Corporate Law Series · 1 of 5
Choosing a legal structure for a textile business affects liability, financing, governance, tax treatment and future investment. The appropriate choice depends on the planned activity and ownership arrangements, rather than a single turnover figure or an assumption that all exporters must be joint-stock companies.
1. Comparing the main options
| Issue | Sole proprietorship | Limited company (Ltd. Şti.) | Joint-stock company (A.Ş.) |
|---|---|---|---|
| Legal identity | The proprietor and business are not separate legal persons. | Separate legal person. | Separate legal person. |
| General minimum capital | No equivalent company-capital minimum. | TRY 50,000. | TRY 250,000; a non-public company adopting the registered-capital system requires at least TRY 500,000 initial capital. |
| Ownership | One natural-person proprietor. | One to fifty shareholders. | One or more shareholders. |
| Ordinary business debts | The proprietor is personally liable, subject to applicable enforcement protections. | The company is the debtor; shareholder and manager obligations require separate examination. | The company is the debtor; shareholders, directors and guarantors have different legal positions. |
| General tax framework | Business income is generally within personal income tax. | Corporate tax rules generally apply. | Corporate tax rules generally apply. |
| Exporting | Possible if the applicable requirements are met. | Possible if the applicable requirements are met. | Possible if the applicable requirements are met. |
The company capital figures reflect the general minima introduced from 1 January 2024. Sector-specific rules and any requirements applicable to an existing company must be checked separately. Capital is not the same as the registry fee or the business’s total working-capital needs.
2. Sole proprietorship
A sole proprietorship may suit an individual testing a business model or operating on a limited scale. It has no separate corporate personality: contracts, receivables and debts belong to the proprietor. That can expose personal assets to business liabilities, subject to the legal protections applicable to enforcement.
Starting such a business does not mean that registration with the tax office is always the only required step. Whether the activity is a commercial enterprise or falls within another category affects trade registry, chamber and other registration requirements. Workplace, manufacturing, employment and sector-specific obligations also remain relevant.
The structure should not be rejected solely because export customers are involved. Natural persons meeting the applicable tax and exporters’ association requirements can export. Particular buyers may impose their own supplier requirements, but those commercial preferences should not be confused with a general legal prohibition.
Before choosing this route, consider contract exposure, product claims, employees, premises, finance and whether another person will actually become a partner. An informal promise to share a sole proprietor’s business can create a very different legal relationship from holding shares in a company.
3. Limited company
A limited company has separate legal personality and can have between one and fifty shareholders. It may provide a workable structure for a textile manufacturer, retailer or exporter with a relatively stable ownership group.
Under Commercial Code Article 573, shareholders are generally not personally liable for the company’s ordinary debts merely because they own shares. Their obligations include payment of subscribed capital and any lawful additional-payment or ancillary obligations in the articles.
Share transfers, admission of a new partner, management powers and exit arrangements require attention to the articles and statutory formalities. A limited company is not simply an interchangeable label for a joint-stock company.
4. Joint-stock company
A joint-stock company may be appropriate where the owners expect a changing investor base, a more developed governance structure or particular financing arrangements. It can also be established with one shareholder.
Transferability of shares can be an advantage, but it is not universally unrestricted. The type of share, payment status, statutory rules and restrictions in the articles may affect the transfer. Investor rights, management appointments and reserved decisions should be planned together.
Shareholders’ position must be distinguished from that of directors, legal representatives and guarantors. Saying that every person involved is protected from all liability by the capital amount is inaccurate.
A joint-stock company has general meeting and board requirements and applicable accounting duties. Independent audit is not automatically imposed on every joint-stock company merely because of its legal form: the relevant categories, thresholds and special legislation must be examined.
Neither TRY 10 million turnover nor an intention to export is a universal legal threshold compelling a textile business to adopt this form. The decision should follow the actual investment and governance plan.
5. Considering the textile business model
Manufacturing workshop
Consider machinery finance, lease commitments, employee numbers, subcontracting, workplace safety and the allocation of manufacturing risk. A limited company may be one option, but the scale of operations and contractual exposure matter more than a blanket recommendation.
Exporter
Review the target markets, customs arrangements, exporters’ association membership, payment risk and the buyer’s supplier conditions. A limited or joint-stock company can be commercially appropriate, but neither is a universal legal prerequisite for exporting.
Retail store, chain or franchise
Lease obligations, consumer transactions, stock, brand licensing and growth plans should be evaluated. A chain or franchise plan does not automatically require an A.Ş.; the capital, governance and financing structure should support the proposed model.
Bringing in an investor
Discuss who contributes capital, who controls daily operations, what decisions require consent, how information is shared and how a partner can leave. A company structure cannot compensate for an unclear partnership agreement.
6. Can the structure be changed later?
Commercial law provides routes for changes of legal form and other business reorganisations. Moving an individual business into a company and converting a limited company into a joint-stock company are not identical procedures.
Registry requirements, continuity of contracts, employees, licences, bank arrangements, assets and tax consequences must be examined. A restructuring should not be described as automatically tax-free or as a simple change of the name printed on invoices.
7. Questions to resolve before incorporating
- Will there be one owner or several, and what will each contribute?
- Who will have authority to sign contracts, borrow or give security?
- What are the expected manufacturing, leasing and employee commitments?
- Are export customers imposing particular commercial conditions?
- Will investors join, and what exit arrangements are expected?
- What cash is needed beyond the statutory capital?
- How will personal guarantees and public-debt compliance be managed?
Legal and accounting advice should be coordinated. Personal income tax and corporate tax cannot be compared solely by looking at one headline rate: profit withdrawals, payroll, VAT, incentives, losses and the owners’ circumstances can affect the result.
8. Incorporation costs
Budget separately for capital commitments, registry and publication charges, professional services, accounting systems, premises and working capital. Costs depend on the structure and actual transaction. Current quotations and official charges should be obtained before committing to a budget.
Sources and the next article
- Ministry of Trade: minimum capital amounts for limited and joint-stock companies.
- Turkish Commercial Code No. 6102: incorporation, governance, shares and shareholder obligations.
- Ministry of Trade Customs Guide: becoming an exporter.
- Trade Registry Regulation: registration of natural-person commercial enterprises.
Next: Textile partnership agreements — starting a business with a friend
General information: This article concerns Turkish law and does not replace advice based on the intended activity, contracts and ownership arrangements. The Turkish statutory texts govern; financial and registration requirements should be checked when the transaction is carried out.