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Company establishment

Both developments in information technology; and entering of this technology increasingly people’s daily lives, causing consumers to demand new products and services. This rapidly increasing demand creates important opportunities for entrepreneurs. As in all the world, entrepreneurship is preferred in Turkey by business people who want to create their own careers and to develop business models that exist. Syrian entrepreneurs have a critical importance both in terms of the different perspectives they can bring to the sector and the integration of Syrian refugees into the labor market. Examples of successful initiatives in the world and Turkey constitutes an example for this. For instance, the social platform Periscope, which was established to share the live videos shot by the users and transformed deeply news production in the world, started to welcome its users with the message “Proudly made in America by immigrants” on the opening screen as a result of the decision it made two years ago. In our country, Turkey, according to a report published by The Economic Policy Research Foundation of Turkey (TEPAV) in November 2018, the number of companies with a Syrian partner established in September 2018 has increased by % 85.2, while Syrian joint capital has increased by 144.7% when compared to the previous year’s September month. These rates clearly show that the integration of Syrian migrants into the country’s economy is in a rapidly increasing trend. However, despite this quantitative increase, the number of issues open to improvement in quality is considerable. According to the report published by INGEV Center for Social Studies on 5 July 2019, the main challenges faced by Syrian entrepreneurs are; difficulty in accessing information needed to conduct business, travel restrictions, difficulty in establishing and operating the company in accordance with the law, difficulty in accounting follow-up, difficulty in accessing sales and supply resources, employee quotas and bureaucratic barriers. In addition, the same report found that the interactions of Syrian and Turkish capitals are limited and that the two groups had a mutually exclusionary attitude on issues such as partnership, shopping and procurement. Only 3% of syrian-owned companies have a Turkish partner. We hope that the information we write below will provide convenience to entrepreneurs by clarifying some of these problems.

Basic Information for Establishing a Company

First of all, citizens of other countries who want to start or operate a business in Turkey must obtain a work permit. You can reach our article here.

“For those who want to start their own business; those under temporary protection may register for their own workplaces with government agencies like Turkish citizens. Those who want to open their own workplace apply for an individual work permit. UK applicants and conditional refugees may establish their own workplaces provided that they meet the assessment criteria and obtain a work permit as set out on the Ministry’s website. Refugees and persons under secondary protection have the right to work without any permission. ”
In addition, it is important to keep in mind that the insurance premiums of the people who do their own business must be paid by themselves. In addition, you need to appoint a financial adviser independently of the type of company you choose. The price of this varies according to the type of company, field of activity and region of ​​activity. Finding a reliable and competent financial advisor is vital to avoiding any future problems. The next step after finding a financial advisor is to select the type of company.

Company types

Entrepreneurs who want to realize their business idea and realize their dreams must carry out their activities through companies in order to do this in accordance with the law. However, in order to do this, it is of central importance to choose the most suitable company type and to carry out the steps of establishing the company in the most accurate way. Achieving this will help you to manage your business in the most efficient way and minimize your personal risk by separating the obligations arising from your company according to the type of company you choose. For example, in capital companies, which we will talk about later, the company assumes responsibility for its debts within the scope of assets. This means that in case of failure of the company, the debts are paid by the company’s possessions, which is a great facilitator for the entrepreneur to reduce personal risk in this way. The company types that we briefly describe below will help you to choose the one that suits you best and take the necessary steps. Before proceeding to this section, it is of central importance to develop a healthy understanding of the distinction between natural and legal persons. According to this distinction, natural persons refer to individual people, while legal persons are fictional and arise from the treatment of goods or groups of persons as a person under the law. For example, while Ömer Koç is a natural person, Arçelik A.Ş. is a legal person.

