Sole proprietorship or limited company? Which one is right for you?

The first big question entrepreneurs face when starting out is usually: “Should I set up as a sole proprietor or form a limited company?” The answer depends on your capital, expected revenue, partnership structure, and risk tolerance.

Sole proprietorship: fast and low-cost start

A sole proprietorship is the simplest company type — no minimum capital, minimal bureaucracy, and ready to invoice within a day or two. Ideal for freelancers, consultants, e-commerce starters, and small service businesses.

Pros:

• No capital requirement; setup completes in 1–2 days.
• Single owner, fast decision-making.
• Lower bookkeeping load; switch between “operating” and “balance-sheet” basis based on revenue.
• High eligibility for Turkey’s Young Entrepreneur tax exemption (under 29).

Things to watch:

• You are personally liable for all business debts.
• Progressive income tax can climb sharply above certain revenue thresholds.
• You cannot bring in investors, issue shares, or transfer ownership easily.

Limited company: limit your liability

A limited company (LLC) has its own legal personality. Partners’ liability is limited to their share contribution.

Pros:

• Personal assets protected from company debts.
• Flat corporate income tax can be more efficient at higher revenue.
• Share transfers, partner additions, and investor onboarding are possible.
• Greater credibility with enterprise clients.

Things to watch:

• Minimum capital of TRY 50,000 (must be paid in).
• Heavier bookkeeping, mandatory CPA, formal filings.
• Dividend distributions are subject to withholding.

Questions to ask yourself

1. What’s your expected annual revenue? Below ~TRY 1M sole proprietorship can win; above that LLC usually wins.
2. Going solo or with partners? Partnerships need an LLC.
3. What’s your risk profile? If your sector has lawsuit, credit, or debt exposure, limited liability is critical.
4. Will you seek investment? Investors require LLCs (or joint-stock companies).

With ŞirketOn

Through ŞirketOn you can set up either a sole proprietorship (from ₺2,299) or an LLC (from ₺4,399) in a few business days. Not sure which one fits? Request a free expert call before incorporation — we’ll guide you to the right structure for your revenue and goals.

Bottom line: Start lean as a sole proprietor and convert to an LLC as you grow — ŞirketOn can plan the transition for you.