How to Register a Sole Proprietorship (Şahıs Şirketi / Individual Entrepreneur) in Türkiye

Becoming a sole proprietor in Türkiye offers simplicity and speed. You can start trading under your own name or trade name with modest legal overhead, and many administrative steps are now digitized.

On the other hand, you carry full personal liability for your business, must comply with tax, social security, and possibly licensing rules, and your tax rate can rise with your income. The major benefits are control, low setup cost, and flexibility; the main challenges are exposure to risk, ongoing obligations, and growing tax/social charges as profits rise.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Türkiye?

In Türkiye, the equivalent of a sole proprietorship is often called a şahıs şirketi, or “real person company”. Sometimes people are simply “self-employed” or working as independent professionals.

Legally, a sole proprietor is one person running a commercial activity in their own name. There’s no separation of legal identity between you and your business, which means profits are taxed as your personal income, and you are personally liable for business obligations.

How a sole proprietorship (Şahıs Şirketi) works in Türkiye

Here’s a snapshot of how a sole proprietorship works in Türkiye—what you register with, how you’re taxed, who you report to, and the trade-offs.

Şahıs Şirketi vs other business structures in Türkiye

If you’re considering a sole proprietorship or another business form (e.g., limited liability company, joint stock company), here’s a comparison to help decide.

Step-by-step guide: How to register a sole proprietorship in Türkiye

Here’s what you’ll need to do, in order, to get your sole proprietorship up and running legally in Türkiye.

Step 1: Check if you are eligible

You must be a natural person with legal capacity. If you are a foreigner, ensure any required residence permit or work permit is in place (if you will operate from Türkiye or have a local presence). Also, check that your planned business activity isn’t restricted or regulated (some sectors require special licenses).

Step 2: Decide on the business activity and name

Choose the exact nature of your activity (what you will do – trade, services, etc.) and decide if you will use your own name or a trade name. If using a trade name, check if it’s available and permissible under Turkish business and trademark rules.

Step 3: Obtain a Tax Identification Number (Vergi Kimlik Numarası)

You must register with the local tax office to get your TIN (tax ID). This is essential for issuing invoices, filing taxes, and any interaction with tax authorities.

Step 4: Notify the business start or register with the tax office

File a business start notification (“Gerçek kişi ticaret sermayesi bildirim / işyeri bildirimi” or equivalent) at the tax office, declaring your activity. This formalizes your status as a business operating in Türkiye.

Step 5: Register with Trade Registry / Chamber of Commerce (if applicable)

If your activity is commercial or you plan to trade goods, you likely need to register with the Trade Registry and Chamber of Commerce. For many smaller or service-type businesses, this might not be required, depending on local regulations.

Step 6: Register for Social Security & insurance contributions

If you earn income from your business, you must register with the Social Security Institution (Sosyal Güvenlik Kurumu, SGK) for any obligations (pension, health, etc.), especially if you hire employees or your work is considered artisan/trade.

Step 7: Get any required licenses or permits

Depending on your business type and location (e.g. food, retail, education, health), local or sectoral licenses & permits may be required. Check municipal licensing and specific regulations for your industry.

Step 8: Open a business bank account and set up accounting

Even if not legally mandated in all cases, having a dedicated bank account for business operations helps with bookkeeping, credibility, and audit readiness. Set up a system to track income, expenses, invoices, and fulfill your declarations.

Step 9: Comply with ongoing obligations

Each year, you’ll need to file your personal income tax return (including business income), make VAT declarations if applicable, handle social security contributions, pay any required municipal or sectoral fees, and renew any licenses. Ensure you maintain proper records of all transactions and stay updated with any changes in law.

Financial and tax obligations for sole proprietors in Türkiye

• Income Tax: Profits from your business are taxed under the personal income tax regime. Türkiye uses progressive tax brackets; the more you earn, the higher the tax rate on portions of your income.

• VAT (KDV): If your business provides goods or services subject to VAT, and if turnover and type of activity meet thresholds, you must register, issue VAT invoices, and file periodic VAT returns. The standard VAT rate is generally 18%, but lower rates apply to some goods/services.

