and a lease or title deed are enough, and the process usually takes a few days. We explain the documents, steps, costs, young entrepreneur support and your obligations after opening.
To open a sole proprietorship, your identity details, a document for the business address (lease or title deed) and information about your activity are enough. Your business start is registered with the tax office, you register with the tradesmen or trade registry depending on your activity, you receive your tax certificate after the inspection and your Bağ-Kur coverage begins. If the documents are ready, the business is usually operating within a few working days. Entrepreneurs under 29 may also qualify for the young entrepreneur exemption.
For people who want to start their own business, the first stop is often a sole proprietorship. Low setup costs, quick opening and simple accounting make it attractive for new entrepreneurs. In this guide we have gathered in one place the documents, steps and costs of opening a sole proprietorship, the support for young entrepreneurs and the obligations that await you after opening.
What is a sole proprietorship, and who is it for?
A sole proprietorship (şahıs işletmesi) is a type of business in which a single individual carries out commercial activity in their own name. It has no separate legal personality; the owner is personally liable for the business’s debts, and earnings are subject to progressive income tax.
It is a good starting model for many professions, from hairdressers to e-commerce sellers and from designers to motorcycle couriers. As earnings grow or a partner is needed, moving to a limited company is considered; we discuss this decision in detail in our article Sole Proprietorship or Limited Company?
Documents required to open a sole proprietorship
- Turkish ID card
- Lease agreement or a copy of the title deed for the business premises
- Necessary permissions if your home address will be the business address (from the other owners or the residential management)
- A professional certificate, master’s certificate or diploma, depending on the activity
- Phone and e-mail details
- For certain activities, a business opening and operating licence from the municipality
Opening a sole proprietorship step by step
- Clarifying the activity: What you will do and the matching activity code (NACE) are determined.
- Tradesman or merchant? Depending on the nature and size of the activity, you register with the tradesmen and craftsmen registry or with the trade registry (in Ankara, within the Ankara Chamber of Commerce).
- Business start notification: Your business start is registered with the tax office.
- Inspection and tax certificate: The tax office inspects the premises, and then your tax certificate is issued.
- Books and invoicing: You choose between the business ledger and e-Ledger, and the e-Archive invoicing system is set up.
- Bağ-Kur registration: Your 4/b social security coverage starts with your tax registration.
- Licences and permits: If required, a business licence is obtained from the municipality.
The difference between a tradesman and a merchant
| Feature | Tradesman (esnaf) | Merchant (tacir, individual) |
|---|---|---|
| Scale of activity | Small-scale activity where labour outweighs capital | Larger-scale commercial activity |
| Registry | Tradesmen and craftsmen registry, relevant tradesmen’s chamber | Trade registry and chamber of commerce |
| Example professions | Hairdresser, tailor, repairer, courier | Wholesaler, large retailer, manufacturer |
| Tax obligation | Income tax; special procedures depending on conditions | Income tax |
Which registry you join depends on the nature of your activity. If this distinction is made incorrectly, corrections may be needed later.
What is the young entrepreneur support?
Under Article 20/B of the Income Tax Law, part of the earnings of entrepreneurs who register as taxpayers for the first time and are under 29, up to a certain amount, is exempt from income tax for three tax periods. The exemption amount is updated every year in line with the minimum wage. Under certain conditions, young entrepreneurs may also receive Bağ-Kur premium support.
The exemption has conditions, such as running the business personally and starting it in your own name. Checking your eligibility with your financial advisor before opening is important so that you do not lose your right.
Opening and first-year costs
The chart below shows an illustrative breakdown of first-year costs for a typical service business. Note that the largest item is usually the fixed monthly costs (accounting and Bağ-Kur).
Example: breakdown of mandatory first-year costs for a sole proprietorship (%)
An illustrative breakdown; taxes, rent and licence costs are not included.
You can see the approximate monthly amount of your Bağ-Kur premium with our Bağ-Kur premium calculator and your income tax with our income tax calculator.
Can you open a sole proprietorship at your home address?
For activities that do not receive customers and do not need storage or production space (such as software, consulting, e-commerce or courier work), your home address can be used as the business address. If you are a tenant, the landlord’s permission may be needed; if you live in an apartment building or complex, the management’s permission may be required. Some activities cannot legally be carried out in a residence.
