What are we comparing?
The Turkish expression “şahıs şirketi” often refers to a sole proprietorship operated by an individual. A limited company is a separate legal entity. This article compares those two structures, rather than Turkish collective or limited partnerships. Working alone does not mean you must choose a sole proprietorship.
The principal differences
| Topic | Sole proprietorship | Limited company |
|---|---|---|
| Legal structure | Individual business | Separate legal entity |
| Profit taxation | Personal income tax rules | Corporate tax rules |
| Minimum capital | No equivalent statutory capital threshold | TRY 50,000 |
| Ownership | Operated by one individual | One or more shareholders |
| Use of funds | Business and personal transactions still need separate tracking | Shareholder accounts, salary and dividends are different transactions |
Look beyond the headline tax rate
High turnover does not necessarily mean high profit. Start with an estimate of annual net profit and the amount the owner needs to withdraw. Compare formation costs, ongoing accounting, staffing and future investment plans together. Minimum capital is not a professional fee paid to establish the company.
Responsibility and administration
A sole proprietorship’s obligations are linked to the individual. A limited company does not eliminate every form of personal exposure: public debts, management responsibilities and personal guarantees require separate consideration. Do not choose a structure on the assumption that incorporation removes all responsibility.
Prepare a useful comparison
List your expected sales and costs for the next 12 months, shareholders, funding needs, customer locations and staffing plans. Also estimate how much cash you will need personally. These figures provide a practical starting point for comparing both structures.