Private companies

This type of company can be opened in approximately 2-3 days, the number of partners and business volume is more limited than other companies, and partners who have to be real persons have unlimited responsibility. This type of company is more suitable for entrepreneurs who work “freelance” and sell certain capabilities of their business life (software, design, etc.) to other companies and individuals. Thanks to the ease of installation, these companies allow you to issue invoices and formalize your business in a short time such as a week, and the most basic problem you may encounter in private companies is that these companies are not suitable for scalability both structurally and legally. The first reason is that capital companies provide a basis for a better division of labor, and the second and more important reason is that the partners have to be natural persons. This obligation is an issue that should be taken into consideration in the future planning in order to prohibit you from getting investment from investment companies which are legal persons when you want to grow and start to meet with investors. If you foresee an income corresponding to a tax rate of more than 22%, which is the income tax rate of limited liability companies (over 40,000 TRY per year), the private company may also be a disadvantage for you in terms of tax expenses.

Establishment of a Private Company

The first thing you need to set up these companies is an accountant who will perform this operation. Fees are variable, but you will need to allocate a budget of around 500-800 TRY for this transaction. You will need a photocopy of your identity card, a residence certificate with a picture, a circular of signature from a notary public, a power of attorney to be given to the financial adviser and a lease agreement if you are a tenant at your workplace and a copy of the title deed if you own the property. If you set up this type of company, you can set up an e-commerce site, buy a POS machine and use online payment systems.

Limited liability companies

The number of partners of these companies, which can also be established with one person, is limited to the highest 50. Limited liability companies can be established with a principal capital of 10,000 TRY. Apart from the joint stock companies outlined below, limited liability companies cannot be made public or issue bonds. Again, unlike joint stock companies, partners have responsibilities for public debt. This means that the partners are responsible for the unpaid portion of the company’s tax debt. In addition, the sale of the company’s share certificates is subject to notary approval in limited liability companies. This has the effect of reducing the flow of shares in limited liability companies. It may be a decision that will make it much easier for initiatives to face these and similar problems to start joint stock companies if they reach the required principal capital.

Joint Stock Companies

Given the most issues we’re talking about, joint stock companies have the opposite characteristics of limited liability companies. Although it can still be established by one person, there is no limit to the number of partners in joint stock companies. They can be established with 50,000 TRY of principal capital or 100,000 TRY of registered capital. The difference between these two types of capital depends on whether the company is publicly held or not. As a natural consequence of it, or even as a reason, joint stock companies can go public and issue bonds. Both because the shareholders are exempt from the responsibilities arising from public debts and notary approval is not required in the transfer of shares, joint stock companies provide a serious advantage in terms of the risks they take and the ease of management.

Joint Stock and Limited Company Setup

The first and most important thing to do at this stage is to create the company’s articles of association. This agreement should include the company title, shareholders and share amounts, the central address of the company, manager or representative information, capital and shares*, how to make company announcements, conditions for shareholders to leave the company, privileged shares and profits if any, and details of the profit distribution.

*While it is necessary to pay 25% of the capital in joint stock companies and determine how the rest will be paid, there is no such obligation in limited liability companies.

Once the company’s articles of association has been prepared, it must be transferred to the MERSIS (Central Registration) system. At the end of this stage, the registration number is received and with this number, 3 copies of the articles of association are signed by the partners by going to the Trade Registry Directorate (4 copies are needed in companies with foreign capital). After that, the person who will be the authorized representative of the company arranges a signature statement in this directorate. You will also need a notarized identity copy at the start-up notification phase. For this purpose, the directors under the company title 2 copies of the signature declaration, the founders’ declaration signed by the founders, if the director is someone other than the partners, the document approved from the Trade Registry Directorate showing that he/she accepted the duty is needed (in this document person’s settlement, nationality; if the person is a Turkish citizen, ID number; if foreign national, tax number or foreign identification number should be specified, if foreign national, attached notarized passport copy and residence permit for foreign nationals residing in Turkey must be added). If the person chosen as the director is a legal person, the decision of the competent body is needed. This document must include the name and surname, address, nationality of the identified real person, the identification number if Turkish citizen, if not the tax number or the identification number for foreigners. For foreign national managers, this document should also include a notarized passport copy and a certified residence permit if their residence is in Turkey. Finally, if the legal person is a foreign national, the document containing the current registration records of the legal person must be included (These documents must be approved by notaries in the country of the legal person (company) or from the Turkish Consulate in that country and must also be translated into Turkish and notarized.).

