Those who want to start their own company often wonder about the costs of forming a limited liability company (LLC), which in recent years has been made possible to establish by a single person. Costs for forming an LLC vary depending on the number of partners, the number of managers, and the field of activity.
What Is a Limited Liability Company and How Is It Formed?
Anyone planning to form an LLC should know that initial documents and expenses must be covered by the owner(s) at the start. Total costs depend on how many managers will be employed, the number of founding partners, the company’s capital, and rent. Accounting fees should also be included when calculating company start-up costs.
Regulatory changes in recent years removed the requirement for two partners when forming an LLC, allowing single-person limited companies. If the company has a single partner, details such as the managers, the sole partner, the partner’s name and residence must be registered and published in the trade registry. Managers may be held liable for losses that arise, so managers of single-partner LLCs must act cautiously. The minimum capital required to form an LLC is set at 10,000 TL; entities with less capital cannot establish a limited company.
Documents and Costs Required to Establish an LLC
Documentation is one of the most important parts of forming an LLC. There are many preliminary procedures during the formation stage, and all steps must be handled carefully to avoid negative outcomes or losses. Below are common documents and their typical costs:
- Signature Declaration (Registration Application): 35.00 TL
- Power of Attorney for Formation: 80.00 TL
- Competition Authority Payment: based on capital
Careful preparation of these documents is essential. Exact cost totals are not fixed because fees vary by region, city, and specific documents. Factors that affect costs include the city size, notary fees, Competition Authority fees, and tax office fees. For example, for a company established in Istanbul with wholesale textile sales as the activity, one manager, one partner, monthly rent of 1,000 TL, and capital of 10,000 TL, estimated costs might be as follows:
Signature declaration for the manager: 39 TL; one copy of ID for the partner: 40.00 TL; formation power of attorney: 100 TL; approval fee for commercial ledgers (100 pages): 130 TL; two signature circulars per manager: 150 TL; and post-registration accountant fees: 135 TL.
Tax-Related Costs for an LLC
In addition to the above, tax-related costs must be paid during company formation. Typical tax office fees include: 23 TL for certain tax office transactions, 23 TL for stamp tax on lease agreements without guarantor, 136 TL for stamp tax on guaranteed leases, and 113 TL for virtual office lease tax.
Alongside tax office expenses, trade chamber fees must also be covered. For example, the Istanbul Chamber of Commerce fee may be 1,000 TL, activity certificate 10 TL, and Competition Authority payment 4 TL. A typical accounting firm registration or onboarding fee can be around 600 TL.
Considering these expenses, those forming an LLC should plan on spending at least around 5,000 TL on initial costs. Entrepreneurs planning to form a limited company with small capital will benefit from accounting for these start-up expenses in advance so they can prepare accurate budgets and avoid unexpected shortfalls.