INSIGHTS

Sole Proprietorship

Alper Karmaz

30.01.2023

What Is Sole Proprietorship

A sole proprietorship is a type of company that is more preferred by entrepreneurs because its establishment is simple and fast. Although it is usually established by a single person, it can also be established with a small number of partners. However, when one of the partners wants to transfer or sell their shares, we can say that it was generally founded by a single person, since all partners of the company must approve this transaction. In sole proprietorship companies where all partners are natural persons, all partners are responsible for the company’s debts.

How Do You Start A Sole Proprietorship?

It can be said that it is easy to establish a sole proprietorship. There is no need to take any legal steps in advance. If you are the sole owner of a particular company and start doing business, you automatically become a sole proprietorship. It can be said that there is no need to formally file paperwork or submit any documents at the federal, state or local level to be recognized as such.
It’s considerable to note that depending on where you run your company and what type of business you operate in, you may need to apply for business and residence permits. In some jurisdictions, a business cannot legally begin to operate unless any required business license is obtained by the owner of the business.

Should I Form A Limited Liability Company (LLC) or A Sole Proprietorship?

The two types of companies have different mechanisms. While determining the most accurate company model, it is necessary to clarify the answers to these two questions: How much is the budget? What is the target? In order to achieve your long-term goals and have a solid structure, you can choose the LLC type of company.
If you want to achieve short-term goals and your budget is limited, you can choose the sole proprietorship type. By determining your goals, you can get support from financial advisors and find the answer to the question of whether it is a sole proprietorship or a limited liability company.

What Are Advantages to Sole Proprietorship?

Sole proprietorships are categorized as ordinary companies, collective companies and limited partnership companies as a type of company in which the partners and companies are integrated in terms of assets. Sole proprietorships that are taxpayers as they are legal entities; liable to pay stamp duty, withholding tax, value-added tax, provisional tax and income tax. Besides, there are many advantages of sole proprietorship, they can be listed as:
● Its establishment can be very quick and easy.
● Establishment cost is lower compared to other types of companies.
● Bookkeeping fees are more affordable.
● Accountant or financial advisor fees are lower.
● A gradual tax system is applied according to income.

How Is A Sole Proprietorship Structure?

How the sole proprietorship is established and what the structure of the company should be varies from country to country. If we take Turkey as an example, the following can be said:
If you want to establish a sole proprietorship, you must apply to the corporate tax office. As a first step, you need to start by collecting the necessary documents. You can deliver these documents to the tax office in person or make an agreement with a financial advisor and have them apply for a sole proprietorship by giving a power of attorney. After being audited by the inspectors assigned by the tax office, you can establish your company in a few days if the conditions are found suitable.
The stages of establishing a sole proprietorship can be listed as follows:
● Necessary information such as residence information, a photocopy of the founder’s identity card, circular of signature and signature registration statement are obtained.
● The company is registered.
● The tax account number is applied for.
● Necessary books are taken and notarized.
● Attendance report is prepared.
● Tax account number is taken.
● Tax plate and cash register plates are taken.
● Expense note, waybill and invoice documents are issued.
● An advertisement is placed in the registry gazette and the relevant chamber of commerce is registered.
● The license to open and operate a business is issued.
● Necessary insurance procedures are done.

Can A Sole Proprietor Have 2 Owners?

Sole proprietorship is a type of company that has a legal personality and the responsibilities of its partners are unlimited. Although it is generally known as being established by a single person, it is also established with a small number of partners.

How Do Sole Proprietors Pay Taxes?

Sole proprietorships are subject to direct taxation, meaning the business owner reports the income or loss from his or her business on his or her personal tax return, but the business itself is not taxed as preferential. The sole proprietor will file a Schedule C with their personal 1040 tax return annually.
They will also be responsible for filing Schedule SE with these returns and paying quarterly self-employment taxes.


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INSIGHTS

Sole Proprietorship

Alper Karmaz

30.01.2023

What Is Sole Proprietorship

A sole proprietorship is a type of company that is more preferred by entrepreneurs because its establishment is simple and fast. Although it is usually established by a single person, it can also be established with a small number of partners. However, when one of the partners wants to transfer or sell their shares, we can say that it was generally founded by a single person, since all partners of the company must approve this transaction. In sole proprietorship companies where all partners are natural persons, all partners are responsible for the company’s debts.

How Do You Start A Sole Proprietorship?

It can be said that it is easy to establish a sole proprietorship. There is no need to take any legal steps in advance. If you are the sole owner of a particular company and start doing business, you automatically become a sole proprietorship. It can be said that there is no need to formally file paperwork or submit any documents at the federal, state or local level to be recognized as such.
It’s considerable to note that depending on where you run your company and what type of business you operate in, you may need to apply for business and residence permits. In some jurisdictions, a business cannot legally begin to operate unless any required business license is obtained by the owner of the business.

Should I Form A Limited Liability Company (LLC) or A Sole Proprietorship?

The two types of companies have different mechanisms. While determining the most accurate company model, it is necessary to clarify the answers to these two questions: How much is the budget? What is the target? In order to achieve your long-term goals and have a solid structure, you can choose the LLC type of company.
If you want to achieve short-term goals and your budget is limited, you can choose the sole proprietorship type. By determining your goals, you can get support from financial advisors and find the answer to the question of whether it is a sole proprietorship or a limited liability company.

What Are Advantages to Sole Proprietorship?

Sole proprietorships are categorized as ordinary companies, collective companies and limited partnership companies as a type of company in which the partners and companies are integrated in terms of assets. Sole proprietorships that are taxpayers as they are legal entities; liable to pay stamp duty, withholding tax, value-added tax, provisional tax and income tax. Besides, there are many advantages of sole proprietorship, they can be listed as:
● Its establishment can be very quick and easy.
● Establishment cost is lower compared to other types of companies.
● Bookkeeping fees are more affordable.
● Accountant or financial advisor fees are lower.
● A gradual tax system is applied according to income.

How Is A Sole Proprietorship Structure?

How the sole proprietorship is established and what the structure of the company should be varies from country to country. If we take Turkey as an example, the following can be said:
If you want to establish a sole proprietorship, you must apply to the corporate tax office. As a first step, you need to start by collecting the necessary documents. You can deliver these documents to the tax office in person or make an agreement with a financial advisor and have them apply for a sole proprietorship by giving a power of attorney. After being audited by the inspectors assigned by the tax office, you can establish your company in a few days if the conditions are found suitable.
The stages of establishing a sole proprietorship can be listed as follows:
● Necessary information such as residence information, a photocopy of the founder’s identity card, circular of signature and signature registration statement are obtained.
● The company is registered.
● The tax account number is applied for.
● Necessary books are taken and notarized.
● Attendance report is prepared.
● Tax account number is taken.
● Tax plate and cash register plates are taken.
● Expense note, waybill and invoice documents are issued.
● An advertisement is placed in the registry gazette and the relevant chamber of commerce is registered.
● The license to open and operate a business is issued.
● Necessary insurance procedures are done.

Can A Sole Proprietor Have 2 Owners?

Sole proprietorship is a type of company that has a legal personality and the responsibilities of its partners are unlimited. Although it is generally known as being established by a single person, it is also established with a small number of partners.

How Do Sole Proprietors Pay Taxes?

Sole proprietorships are subject to direct taxation, meaning the business owner reports the income or loss from his or her business on his or her personal tax return, but the business itself is not taxed as preferential. The sole proprietor will file a Schedule C with their personal 1040 tax return annually.
They will also be responsible for filing Schedule SE with these returns and paying quarterly self-employment taxes.