10/10/2023

Is it necessary to create a business for just one employee in Turkey?

business turkey

Creating a formal business entity in Turkey for just one employee is not necessary in all cases.

The decision to establish a business entity depends on various factors, including the nature of the work, your long-term goals, and your compliance preferences. Here are some options to consider:

If you only plan to hire one employee or a limited number of employees in Turkey, you can use EOR services. An EOR company in Turkey can legally employ the worker on your behalf, taking care of payroll, taxes, and labor law compliance. This option allows you to avoid the complexities of setting up a business entity.

For certain roles and projects, you may be able to engage a Turkish worker as a subcontractor or freelancer. This approach does not require you to establish a formal business entity. However, it’s crucial to understand the legal and tax implications of such arrangements, as they can vary based on the specific circumstances.

If you anticipate expanding your operations in Turkey in the future or require a more substantial presence, you might consider forming a joint venture or partnership with a local Turkish company. This could provide a legal framework for employing one or more individuals.

Professional Employer Organizations (PEO) are similar to EOR services and can help you employ workers in Turkey without setting up a business entity. They handle HR, payroll, and compliance matters on your behalf.

If you opt to establish a company, you should be prepared for additional expenses, including:

  • Initial setup fees and administrative costs.
  • Ongoing monthly fees for accounting services.
  • The necessity of securing a local address and covering rental costs or considering a virtual office.

For smaller teams, there are also time-consuming tasks to consider:

  • A requirement for regular monthly oversight of accounting, tax-related matters, and declarations for both you and your employees.
  • The need for your employees to invest time in comprehending and staying up-to-date with local obligations since Turkish laws evolve annually.
  • Frequent communication with an accountant, often involving in-person meetings (as face-to-face interactions are highly regarded in Turkey). Keep in mind that your employee may not be accustomed to handling such tasks, as they are an “employee” rather than an “entrepreneur.”
  • Even if your company isn’t generating revenue initially, there will still be monthly, quarterly, and annual declarations to complete, stamp taxes to pay, and accounting books to maintain, among other small but essential tasks.
  • These obligations can distract your employee from focusing on developing your business in Turkey and fulfilling their primary role.
  • Lastly, if you decide to discontinue your project in Turkey, your company must remain “active” for 12 months, necessitating the ongoing payment of monthly costs and taxes during this period.

For these reasons, outsourcing is often the most suitable solution for businesses with up to three to four employees. If you’re interested, Azkan Group (click here to contact us) can offer you a comprehensive package that includes both recruitment and Professional Employer Organization (PEO) services.

We hope this approach aligns with your needs and objectives.

The choice between these options should be based on your unique business needs, budget, and long-term plans. If you are uncertain about the best approach for your specific situation, it is advisable to consult with legal and business experts who are knowledgeable about Turkish labor laws and regulations. They can provide guidance on the most suitable and compliant method for hiring and managing employees in Turkey, whether it’s for one employee or more.

Azkan Group can support you in your Employer of Record (EOR) and payroll requests (also called Umbrella Company) in Turkey. We can manage your HR requests even if you don’t have a legal entity in Turkey.