Establish a Limited Company
If you have a sole proprietorship and want to expand your business, benefit from government support more comprehensively or realize your business dream with your partner, you should establish a Limited Company; You must convert your current company to a Limited Company.
Establishing a limited company is very prestigious from an institutional point of view. Regardless of sole proprietorships, you need to open a limited liability company in order to expand your current business and to have many advantages such as the fact that the company has a title independent of the personal name, the trust brought by the limited company's own responsibilities and the credibility of the banks. While it seems advantageous to open a sole proprietorship up to a certain income bracket, your financial advisor, who examines your monthly regular income and expense balance, will also say that it is time to open a limited company for you. While tax rates vary within certain limits according to the amount earned in sole proprietorships, tax rates are fixed in limited liability companies.
Four Reasons to Establish a Limited Company
1 Limited company title is much more prestigious when compared to sole proprietorships. For this reason, if you want to make different investments or receive investments, if your corporate identity has an important place in the trust of your business, you should start working to become a limited company.
2 Establishing a limited company has serious tax advantages over a certain income level. In order to benefit from these advantages, you can convert a sole proprietorship to a limited liability company, or you can close the sole proprietorship and open a new company. At this point, your financial advisor will make the most accurate guidance.
3 Your company has grown and you are now competing with bigger competitors. At this point, you can switch to a limited liability company structure in order to determine your partnership structure better and to increase the support you will receive to grow your company.
How to Establish a Limited Company
In order to establish a limited company, a company name must first be determined. Unlike sole proprietorships, the legal entity of Limited Companies is formed independently of individuals. For this reason, it is recommended to start the processes such as determining a company name and, if necessary, trademark registration, with the establishment of the company. There are some basic rules to consider when choosing a company name. Words that cannot be used in the establishment of the company, such as foreign words, expressions that may cause discrimination based on language, religion, race, slang words and phrases are subject to certain restrictions. For this reason, you can learn about the restrictions on the company name / title during the meeting with your financial advisor, or if you wish, you can find out whether they are suitable by sharing your preferences for the company name with your financial advisor. At least one of the fields of activity must be present in the title. Abbreviations cannot be made on words that show the subject. After deciding on the name/title of the company, a capital of at least 10,000 TL should be determined.
Every company must have a legal address. If you are going to organize a room of your own house as a workspace, or you will show a virtual office as an address, you must complete the legal address transactions. When determining the company address, you must show the lease agreement and indicate how much of the contracted property you will use for business. This is very important when you are going to use your own home as a company address. Because the withholding tax paid on the lease agreement at the establishment of the companies is calculated depending on the rent. If you are going to use only one room of your house for business, the rental value is determined by looking at the square meter of the room and then this square meter account is used for withholding payments. This account is also important in terms of including home invoices in the taxation process.
After the title and address are determined, your accountant will ask you for the necessary documents and power of attorney. Your financial advisor prepares your company's articles of association through the MERSIS system. After this step, your company's tax identification number is determined. According to a new decision issued in 2018, the requirement to block 25% of the capital of limited companies has been lifted. You can pay the committed capital within 24 months. After the company's articles of association are approved by the system, it is necessary to go to the affiliated Chamber of Commerce for the establishment. You can determine which region to go at which time from the appointment system.
When you go to the chamber of commerce, there are documents you need to take with you for transactions.
• Chamber Registration Petition
• Chamber Registration Statement (all partners must have photos)
• Incorporation application form, if there is a foreign partner in the company
If the partners cannot be present at the Chamber of Commerce during the establishment process, the financial advisor they have given power of attorney can go instead. The financial advisor can issue a company incorporation power of attorney from the notary public. The price of the company incorporation power of attorney is 95 TL.
There are payments to be made to the Chamber of Commerce during establishment.
• Establishment and Certification: 50 TL
• Registration and Announcement: 1.100 TL
• Advertisement Expenses: 10 TL
• Room Newspaper Subscription: 40TL
• Saver: 220 TL
• Opening Notebook Certification: 140 TL
• Competitive Share: 4 TL
Amounts may vary according to the company's articles of association.
After you submit your documents in full and make all your payments, your application for establishment of a Limited Company is approved. Registration letter, registration certificate and activity certificate are obtained.
With a change made in 2018, book approvals are also made during the establishment.
Books to be certified for a limited liability company:
• Ledger Ledger
• Journal Book
• Stock book
• Board of Directors Decision Book
• Common Share Book
The articles of association of your company will be registered at the Trade Registry Office. After the registration, a circular of signature and a power of attorney for your financial advisor are issued from the notary public. The partners of the company sign under the company title at the notary public. It is possible to use this signed document for all subsequent transactions. The average cost for the signature circular is 220 TL. The cost may increase depending on the length of the main contract. The fee for the power of attorney, which you must obtain from a notary public for your financial advisor, is 142 TL. After the company registration, you need to go to the tax office by collecting some documents with the power of attorney of your financial advisor.
• Job Start Notification Form
• Job Start Notification Form
• Photocopy of rental agreement or deed
• Copy of Trade Registry Certificate
• It is a Registration and Announcement Petition.
Advantages of Establishing a Limited Company
The shareholding structure of limited companies is different from that of sole proprietorships. In this way, other partners can be accepted into the company or a part of the company can be marketed to different companies.
Limited companies are more prestigious than sole proprietorships. They are more suitable for the institutional structure. It is seen as more reliable by banks and government agencies. In this way, Limited Companies are treated more flexible about some possibilities.
Limited companies partners can benefit from flat tax opportunities. For 2019, this opportunity is 22%.
Disadvantages of Establishing a Limited Company
In Limited Companies, the bookkeeping costs are higher than the bookkeeping costs of the sole proprietorship. The bookkeeping fee is determined according to the activities and size of the company. This fee differs in each city. The fees are determined by the Chamber of Certified Public Accountants. It is forbidden to serve below the base prices.
Apart from these, there are some regular payments that are considered as a disadvantage of establishing a company rather than establishing a limited liability company, but should not be seen as a disadvantage when you consider the value added by incorporation to you, your business and your commercial assets. These payments are the ones you need to make, regardless of your legal entity.
Amounts to be paid each month; value added tax, if you have an employee, insurance premium, BAĞ-KUR premium and Financial Advisory fee. Items to be paid quarterly; Withholding and Corporations Temporary Tax. The ones to be paid annually are; legal book certifications, annual corporate tax and professional chamber membership fee
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