The truth behind becoming an entrepreneur in Turkey… When you are a foreigner...
Or the reasons why I have been quite silent the past few months… In this blogpost, I want to share with you my experience, my “worst practices”, meaning the mistakes I did on this entrepreneur journey that you can avoid, or try to avoid.
So yes, it’s official. I am now my own boss! And I am quite proud of this achievement, though, as you will see, it wasn’t a smooth path covered by flowers and butterflies.
But let me tell you everything from the start...
The background story...
End of 2018, after a successful coaching, alignment of what I wanted and my financial “readiness” (understand here my stopping waiting for the right moment and my finally jumping from the cliff), I quit my secured but less fulfilling full time position to start “for real” the entrepreneurship journey and this long administrative route leading to the concretisation of my seeking for freedom and independency.
After some rétrospective, here are some pieces of advice I want to give you, should you be in my case, a foreign female, studdborn enough to decide to open her business in Turkey.
Advice 1: You don’t really need a lawyer in fact
In my quest of wanting things to be as legal and legitimate as possible and to be sure the subtle Turkish administration and legislation won’t trick me, I decided to hire a lawyer to help me to create my legal entity and, more important, to give me a legal status as a foreign individual entrepreneur.
Well, to be honest, either I didn’t have luck and the lawyer I chose was bad or this person didn’t give it a s*** and just wanted to earn easy money doing mostly nothing, I ended up asking this person where to look, what to ask for and triple check the information provided.
Advice 2: Hire an accountant
Right from the beginning. In Turkey, accountants are the people dealing with all business oriented things.
The accountant will help you opening your business, registering it at the tax office and will take care of your monthly bookkeeping, a mandatory thing, even for the individual society (sahis firmasi in Turkish).
However, it’s quite mission impossible to find an English-speaking accountant in Turkey. So, my advice for you, if you don’t speak Turkish, would be to have a Turkish friend to help you to communicate.
Advice 3: Register your business at a Turkish Chamber of Commerce
Especially when you are a foreigner. It might be handy after to obtain your residence permit.
I thought about skipping this step, to be honest, but I ended up happy to have listened to my lawyer for that time.
Advice 4: Start small
When I started thinking about opening a business in Turkey, I thought directly about a limited company. But, when you are just starting and still in the process of testing your business, it might be a bit heavy in terms of taxes and administrative works.
Start with a sahis firmasi and them you will see.
As a foreigner, there is no issue to open a sahis firmasi, you just need to have a valid residency permit in Turkey.
Here are the list of documents you will need to prepare beforehand:
a notarized translation of your passport
a procuration for your lawyer (if you decide to work with a lawyer) or vekaletname
a procuration for your accountant
a signature circular, or imza beyannamesi
a copy of your rent agreement: it can be where your live or your can opt to have your legal address register in a coworking place for example. I registered my address at Kamara.
a copy of your current residency permit, or work permit
My advice would be to have several examplars of the above documents in stock.
Advice 5: Registration at the tax office, just follow your accountant
The accountant you will choose will deal with the tax office registration. You will also have to think about the activity sector you want to operate in as it might also dictate the needs of additional authorizations, certificates or permits.
I prepared all the documents my accountant asked me, came with him at the tax office and had a lovely chat with the woman who dealt with the registration. She even called a friend of her who spoke French when she learnt I was French so that I can talk to him.
At the registration at the tax office, you will be asked to pay 48 TRY.
After your registration at the tax office, tax officers will come at the address you indicate you will be working from to check. It’s a very easy procedure.
You will receive an SMS telling you the day the tax officer will come. If you are not available that day, you can always call them to cancel and wait for another day. It’s better to do that than not to be there when the tax officer shows up…
You have up to 3 weeks after the registration at the tax office to have it done.
The tax officer will just check that you are indeed here, will take pictures of your working place, will ask you to sign a document and give you a paper testifying that the tax verification has be done.
Not a very painful step and the tax officer I dealt with was also very kind. He asked questions on my new business and chatted a bit.
Advice 6: Registration at the Chamber of Commerce, multiple-check the list of documents requested, not just one time...
Once you have your tax registration completed, you can think about the second step: registering your business to the Chamber of Commerce.
And this is where my lawyer wasn’t helpful at all. We went to the Istanbul Chamber of Commerce 5 times, each time there was a missing document or something else.
The 5th time was the right one and the month after, I was published in the Official Journal.
In February 2019, these were the documents I have been requested to show at the Chamber of Commerce:
Vergi levhasi: this document will be prepared by your accountant after the registration at the tax office
a notarized translation of your passport
a procuration of your lawyer or accountant, depending on the person who will deal with the Chamber of Commerce with you
a copy of your residency permit, or work permit, notarized stamp
a copy of your rent agreement
a signature circular
a stamp. My lawyer insisted that I have my stamp ready, though the official at the Chamber of Commerce didn’t ask for it
a deposit of a minimum of 100 Turkish Lira corresponding to a kind of capital
The state person checked all the documents, made me sign some other documents, handled me a paper so that I can pay my deposit and that’s it: my company was officially opened. The following month I was published on the Official Journal.
