Closure Process, New Limited Company Formation, Tax Differences, and Key Considerations

Many entrepreneurs in Turkey start with a sole proprietorship, but as the business grows and the revenue increases, switching to a limited company becomes essential for credibility, tax efficiency, and scaling.

This guide explains when and how the transition should happen.

1) When Should You Move from Sole Proprietorship to Limited Company?

You should switch if:

• Monthly revenue exceeds 100,000 TL

• You need stronger corporate credit limits

• You work with corporate clients

• You want business partners

• Your tax rate has reached 35–40%

• You aim to build a long-term brand

For industries like hosting, IT, software and e-commerce, moving to a limited company is eventually inevitable.

2) Can a Sole Proprietorship Directly Convert to a Limited Company?

No.
Turkey does not allow structural conversion.

Transition consists of two separate actions:

1. Close the sole proprietorship

2. Establish a new Limited Company

They are legally independent entities.

3) How to Close a Sole Proprietorship

Step 1: Submit “Business Termination Notification” via e-Devlet

Search:
“İşe Son Verme Bildirimi”

Step 2: Accountant finalizes the forms

Step 3: Tax Office Inspection

A tax officer visits and confirms closure.

Step 4: Final declarations and ledger closing

Total time: 1–5 days

4) Opening the Limited Company After Closure

Limited company formation requires:

• Company name

• Partner structure

• Capital (minimum 10,000 TL)

• NACE code (activity code)

• Company address

• New tax number

Tax number does not transfer from sole to limited.
They are entirely separate legal identities.

5) Tax Differences and Financial Impact

For higher income levels, the fixed 25% corporate tax becomes a major advantage.

6) Transferring Brand, Domains, and Assets

Items from the sole proprietorship:

• Brand / trademark

• Domains

• Servers / equipment

• Inventory

• Office assets

Can be legally transferred to the Limited Company via invoicing.

This makes the process fully compliant and tax-deductible.

7) Common Mistakes During Transition

• Opening the Limited before closing the sole

• Keeping both active unnecessarily

• Wrong NACE codes

• Incorrect address information

• Too low declared capital for Limited

• Delays in opening the corporate bank account

Avoiding these mistakes ensures a smooth transition.

8) Conclusion

Transitioning from a sole proprietorship to a limited company is a two-step process: close the sole business and establish the limited company.

If your business is growing and you aim for long-term stability,
a limited company is the only logical structure.