When forming a company in Turkey, one of the most important decisions is choosing the right legal structure. This guide compares the sole proprietorship (real-person business), Limited Şirket (Ltd. Şti.; limited liability company/LLC) and Anonim Şirket (A.Ş.; joint stock company/JSC) under the 2026 capital, tax, liability and social security rules.
Each company type has its own advantages and disadvantages. There are significant differences in capital requirements, liability structure, establishment processes and tax obligations.
In this article, we will examine the three main company types in detail, provide a comparative analysis and evaluate which company type is more suitable in which situation.
Terminology note: “Sole proprietorship” here means the everyday single real-person business. In the Turkish Commercial Code, şahıs şirketleri are collective and limited partnerships. Ltd. Şti. and A.Ş. are Turkish-law entities; LLC, GmbH, SARL or similar labels are only explanatory equivalents, not identical legal forms.
What are the main company types in Turkey?
This guide focuses on the three structures compared most often in practice: the sole proprietorship, Limited Şirket (Ltd. Şti.) and Anonim Şirket (A.Ş.). The Turkish Commercial Code also provides for collective companies, limited partnerships and cooperatives.
What is the main difference between Ltd. Şti. and A.Ş.?
Ltd. Şti. is often chosen by SMEs that want a simpler management structure. A.Ş. is more flexible for share transfers, investor structures and access to capital markets. Capital, public-debt liability and governance rules differ.
- ✓The main differences between a sole proprietorship, Limited Şirket (Ltd. Şti.) and Anonim Şirket (A.Ş.)
- ✓Advantages and disadvantages of each structure
- ✓Capital requirements and liability rules
- ✓Which structure may fit which situation
📊Main Differences Between Company Types in Turkey (2026)
| Feature | Individual Company | Limited Company (LTD) | Corporation (A.Ş.) |
|---|---|---|---|
| Number of Partners | Single person | Min. 1, max. 50 | Min. 1, no upper limit |
| Capital Requirement | No lower limit | Min. 50,000 TL | Min. 250,000 TL |
| Capital Blockage | None | None | 25% of cash capital (min. 62,500 TL) must be blocked in bank before registration |
| Establishment Cost (2026) | ~2,000-5,000 TL | ~13,000-20,000 TL | ~33,000-42,000 TL + blockage |
| Debt Liability | Unlimited – all personal assets | Private debts: company assets; public claims: Law 6183/35 | Shareholder only up to subscribed capital; board public-debt liability is separate |
| Tax Structure | Income Tax (15% – 40%) | Corporate Tax 25% | Corporate Tax 25% |
| Minimum Corporate Tax | None | Cannot be less than 10% of profit* | Cannot be less than 10% of profit* |
| Share / Capital Transfer | None (must close and reopen) | Notary + trade registry registration required | Notary not required, share transfer very flexible |
| Bağ-Kur (4/B) | Mandatory upon opening | Partners are generally Bağ-Kur members** | Shareholder directors who sit on the board are covered by 4/B. |
| Young Entrepreneur Support | The young-entrepreneur income exemption continues if its conditions are met; the 1-year Bağ-Kur premium subsidy was abolished as of 1.1.2026. | None | None |
| Company Closure | Very easy (1–2 days) | Difficult (at least 3 months liquidation) | Difficult (at least 3 months liquidation) |
| Profit Distribution | No separate profit distribution | Distributions to an individual shareholder are generally subject to 15% withholding; annual filing and credit depend on that shareholder’s circumstances. | Distributions to an individual shareholder are generally subject to 15% withholding; annual filing and credit depend on that shareholder’s circumstances. |
| Share Sale Advantage | None | A limited-company participation does not automatically qualify for the two-year share-certificate exemption. | An individual who sells share certificates of a fully taxable A.Ş. after holding them for more than two years may, if the conditions are met, have no income tax on that sale. |
| Audit Requirement | None | Required if the activity, special lists or Presidential-decree thresholds are met. | Required if the activity, special lists or Presidential-decree thresholds are met. |
| Lawyer Requirement | None | None | For A.Ş. companies with principal capital of 1,250,000 TL or more |
| Decision Making | Single person | General assembly / manager | General assembly + Board of Directors |
| Foreign Partner | There is no partnership structure. Foreign individuals may start a business in their own name if they meet tax, residence/work-permit and other conditions. | Allowed | Allowed |
| Prestige & Scale | Small jobs / freelancer | Ideal for SMEs | Large scale, investment & going public |
- Adding profit to capital is not a distribution (GVK 94 and Presidential Decree 9286; general withholding 15% from 22.12.2024).