Following these transactions, the company’s articles of association should be taken and going to the tax office, the potential tax number should be obtained. This can also be done through the MERSIS (Central Registration) system if the system is switched in the region. After the company registration, this number will function as a tax number. If it is a joint stock company established, as mentioned above, 25% of the capital must be paid, so taking the potential tax number, the bank is gone and this amount is blocked. Then, information letter is received from the bank addressed to the trade registry office.

After this stage is completed, the establishment of the company in the chamber of commerce can be started. For this purpose, you must go to the Trade Registry Office and find the authorized officer and submit the company’s articles of association that you have previously approved from the notary, signature statements of 2 company officials, chamber registration declaration, 3 copy of company establishment application forms, the founding partners information form, the bank letter stating that at least 25% of the capital has been blocked as mentioned above, and finally the bank receipt of the share of the competition institution that you deposited in the pay desk chamber of commerce to the competent office. In addition, you must pay the relevant fees.

Following the registration of the articles of association, signatory circulars are created. This is done by the manager designated by the company in the notary. At the same time, on the day the company is registered, all books determined by law must be certified. At this stage, your financial adviser or accountant will guide you.

After registration of the company, going to the tax office at which the company is registered, the start-up notice is made. At this stage, the approved articles of association, signatory circulars, lease contract or copy of the title deed, the original copies of company registration letter and registry certificate, the residence certificates of the company partners, original copies or approved copies of identity card and notarized identity copies of company partners are needed. After the tax officer identifies the address of the company and approves the address, it prepares the attendance report and after this point the newly established company is entitled to demand tax plate. Following this, bağkur (Social Security Organisation for Artisans and the Self-employed) operations and cash register operations should be carried out. For the cash registry, Firstly, the cash register petition is filled in and received from the tax office, and then the transactions are completed at the cash register dealer. After that, the photocopy of the cash register invoice, the photocopy of the cash register permit document, the first receipt of the cash register and the first three pages of the cash register license are taken and the tax office is taken and the approval process is completed.

After all this has ended,receiving the chamber of commerce application form, the trade registry gazette, the signatory circular including the director’s signature, company’s articles of association (obtained from the chamber of commerce), the identity certificate copies of the company’s partners and the residence certificate of the company’s partners, registration at the chamber of commerce is performed. If the company operates in the field of industry, these transactions are done from the industrial chamber.

The steps we have listed so far almost complete the establishment of the workplace. Finally, it is necessary to pay the environmental and cleaning tax to the municipality and to obtain a business license. In doing so, you will need a lease contract or a copy of the title deed, a copy of the chamber of commerce registration, a tax plate and your trade registry gazette.

After the transactions are completed, your company can start its business life, issue invoices and employ workers. Grants provided by different institutions during and after this phase can significantly reduce both your installation costs and operating costs. Our article on these grants can be found here.

Result

The three types of companies described above are the most common and relevant for potential entrepreneurs from the most perspectives. As you can see; companies vary mainly according to the level of personal responsibility that partners take. Accordingly, personal responsibility is at the highest in private companies, while this is at the lowest level in the joint stock company. The limited liability company has a more hybrid structure. In addition to these types of companies, commando, collective and cooperative companies are located at different points of the spectrum with different organizational and responsibility structures. Although these types of companies create important alternatives, they are more exceptional both in terms of incidence and the advantages they provide.

Whichever type of company you choose, the founding phase is very important in terms of getting on the road, even if it is laborious. If you find a good financial adviser, these stages can be removed from your to-do list in a short time. In addition, we strongly advise you not to give credit to third parties who are requesting money for start-ups from you, except under the direction of government agencies and your financial adviser.

We hope your new company will bring you plenty of profits and happiness!

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