1.Selection of the Financial Advisers

Once you've decided to start a company, the first thing you need to do is choose through interviewing financial adviser you can trust. Of course, you don't need to hurry in choosing a financial adviser. Your interview with a few financial advisers about your work will give you the correct answer..

 All steps written to inform here are steps that can be carried out with the guidance of an expert consultant.

In the establishment of the company and within the process of operation of the company, it is a serious matter of expertise to act according to many laws such as  Turkish Commercial Code numbered 6102,  Tax Procedure Law numbered 213,  Corporate Tax Law numbered 5520, Income Tax Law numbered 193, Public Receivables Law numbered 6183, Social Insurance and General Health Insurance Law counted 5510, Accounting Profession Law numbered 3568 and VAT general communique.  


2. Incentives

Before the establishment phase of a company, it is vital to investigate incentives that are suitable for the type of company you want to establish. Once you have established a company, you may miss many incentives. Besides, having information about incentives before determining which kind of company you want is also crucial, as the relevant incentives will vary depending on the type of company you will set up.

For example, entrepreneurial incentives are available only in the sole proprietorship for youth under the age of 29. In the context of this incentive, with 3 years tax exemption, the social security premium for 1 year is covered by the state.


3. Company Type

The most important issue you need to determine with your financial advisor that you are working with is what kind of company you will start. You may need to discuss the purpose, areas of activity, effectiveness and possible turnover of your business with your consultant in a realistic way. There are 3 types of companies in our country: Sole proprietorship, Limited company, Joint Stock Company.

Sole proprietorship: The shareholder of a sole proprietorship is the person himself and no capital is required to start. The Company is responsible for tax liabilities and receivables with all its assets. The establishment and closure of sole proprietorships are also very simple and less costly than other types of companies

The most important point of the individual company compared to other types of companies is the increasing taxation of company profitability. 15% up to 18,000 Turkish Liras, 20% between 18,000-40,000 Turkish Liras, 27% between 40,000-98,000 Turkish Liras, 35% between 98,000-500,000 Turkish Liras, 40% after 500,000 Turkish Liras, tax rates are applied.

On the other hand, a 22% tax rate is applied to profits on a fixed basis in limited and joint-stock companies. However, if profits are distributed to the shareholders of limited and joint-stock companies, 15% stoppage tax is also applied. Essentially, the main purpose of stoppage tax is to encourage company growth by preventing partners from withdrawing capital from the company.

Social insurance contributions of the shareholders in the sole proprietorship are deducted directly from the profit at the end of the period, while the social insurance payments of the board members or directors in the limited and joint-stock companies cannot be neither deducted from tax nor shown as an expense.

For example, let us imagine that you have paid 10,000 Turkish Liras social insurance premium for one year. If you are the owner of the sole proprietorship, and you have 20,000 Turkish Liras tax payment to the state at the end of the year. After deducting 10,000 Turkish Liras from the 20,000 Turkish Liras tax payment, you can pay 10,000 Turkish Liras in taxes. However, in limited and joint-stock companies, we cannot deduct the amount of 10,000 Turkish Liras directly from the tax and it is not possible to deduct our tax base as an expense.

A limited company can be established with a capital of at least TL 10,000 Turkish Liras. There is no need to reserve any amount to the bank in its establishment. The number of shareholders is limited to 50 people.

The share transfer of a limited company is costly and made through a notary. The share transfer is taxable regardless of the year of acquisition. The director shareholders of the limited company are responsible for public receivables with their all assets. Non-director shareholders are responsible for public receivables proportionately with their share stake. At least one of the shareholders of the limited company must be a manager. Besides, all shareholders must pay social insurance contributions.

A joint-stock company can be established with a capital of at least 50,000 Turkish Liras. A quarter of the capital of the company must be reserved in any bank. In non-public joint-stock companies, the maximum number of shareholders is 500.

There are no costs for share transfers of joint-stock companies. Once shareholders have entered into a share transfer agreement between themselves, it is sufficient to register shareholders in the share book. Shares will not be taxed after 2 years. Shareholders are not obliged to be on the board of directors. Anyone outside can be appointed as a board of directors. The shareholders outside of the board of directors are responsible for paying public and other commercial debts proportionately with only the capital they committed. Non-board shareholders do not have to pay social insurance contributions.


4. General Evaluation

Once you have chosen your financial adviser whose reliability and expertise you believe in, you should ask your financial adviser for a comprehensive report on incentives. If you look at the minimum capital amounts of company types, you may prefer individual enterprises for commercial activities on a small scale.

Due to the tax rates applied for businesses that will result in more than 100.000 Turkish Liras in profits as a result of commercial activities, it would be more appropriate to choose a limited company rather than a sole proprietorship.

Prestige is one of the most important factors while deciding the type of company. In particular, company type will be very effective when you need financing. Because the creditworthiness of limited companies will be higher than sole proprietorship and lower than joint-stock companies in the perspective of banks.

If the shareholders will not be in management for any reason in the company's activities, it is appropriate to choose a joint-stock company. That's because joint-stock company's shareholders are not obliged to be on the board of directors. However, shareholders of a limited company should be on the board of directors. Likewise, all responsibility for public debts and commercial debts in the joint-stock company belongs to the board of directors.


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