- The two-year exemption applies to share certificates of a fully taxable A.Ş., an individual seller and the holding period. Limited-company participations and sales by companies follow different rules.
- Approximate formation costs vary by city, chamber, notary, translation and the scope of services.
🔴CRITICAL WARNINGS (2026)
1. Mandatory Capital Increase – Deadline: 31.12.2026
⏰ URGENT: Must be completed within this year!
- Limited Company: Those with capital below 50,000 TL
- Corporation: Those with capital below 250,000 TL
⛔ If not increased on time, the company legally dissolves (automatically terminates).
📌 The Ministry of Trade has the authority to extend the period twice, by one year each time, but this should not be relied upon. Completing within 2026 is the safest!
2. Liability for debts in limited and joint-stock companies
Private-law debts and public receivables are assessed separately.
- The company’s private-law debts are borne by the company’s assets.
- Partners remain liable for the capital they subscribed.
- Limited-company partners are directly liable, in proportion to their capital shares, for public receivables that cannot be collected in full or in part from the company, or that appear uncollectible, under Article 35 of Law No. 6183.
- Managers’/legal representatives’ liability is assessed separately under Tax Procedure Law Art. 10 and repeated Art. 35 of Law No. 6183.
An A.Ş. shareholder is not, merely as a shareholder, liable beyond subscribed capital. Public-debt liability may still arise from being a board member or legal representative.
Legal basis: Law No. 6183 Arts. 35 and repeated 35; Tax Procedure Law Art. 10.
3. Minimum Corporate Tax (From 2025)
- 10% of profit before deductions and exemptions is the lower limit
- Newly established companies exempt for first 3 years
- Transfers, type changes etc. may not be considered exempt
- Also applies in provisional tax periods
4. Bağ-Kur (4/B) Details - Frequently Asked Topic!
Individual Company:
- ✓ Mandatory upon opening
- ✓ Continues until company closure
Limited Company:
- ✓ All partners are generally Bağ-Kur members
- ✓ If insured as 4/A (SSI) in another workplace, Bağ-Kur is suspended
- ⚠️ When you leave that job, Bağ-Kur automatically activates
- ✓ When partnership ends, Bağ-Kur obligation ends
Corporation:
- Shareholders of a joint-stock company who are board members are covered by 4/B.
- Merely owning shares does not by itself create a 4/B obligation.
- Being a non-shareholder board member does not by itself create a 4/B obligation.
- For a shareholder director, the obligation starts on election to the board and ends when that office ends.
5. Lawyer Requirement (Corporation Only)
In A.Ş. companies with principal capital of 1,250,000 TL or more:
- At least one contracted lawyer must be retained.
- The lawyer may be a full-time employee or an external service.
Joint-stock companies with capital of 1,250,000 TL or more that fall under Article 35 of Attorneys’ Act No. 1136.
📊2026 INNOVATIONS AND CURRENT INFORMATION
📱e-Archive invoice issuance rules (2026)
A duty to issue e-Archive invoices does not mean every taxpayer is automatically registered in the e-Invoice application. e-Invoice and e-Archive Invoice are separate applications.
- For taxpayers whose commercial profit is determined under the simple method and those keeping books on the operating-account basis, invoices exceeding 3,000 TL including taxes must be issued as e-Archive invoices between 1.1.2025 and 31.12.2026.
