One of the most important decisions when establishing a company in Turkey is which company type you will choose. Understanding the differences between Individual Company, Limited Company (LTD) and Corporation (A.Ş.) is critical for the future of your business.
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.
- ✓Fundamental differences between Individual Company, Limited Company and Corporation
- ✓Advantages and disadvantages of each company type
- ✓Capital requirements and liability structures
- ✓Which company type to choose in which situation
📊Fundamental Differences Between Company Types and Social Security Status (2026 Current)
| 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 | Limited (theoretically to capital share) ⚠️ Personal liability for public debts! | Limited – only to committed capital |
| 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** | Only Board of Directors members*** |
| Young Entrepreneur Support | Available (under 29, no Bağ-Kur for 1 year) | 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 | Distributed with 10% withholding | Distributed with 10% withholding |
| Share Sale Advantage | None | None (gain is taxable) | Available – tax-free after 2 years |
| Audit Requirement | None | Required under certain criteria | Required in most cases |
| Lawyer Requirement | None | None | Required if capital >1,250,000 TL |
| Decision Making | Single person | General assembly / manager | General assembly + Board of Directors |
| Foreign Partner | Not allowed | Allowed | Allowed |
| Prestige & Scale | Small jobs / freelancer | Ideal for SMEs | Large scale, investment & going public |
🔴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. Public Debt Risk for Limited Company Partners
In limited companies, if the following debts cannot be collected from the company, partners' personal assets (home, car, bank account) can be seized:
- ✓ ✓ Tax debts
- ✓ ✓ Social Security premiums
- ✓ ✓ Other public debts
📖 📖 Legal Basis: Law No. 6183 on Collection Procedure of Public Receivables
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:
- ✓ Only Board of Directors members are covered by Bağ-Kur
- ✓ Partners not on the Board (even founders) do not pay Bağ-Kur
- ✓ Merely being a shareholder does not create Bağ-Kur obligation
- ⚠️ Bağ-Kur starts when elected to Board, ends when removed
5. Lawyer Requirement (Corporation Only)
In corporations with capital exceeding 1,250,000 TL:
- ✓ There is a requirement to have at least 1 lawyer
- ✓ Lawyer can be full-time employee or service can be obtained externally
📊2026 INNOVATIONS AND CURRENT INFORMATION
📱E-Invoice Requirement (2026 NEW!)
⛔ Paper invoice period has completely ended!
- ALL invoices must be issued as e-invoice or e-archive regardless of amount
- Old regulation: Below 3,000 TL could be paper in 2025 → NONE in 2026
- All businesses must switch to digital invoice
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
🎯Conclusion and Recommendations
Company type selection depends on the size, goals and risk tolerance of your business. Individual company or limited company may be more suitable for small businesses, while corporation may be more suitable for large projects.
It is important to have a detailed meeting with your tax advisor and review your business plan to make the right decision.
Each company type has its own unique advantages. What matters is choosing the one that best suits your business needs.
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The information in this article is for general informational purposes only. For your specific situation, please contact us or another expert.