Short answer: To set up a sole proprietorship in Turkey, you submit a start-of-business notice to the tax office, which can also be done online. The tax office inspects the business address, after which your tax certificate is issued. Depending on your activity, you register with the trade registry or the tradesmen's registry, and your Bağ-Kur (self-employed social security) coverage starts with tax registration. Finally, you set up invoicing and accounting begins.
A sole proprietorship (şahıs işletmesi) is one person carrying on business in their own name. It is faster and cheaper to set up than a limited or joint stock company, which is why new entrepreneurs, freelancers and couriers in Ankara often choose it. In this guide, we at Ankara Muhasebeci walk you through the process step by step.
Below you will find the required documents, a table of taxation methods, where to apply in Ankara, common mistakes and short answers to the most frequent questions.
Who is a sole proprietorship right for?
It suits entrepreneurs who work alone, have limited starting capital and want to start quickly: small traders, service businesses, e-commerce sellers and independent couriers. However, the owner is liable for the business's debts with all personal assets. If you plan to take on partners, expect high income or work with corporate clients, a limited company may be better. We compare both in sole proprietorship or limited company.
Required documents
- Turkish ID card (or residence permit and tax number for foreign nationals)
- Lease agreement or title deed for the business address
- Description of the activity, used to set the NACE code
- Signature declaration if registering with the trade registry
- Chamber registration documents depending on the activity
Working from home is possible; the tax office assesses whether the address suits the activity during inspection.
Step by step
- Preparation: decide on the activity, business address and taxation method.
- Start-of-business notice: notify the tax office; this can be done via the Revenue Administration's digital tax office.
- Inspection: the tax office inspects the premises; registration is finalised and the tax certificate becomes available online.
- Chamber and Bağ-Kur: register with the trade or tradesmen's registry; 4/b insurance starts.
- First invoice: set up e-Archive or paper invoicing and invoice your first sale.
Choosing a taxation method
Income from a sole proprietorship is taxed under different methods depending on the type and volume of activity. The method determines both the type of books and the filing obligations.
| Method | For whom? | Books / records |
|---|---|---|
| Simplified method (basit usul) | Small tradesmen meeting the legal conditions | Keep documents; no bookkeeping requirement |
| Business account basis | Businesses below certain thresholds | Business account book |
| Balance sheet basis | Businesses above the thresholds | Journal, ledger and inventory books |
| Freelance income | Engineers, consultants, designers and similar professionals | Freelance income book |
Thresholds and conditions are updated every year; confirm current values before applying.
If you are a freelancer, see our freelance accounting page.
Trade registry or tradesmen's registry?
Small businesses that combine capital and their own labour, with income at a level to make a living, are generally classed as tradesmen and register with the tradesmen and craftsmen registry through the relevant chamber. Businesses beyond this scale count as merchants and, in Ankara, register with the trade registry of the Ankara Chamber of Commerce. The choice affects the chamber you join, membership fees and in some cases the type of books, so it should be decided based on your activity and expected volume.
Which taxes does a sole proprietorship pay?
The profit of a sole proprietorship is the owner's personal income and is subject to progressive income tax: the rate rises as income rises. The main obligations are:
- Income tax: declared in March on the previous year's profit.
- Provisional tax: paid in advance on periodic profit for balance sheet and business account taxpayers.
- VAT: VAT on sales less VAT on purchases is declared.
- Withholding return: filed if you employ staff or make payments subject to withholding.
Use our income tax calculator to estimate your bracket.
Bağ-Kur and young entrepreneur support
Your 4/b (Bağ-Kur) insurance starts with tax registration and contributions must be paid monthly. Our Bağ-Kur premium calculator shows the amount in advance.
Entrepreneurs under 29 who register for the first time may benefit from the young entrepreneur income exemption and, for a period, Bağ-Kur contribution support, provided they meet the legal conditions. The conditions are detailed, so review them with your financial advisor before applying.
Practical notes for Ankara
In Ankara, the start-of-business notice goes to the tax office responsible for your business address; businesses in Çankaya, Keçiören, Yenimahalle or Etimesgut belong to different tax offices. During inspection, officers visit to confirm that business has actually started, so a desk, signage or a set-up suitable for the activity, and being reachable at the address, are important.
Common mistakes
- Notifying late: may lead to an irregularity penalty and loss of benefits such as the young entrepreneur exemption.
- Wrong activity code: affects chamber registration and some tax obligations.
- Undocumented home address: applications without a lease or deed can cause problems at inspection.
- Forgetting Bağ-Kur: contributions belong in the monthly cash plan.
- Mixing personal and business spending: a separate bank account simplifies tracking.
The first month
Building a document routine in the first month saves a lot of work later: have purchase invoices issued in the business's name, keep business and personal spending in separate accounts and know your filing calendar. See our monthly tax calendar and document checklist.
Frequently asked questions
How much capital do I need for a sole proprietorship?
There is no legal minimum capital. Setup costs consist of chamber registration, the signature declaration and premises costs.
Can I set up a sole proprietorship online?
The start-of-business notice can be submitted through the digital tax office. Inspection, chamber registration and signatures are completed separately.
Does Bağ-Kur start automatically?
Yes. 4/b insurance starts with tax registration. If you are also employed under 4/a, your situation should be assessed separately.
Can I run a sole proprietorship from home?
Yes. The address is assessed for suitability during inspection and must be documented with a lease or title deed.
Can a sole proprietorship become a limited company?
As the business grows, it can be converted into a capital company through the routes provided by law, or a new limited company can be formed. The right route depends on the business.
How long does setup take?
With documents ready, the notice and inspection are completed quickly. Total time depends on the inspection, chamber registration and invoicing setup.
Conclusion
A sole proprietorship is a strong option for entrepreneurs who want to start quickly and cheaply. Choosing the right taxation method, planning for Bağ-Kur and building a document routine from day one are the foundations of healthy growth. As the business grows, needs change. Rising income, a new partner or corporate clients are good moments to review your company type so that the tax burden and liability structure match the new scale.
At Ankara Muhasebeci, we handle sole proprietorship setup from the start-of-business notice through inspection, invoicing and tax returns. See our company formation page for details.
