Istanbul, which sits on the Bosphorus Strait between Europe and Asia, is a great place for business owners to go to many different markets and has a strong economy with a lot of potential. Starting a business in Istanbul comes with its own set of unique chances and problems that potential business owners should think about carefully before starting their firm in this ancient city.
Getting to know Istanbul’s business scene
Istanbul is the economic centre of Turkey, bringing in around 40% of the country’s tax income and housing a lot of its industrial operations. The city’s strategic location offers it a great place to access markets in Europe, the Middle East, North Africa, and Central Asia. When thinking about starting a business in Istanbul, entrepreneurs should know that the city has a domestic market of over 85 million people and is a gateway to a regional market with around 1.5 billion customers.
Istanbul’s economy is varied, including both traditional businesses like textiles, food processing, and car manufacture and fast-growing ones like technology, tourism, finance, and renewable energy. This diversification opens up many areas for new businesses to investigate and maybe do well in.
Business Legal Structures
Choosing the right legal structure is very important when starting a business in Istanbul. The Turkish Commercial Code lists many sorts of businesses, with the following being the most common:
Joint Stock Company (Anonim Şirket – A.Ş.): This type of business is best for bigger ones with more than one owner. It needs at least 50,000 Turkish Lira in capital. This structure protects shareholders from being personally responsible and lets people trade shares on the open market.
A Limited Liability Company (Limited Şirket – Ltd. Şti.) is a type of business that is popular with small to medium-sized firms. It needs at least 10,000 Turkish Lira in capital. This form limits liability and makes it easier to operate than a joint stock company.
Branch Office: Foreign corporations can set up branch offices that work as parts of the parent company instead than as separate legal entities.
Liaison Office: These are used for networking and market research, but they don’t do any business directly.
Because each structure has different tax, liability, capital, and governance requirements, it is important to carefully consider which one is best for your business goals.
How to Sign Up and What You Need
It has been easier to start a business in Istanbul in the last several years, but there are still a few important measures that must be followed. First, business owners need to write articles of association and get them notarised. After that, papers must be sent to the Trade Registry Office along with verification that the capital has been deposited in a Turkish bank.
Foreign investors should know that they need a tax number before opening a company in Istanbul. You may get this from the local tax office if you have a passport. Also, all businesses must sign up with the Chamber of Commerce, the Social Security Institution, and the right tax office.
Turkish officials have tried to cut down on red tape, but it’s still a good idea to hire a local accountant and lawyer to help you get through the procedure quickly. The whole process of registering usually takes one to three weeks, as long as all the paperwork is filled out and sent in correctly.
Requirements for capital and banking issues
Entrepreneurs who want to start a business in Istanbul must meet minimum capital requirements that depend on the type of business they want to start. A corporate bank account must hold the capital, and verification of this deposit is part of the registration paperwork.
Turkey has a well-developed financial system, and there are several national and international banks in Istanbul. To open a business bank account, you usually need to provide the bank your company’s registration papers, tax number, and ID for all shareholders and authorised signers. Some banks may ask foreign stockholders for more than just identity documents that have been apostilled and translated.
You can have both Turkish Lira and foreign currency accounts, which makes it easier to do business in other countries. But according to new rules, some transactions between Turkish businesses must be done in Turkish Lira.
Things to think about for taxes
There are a number of taxes in Turkey that new enterprises need to think about. The corporate income tax is 25%, however some industries or areas may get tax breaks that lower this rate. Depending on the goods or services, the Value Added Tax (VAT) might be anywhere from 1% to 18%. Companies also have to take income tax out of their employees’ pay cheques and pay into social security.
In Turkey, people who don’t pay their taxes face harsh consequences. So, while starting a business in Istanbul, it’s important to put up good accounting processes and hire skilled financial consultants right once.
Turkish accounting standards, which have been brought into line with International Financial Reporting Standards (IFRS), must be used to make annual financial statements. Certified auditors must check the financial accounts of companies that go above specific limits.
Rules for hiring
Istanbul has a wide range of workers, including many highly educated and multilingual professionals. But Turkish labour rules offer workers a lot of protection that companies must follow closely.
The standard work week is 45 hours, and overtime is regulated and paid at a higher rate. Contracts of employment should explicitly spell out the terms and circumstances, and the law should rigorously control how people can end their contracts. When an employee is fired without a good reason, they must get severance compensation if they have worked there for at least a year.
To work lawfully, foreign nationals need work permits. The employer has to apply for them. Some jobs may only be open to Turkish citizens, and firms may have limits on how many foreign workers they may hire compared to Turkish citizens.
Things to think about while choosing a location
Istanbul is a huge city that covers two continents. Each neighbourhood has its own benefits for businesses. Most businesses are located on the European side, with Levent, Maslak, and Şişli being prominent business districts with high-end office space. Costs are a little lower on the Asian side, especially in Kadıköy and Ataşehir, but the infrastructure is still good.
When starting a business in Istanbul, business owners need think about things like how close they are to customers, suppliers, transit hubs, and possible workers. The city’s famous traffic jams might have a big effect on everyday operations, thus they should be taken into account while choosing a location.
Istanbul also has a number of free zones that give enterprises who export goods tax breaks and customs exemptions. These areas have buildings that are made just for businesses that make things, trade things, and provide services.
Business and Culture
To launch a business in Istanbul successfully, you need to know how Turkish business works. Trust and relationships are very important in Turkish business. At first meetings, people generally talk about getting to know one other instead of business right away. You need to be patient since talks may take longer than they do in certain Western countries.
In Turkish businesses, hierarchy is usually respected, and decisions are usually made at the top levels of management. Small chat is common at the beginning and conclusion of business meetings, and it’s rude to go straight to business without some socialising first.
English is extensively used in business, especially by younger professionals. However, knowing a few basic Turkish words shows respect and can make it easier to work with local stakeholders.
In conclusion
Starting a business in Istanbul is a great way for entrepreneurs to get into a fast-moving industry that connects several locations. The city’s strategic position, broad economy, and increasing business environment make it a great place to do business in many different fields.
But to be successful, you need to be well-prepared, know the rules in Turkey, and be able to adapt to how business is done there. Entrepreneurs can set their Istanbul businesses up for long-term prosperity in this lively city where East meets West by carefully following the law, choosing the right structures, and accepting cultural differences.