If your home address is not suitable, a virtual office service can be an alternative. Evaluating which option suits your activity before opening prevents problems during the inspection.
Which books will you keep?
Sole proprietorships are subject to different bookkeeping methods depending on the size of their earnings and turnover:
| Method | For whom? | Feature |
|---|---|---|
| Simplified procedure (basit usul) | Small tradespeople meeting the conditions set by law | Light record-keeping; conditions and scope depend on legislative changes |
| Business ledger basis | Most sole proprietorships below the thresholds | Single-entry bookkeeping based on income and expense records |
| Balance-sheet basis | Businesses above the thresholds or choosing this method | Double-entry bookkeeping, more detailed reporting |
Since the scope of the simplified procedure has changed several times in recent years, check your eligibility against the current legislation with your financial advisor.
Checklist for the first 90 days
- Tax certificate received and shared with customers
- e-Archive or paper invoicing set up
- A separate bank account opened for the business
- Getting expense receipts issued to your tax number has become a habit
- Bağ-Kur registration and first premium payment checked
- The first VAT return and payment date added to your calendar
- If applicable, the young entrepreneur exemption confirmed as correctly applied
When should you move from a sole proprietorship to a limited company?
In a sole proprietorship, the tax burden rises as earnings grow because of the progressive income tax schedule. Above a certain level of earnings, a limited company subject to corporate tax may become more advantageous. A limited company also comes up when you want to take on a partner, work with corporate clients or limit your liability.
The decision to switch should not be based on tax rates alone; accounting costs, taxes on profit distribution and the management workload should also be taken into account. For a comparison in figures, see our article Sole Proprietorship or Limited Company?
Obligations after opening
- Issuing an invoice for every sale and service
- Documenting expenses in the business’s name
- Filing VAT, provisional tax and annual income tax returns on time
- Handling payroll and social security notifications if you employ staff
- Paying Bağ-Kur premiums regularly
We recommend saving our Tax Return Calendar article for a list of all these dates.
Common mistakes in a sole proprietorship
- Mixing personal and business spending: Using a separate bank account makes both tracking and expense documentation easier.
- Postponing Bağ-Kur premiums: Premium debt can prevent you from accessing healthcare services.
- Issuing invoices late: An invoice must be issued within the legal period from the delivery of goods or the performance of the service.
- Not setting money aside for tax: Putting part of your income aside every month prevents surprises in filing periods.
Frequently asked questions
How long does it take to open a sole proprietorship?
When documents are complete, tax registration, inspection and the tax certificate are usually completed within a few working days. For activities that require a licence, it may take longer.
Do you need capital to open a sole proprietorship?
No. There is no legal minimum capital requirement for sole proprietorships.
Can I open a sole proprietorship while employed?
Yes. You can open a sole proprietorship while insured through another job. In this case, how your Bağ-Kur and employee social security coverage will work is assessed separately.
Is it possible to open a sole proprietorship online?
Business start procedures can largely be initiated digitally; however, physical steps may be required for the inspection, registry entry and some signatures. Your financial advisor can carry out the process on your behalf.
Do I benefit from the young entrepreneur exemption automatically?
No. Your eligibility must be assessed and the correct notifications made when you start the business. Check with your financial advisor before opening.
Is an accountant mandatory for a sole proprietorship?
In practice, taxpayers keeping books on a balance-sheet or business-ledger basis must file their returns through a financial advisor. Under the simplified procedure there are fewer obligations; still, professional support for the opening and annual procedures reduces the risk of errors.
What should I do if I want to close my sole proprietorship?
A business closure notification is made to the tax office, final period returns are filed and any chamber registration is cancelled. Your Bağ-Kur registration also ends with this notification.
Final word
Opening a sole proprietorship is a process that can be completed in a few days with the right preparation. Getting details such as the activity code, registry entry and young entrepreneur exemption right from the start makes your first year much easier.
At Ankara Muhasebecim, we carry out the company formation process for you from our office in Kızılay and look after your accounting and social security work after opening. Contact us for a free initial meeting.
Ask our advisor for an assessment tailored to your situation.