- For other taxpayers, an e-Archive invoice must be issued from 1.1.2026 with no amount threshold.
- For the simple-method and operating-account groups, the no-threshold rule starts on 1.1.2027.
- The duty to issue an e-Archive invoice does not mean the taxpayer is registered in e-Invoice.
- e-Invoices are issued to recipients registered in e-Invoice; e-Archive invoices are issued to those who are not.
1️⃣Individual Company
Individual company is the simplest and fastest established company type. It can be established and operated by a single natural person.
This company type is ideal for small businesses and self-employed professionals. Establishment cost is low and procedures are fast.
- • Very fast establishment process (1 business day)
- • Low establishment cost
- • Simple accounting and reporting obligations
- • Unlimited liability (personal assets are at risk)
- • Limited number of partners (maximum 1 natural person)
- • Limited growth potential
2️⃣Limited Company (LTD)
Limited company is the most commonly used company type. Partners' liability is limited to the capital they commit.
It is an ideal option for small and medium-sized businesses. Provides both flexibility and protection.
- • Limited liability (partners' personal assets are protected)
- • Minimum 50,000 TL capital sufficient (2026)
- • Flexibility between 1-50 partners
- • Relatively fast establishment process (3-5 business days)
- • Higher establishment cost compared to individual company (~13,000-20,000 TL)
- • More detailed accounting and reporting obligations
3️⃣Corporation (A.Ş.)
Corporation is designed for large-scale businesses and public companies. It has the highest capital requirement.
Suitable for companies that want to attract investors, go public or carry out large projects.
- • Unlimited number of partners
- • Possibility of going public
- • High reliability and prestige
- • Suitable structure for large investments
- • Minimum 250,000 TL capital requirement (2026)
- • Longest establishment period (5-7 business days)
- • Most complex accounting and reporting obligations
Which structure fits which case? Assumed examples
These are illustrative scenarios, not real client files. Change capital, partnership, risk or growth assumptions and the leaning may change.
Example A — Solo founder, low fixed capital, simple activity
Assumptions: one natural person; low start-up capital; limited debt risk; need to open/close quickly; possible young-entrepreneur income exemption.
Under these assumptions a sole proprietorship is often considered: simpler set-up/closure and income-tax brackets, but personal assets remain fully exposed to debts.
Example B — One or a few partners, SME scale, limited liability needed
Assumptions: 1–50 partners; at least TRY 50,000 capital available; want company assets to ring-fence private debts (public claims still special); share transfers via notary + registry acceptable.
A limited company is often considered: 25% corporate tax plus withholding on dividends; partners are generally in Bağ-Kur. Share transfers are less flexible than in a JSC.
Example C — Investors / scale / flexible share transfers
Assumptions: at least TRY 250,000 capital and pre-registration 25% cash blockage affordable; flexible share transfers matter; future investment or IPO possible.
A joint-stock company (A.Ş.) is often considered: more flexible transfers, higher set-up/compliance cost; mere shareholding alone does not trigger Bağ-Kur (board-member shareholders are assessed separately).
There is no single answer to “LLC or JSC?”. Clarify liability, capital, partners and tax cash flow first, then quantify sole vs limited tax effects with the comparison tool below.
🎯Conclusion and Recommendations
In Turkey, choose a company type by clarifying liability, capital, partners and tax cash flow first. The assumed examples above show when each structure typically comes onto the table; the final choice depends on your file.
When deciding between a Turkish joint-stock company and a limited company, read share-transfer flexibility, set-up cost and Bağ-Kur scope together, then check the numbers with the sole vs limited tax comparison tool.
This article is general information; review concrete assumptions with your certified public accountant for formation and tax planning in Turkey.
See the tax effect in numbers
Compare sole-proprietorship and limited-company tax loads under the same assumptions.
Sole vs Limited Tax Comparison→Legal Disclaimer
The information in this article is for general informational purposes only. For your specific situation, please contact us or another expert.