A sole proprietorship (often called a "şahıs şirketi") is a business run by one person in their own name, for trade or a profession. There is no separate legal personality; the owner is liable with all personal assets. In return, it is quick and cheap to set up and its accounting is simpler.
Who is it for?
- Self-employed tradespeople, e-commerce sellers, consultants, developers, designers, freelancers
- Entrepreneurs with relatively modest profits who will not retain earnings in the business
- First-time taxpayers under 29 (young entrepreneur exemption)
Comparison with a limited company and tax burden: Sole trader or limited company?
Step by step
- Activity and NACE code: business income or professional income? The code sets the type of books, VAT rate and permits.
- Premises: lease or title deed. Working from home is possible; a rented home triggers rent withholding.
- Start of business notification: via the Internet Tax Office or an accountant; the tax office inspects the premises.
- Tradesmen registry or trade registry: depending on the activity (not needed for professionals, who join their professional chamber). Details below.
- Bağ-Kur (4/b) registration: starts automatically with tax registration.
- e-Documents: e-Archive / e-SMM / e-Invoice (as required), e-signature or e-seal.
- Bank account and POS: in the business's name; receipts and payments over TRY 30,000 must go through a bank.
Merchant or tradesman? Trade registry
An individual running a commercial business in their own name is a merchant and registers with the trade registry (ITO in Istanbul). Tradesmen and craftsmen whose capital and income rest on their own labour are on the tradesmen registry and cannot register with the trade registry or the chamber; ITO's examples include hairdressers and barbers, manicure, skin care, tea houses, market stalls and grocers. Businesses keeping operating-account books and people building for their own use are not registered either.
Points for ITO registration:
- The trade name contains the owner's name and surname; if identical to an existing registration, a distinguishing addition is used.
- A sole proprietorship is registered with one activity only; separate businesses with distinguishing additions are opened for other fields.
- Apply with a MERSİS request number and an ITO appointment. Documents: petition signed by the owner (trade name, capital, opening date, actual activity, NACE code and bookkeeping basis), chamber registration form with photo (NACE code must match MERSİS), signature declaration (holders of new ID cards can confirm via MERSİS "Yetki Kabul İşlemleri") and tax certificate. Tax registration is checked electronically; businesses not registered with the tax office are not registered.
- At least TRY 100 capital is declared for chamber registration.
- 2026 amounts: registration fee 5,466.10 TL, gazette start-of-business notice 708 TL. Address, name, activity and capital changes 2,707.50 TL; deregistration 1,053 TL.
- For continuation by inheritance or transfer, heirs' notarised consent and a certificate of inheritance are required.
First-year costs
| Item | Note |
|---|---|
| Bağ-Kur premium | At least TRY 11,808.23 a month in 2026 (35.75% of the minimum base); TRY 10,156.73 with the 5-point reduction for timely payers. The one-year Bağ-Kur support for young entrepreneurs was abolished in 2026. Bağ-Kur calculator |
| Accounting fee | Depends on books, documents and employees |
| Chamber dues | Tradesmen's chamber or chamber of commerce |
| Taxes | Monthly VAT, quarterly provisional tax, annual income tax |
| e-Documents | GİB portal free; integrators charge |
Young entrepreneur exemption
For people who become taxpayers for the first time due to business, agricultural or professional activity and are under 29 when they start, 400,000 TL a year of profit is exempt from income tax for three tax years. It applies to profit, not turnover, and does not remove VAT or withholding obligations. Shareholders of limited or joint stock companies cannot benefit; neither can those taking over a relative's business or joining later as partners.
Type of books
Businesses below the thresholds keep operating-account books; professionals keep a professional income book. If thresholds are exceeded two years in a row, balance-sheet books apply. Balance sheet or operating account? · Bookkeeping basis test
Moving to a limited company
When profits grow or a partner joins, the sole proprietorship can be closed and a new company formed, or the business can be transferred to a capital company. Plan the transfer of stock, fixed assets, receivables and payables and its VAT and tax consequences in advance. Restructuring
Closing down
- Notify the tax office within 1 month of ceasing business.
- Final returns: VAT, withholding, provisional tax (if any) and the last annual return in March of the following year.
- Sell remaining stock and fixed assets or withdraw them; VAT is charged on withdrawn goods.
- Leave e-document systems and close the cash register memory.
- Check that Bağ-Kur ended with the tax registration; restructure any premium debt.
- Deregister from the tradesmen or trade registry: a statement of assets and liabilities is filed; if the owner has died, a certificate of inheritance and a statement signed by one heir.
Common mistakes
- Mixing business and personal accounts; not getting expense documents in the business's name.
- Missing the Bağ-Kur due date (end of the following month) and losing the 5-point reduction.
- Stopping business without notifying the tax office; returns and Bağ-Kur debts accumulate.
- Applying the young entrepreneur exemption to turnover.
Sources
Income Tax Law (art. 37 business income, art. 65 professional income, art. 20 repeated young entrepreneurs); Tax Procedure Law (art. 153 start of business, art. 160 cessation, art. 177 thresholds); Law No. 5510 arts. 4/1-b and 81 (5-point reduction); Turkish Commercial Code arts. 11–15 (merchants); ITO sole trader registration.