Keep all these precious documents like the Sicil and the extract from the Official Journal. Scan them and store them. They are the proves that you are a business owner.
Advice 7: Keep it simple for your permit
I wanted to obtain a work permit linked with my newly created company but this didn’t work out. My lawyer didn’t go into details but, from what I know, for a foreigner to be able in a company, no matter which one, you need to have 5 Turkish citizens already working for you.
My advice, don’t bother apply for a work permit, even if your lawyer will assure you you will have it.
Go to the Goc website and apply for a residency permit. The only difference is that you won’t apply for a touristic or family permit but for a business permit.
In the occupation part, state that you work, precise that you are a company founder, state the name of your company as per your official documents from the Tax office and the Chamber of commerce and choose “entrepreneur” as your profession.
In the “Reason of stay”, you will choose business reason and refer to the list of documents to provide for business purpose:
Notarized Vergi levhasi
Notarized Sicil document from the Chamber of commerce
Notarized extract from the Official Journal where you appear
A signature circular
Motivation letter explaining why you ask for a business permit (I took my best Turkish and wrote a beautiful letter the officer even read when I came at the appointment)
And all the other documents requested for the residency permit. Check them online on the Goc idaresi as they tend to update this list regularly.
I was very stressed for my appointment at the Goc because of a very bad first experience 5 years ago and had all my documents triple checked, even put more documents in case, and had my taxes paid beforehand. If you have all the requested documents, you answer any question the officer can ask and you don’t loose your temper because it might take time, everything will go just fine.
Once the officer takes all you documents and doesn’t require additional ones, you can leave and you just wait for the magical SMS telling you that your residency request has been evaluated positively.
Advice 8: Be patient
I started the procedures for opening my business mid December 2018, naively hoping it will be done by the end of January 2019…
Well, I obviously underestimated the bureaucracy and the various issues I would have to face.
My company has been registered at the Tax office end of January 2019 and at the Chamber of Commerce end of February 2019.
And it took me around less than 2 months from the completion of my application online and the reception of the SMS confirming the validation of my permit request.
So around 5 months…
But, no matter all the struggles I went through, the despair moments I thought I would give up, it is worth all of them.
I just wish I would have been more prepared and dedicated more time to solve issues by myself sometimes.
Bonus point: what to expect after you opened your business money wise…
Accountant monthly fees
Your accountant will deal with all your declarations and tell you every month how much you will have to pay. You will send him all your invoices and bills.
For 2019, the average monthly fees for accountant are around 300 TRY.
Every month, you will have to pay a mandatory VAT, even if you don’t have incomes.
This monthly VAT is 48 TRY. It will be higher depending on the incomes you declare.
Then, even trimester, another tax of around 80 TRY.
When you will start declare incomes, you will be taxed on them from 15%.
Depending on your rental fees, you might be subject to the stopage. This will be calculate by your accountant.
Social insurance or SGK
During the first 3 months, you won’t pay SGK. Then, one day, your accountant will send you a message telling you to pay a SGK premium and your first SGK monthly payment.
SGK, at the beginning, might be the biggest expense you will have as it is around 700 TRY.
You will need a stamp with your company details, even if you are an individual company. Count around 60 TRY for that.
You will be asked for a copy of your Vergi levhasi.
Generally, stamps are quick to do and easy to update in case of information changes. I had mine within 2 hours.
These are the invoices you will issue to your clients and then send to your accountant to declare your revenues.
For that, you will need to provide your Vergi levhasi, your residence permit, your logo, the confirmation of the tax office location control.
Count around 600 TRY for a block of invoices. Usually, this block of invoices will last a few years. If not, well it means that your business is skyrocketing and this is great for you!
How much do you need to open a company in Turkey?
Well, I would advise you to budget around 4000 TRY for your business opening and business permit to cope with any unexpected expenses that can arise on the way and including all the notarisations you will need to do.
Of course, if you decide to work with a lawyer, it might be more expensive.
I have been quoted up to 1 500 USD plus VAT just for lawyer fees, excluding all notarisations, translations costs and taxes you will need to pay on the way.
Well, I hope this will help you, should you decide to undertake this wonderful journey of entrepreneurship in Turkey.
I don’t pretend though to detain the exact truth and I won’t stress enough to check as regularly as possible the list of documents and the procedure. Turkey is a country with procedures and lists of documents that can change every month.
What I just explained to you was my own experience. I don’t know if it goes like that for everybody or if I was a kind of exception. I also did my own mistakes.
Anyway, I thought it would be good to share it as I didn’t find much when I was looking for information and, not being married to a Turkish national, I couldn’t identify with the few people I know who did the same, but are under a family permit.
I would be glad to exchange with you on that topic, should you be at the beginning of your entrepreneur journey and wishing to open something in Turkey or, should you have already opened a business here and wanted to share your experience with me. :)
Photo credits: Unsplash