• Deductible Expenses: You can subtract allowable business expenses from your income (rent, utilities, transport, and some depreciation) in arriving at taxable profit. Maintaining proper receipts and records is essential.

• Social Security & Insurance: Contributions to SGK (health, pension, etc.) are required depending on your work status or if you hire people. The rates and base depend on your declared income and the sector.

• Record-keeping: You must keep invoices, receipts, bank statements, financial records sufficient to support your tax filings, VAT, and any audits. Turkish tax authorities expect compliance with record retention norms.

Launch your contracting career and stay compliant with Deel

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• Automate invoicing and expense tracking with essential Bookkeeping tools
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FAQs

What is the minimum capital required to start a Şahıs Şirketi in Türkiye?
There is no minimum capital requirement. Unlike limited companies, you can establish a sole proprietorship without depositing share capital.

Do Şahıs Şirketi need to register for VAT (KDV)?
Yes, if your business activity is subject to VAT and your turnover requires registration. The standard VAT rate is 18%, with reduced rates (8% and 1%) for some goods and services. Voluntary registration is possible if you want to reclaim input VAT.

How much are the standard monthly or annual contributions?
There is no fixed monthly fee for everyone. You’ll pay personal income tax on profits according to Türkiye’s progressive brackets (ranging from 15% up to 40%), plus social security contributions to SGK if you’re liable. For example, if you declare TRY 200,000 net income, you’d fall partly into higher brackets and your total annual tax could exceed TRY 40,000, plus social contributions.

Can a Şahıs Şirketi hire employees?
Yes. As soon as you employ staff, you must register as an employer with SGK, deduct income tax from salaries, and make social security and insurance contributions. You’ll also need to comply with Türkiye’s labor law requirements.

How long does it take to register as a Şahıs Şirketi in Türkiye?
If your documents are ready, you can often complete the process at the tax office in just a few days. Registration with the trade registry (if required) and obtaining sectoral permits may take longer, but many sole proprietors are up and running within one week.

Can foreign nationals register as Şahıs Şirketi in Türkiye?
Yes. Foreign nationals can register as individual entrepreneurs, but you’ll need a valid residence or work permit and a Turkish tax ID number. Some activities are restricted to Turkish citizens only, so always check sector-specific rules.

Do Şahıs Şirketi need a separate business bank account?
Not strictly required by law, but strongly recommended. A separate account helps you keep business and personal finances apart, makes accounting easier, and presents a more professional image to clients.

What happens if I stop working as a Şahıs Şirketi?
You must notify the tax office and, if applicable, the trade registry and Chamber of Commerce that you’re ceasing operations. You’ll need to submit final tax returns, pay any outstanding liabilities, and keep records for the statutory retention period.

Are there any government incentives or reduced rates for new Şahıs Şirketi?
Yes. Türkiye has a “young entrepreneur incentive” that exempts qualifying entrepreneurs under 29 years old from income tax on up to TRY 75,000 of profits annually for three years. There are also reduced social security contribution schemes for certain new businesses.

Can I use Deel as a Şahıs Şirketi to get paid by international clients?
Yes. Deel allows sole proprietors in Türkiye to invoice clients abroad, receive payments in multiple currencies, and benefit from transparent exchange rates.

Does Deel generate compliant invoices for Şahıs Şirketi?
Yes. Deel generates invoices that include all required details such as your tax number, name or trade name, and VAT if applicable, so you remain compliant with Turkish tax law.

Can Deel help me with taxes as a sole proprietor in Türkiye?
Yes. Deel provides downloadable reports and records of your income and payments, which you can use when filing your annual income tax return and VAT declarations. It doesn’t replace an accountant, but it simplifies compliance.

Does Deel offer contracts for freelancers and Şahıs Şirketi?
Yes. Deel includes locally compliant contract templates so you can work with clients safely and professionally.

Can I access benefits through Deel as a Şahıs Şirketi?
Yes. Deel offers optional perks such as health insurance or retirement plans, giving freelancers in Türkiye access to benefits that are typically only available to employees.