Which Company Type Should I Form? Sole Proprietorship vs Joint-Stock vs Limited Liability — Practical Differences

Choice of company type is directly tied to what the founders expect from the business and what they are willing to take on. A company is a commercial structure formed to conduct commercial activity — and depending on the founders’ goals, it can be set up as a partnership, capital company or sole proprietorship.

The Three Types

Joint-Stock Company (Anonim Şirket)

• Minimum capital: TRY 50,000
• Shareholders: 1 – 500 (or more if publicly held)
• Shareholders are liable only up to their committed capital.

Limited Liability Company (Limited Şirket)

• Minimum capital: TRY 10,000
• Members: 1 – 50
• Members are liable for the payment of their capital share and any additional obligations the articles impose.

Sole Proprietorship (Şahıs Şirketi)

• No minimum capital
• The simplest formation route.
• Owners are personally liable without limit for the debts of the business.

Sole Proprietorship vs the Capital Companies

Advantages

• Lower formation friction.
• No minimum capital.
• Young entrepreneur exemption: Founders aged 18 – 29 can claim an income tax exemption of up to TRY 150,000 per year for three years.

Disadvantages

• Unlimited personal liability.
• Progressive income tax that scales with revenue.
• Tax burden grows quickly as the business scales.

Joint-Stock vs Limited Liability

Topic	Joint-Stock Company	Limited Liability Company
Share transfer	No notarisation required	Notarisation + Trade Registry filing required
Public offering	Possible	Not possible
Lawyer requirement	Mandatory at capital TRY 250,000+	Not required
Share premium	Available	Not available
Tax on share sale	None, after a 2-year holding period	Taxed in every sale

Liability for Public Debts

Joint-Stock Company. If the debt has a public-law character, the company’s legal representatives can be held liable; shareholders are not.

Limited Liability Company. Members are directly liable in proportion to their share for public-law debts (notably tax and social security).

How to Choose

Factors to weigh:

• The industry the business will operate in
• The capital required
• The level of personal liability the founders can accept
• Modelled tax exposure
• Ownership structure and projected earnings

The right structure is the one in which the chosen industry, capital requirement, liability profile and tax exposure are in balance.