Open your own small or medium-size business, vat payable, in israel
In Israel, there are several types of private enterprises (Osek Patur, Osek Murshe, CHEVRA BAAM). Taking your company to one category or another is not easy, wrong formalization is fraught with unforeseen sanctions against you. What kind of business is more profitable for you to open – Osek Murshe or Chevra Baam – you can read about the advantages and disadvantages of each type of enterprise in the article “LLC or Osek Murshe – advantages and disadvantages“.
General information
The first step preceding the registration of any enterprise is the choice of an audit firm that will deal with your problems.
The most popular type among small and medium-sized businesses is the so-called Osek Murshe, a company operating within a financial turnover above 100 187 shekels a year and issuing tax receipts with the addition of value added tax (VAT, in Hebrew – MAAM). The scope of the turnover of funds and the amount of VAT are adjusted from time to time, of which you will necessarily be informed by your rohe-heshbon (the auditor). Auditing company Brodetsky Shmuel Roe-Heshbon provides consultations on all issues, preparation of documentation for the opening and running of business, compilation of various types of reporting.
Your first meeting with the auditor
Having arranged a meeting, put together a folder of necessary documents:
- Identity card (teudat zehut).
- Information about the bank account, (our firm recommends to open a separate account that allows you to separate the income and expenses of the business from other banking procedures that are not related to it).
- A copy of the document, recognized in Israel, that gives you the opportunity to do business in this industry. There are types of activities that are prohibited without taking professional courses and passing the qualification exam (for example, work as an electrician or a driving instructor). In other cases, it is desirable to attach to the documentation a certificate of higher or secondary special education in the same or a related field.
- If the premises for your business have already been rented, bring a photocopy of the contract.
- At least one completed order form for your product or service, indicating that the idea of a business is real and productive. The order must specify the cost of jobs before VAT calculation, its amount must be calculated and the total price including VAT specified.
Audit and accounting services for the IE (individual enterprises) is our specialization. Therefore, prepare in advance a list of questions that you plan to ask the auditor. And do not hesitate to ask: the auditing firm Brodetsky Shmuel Roe-Heshbon offers answers to any questions of its customers, both general and private, never refusing advice.
Even if the annual turnover amount is small …
The auditor will tell you whether it is possible to open a company of a simpler type (Osek Patur) if the planned turnover is small at the start.
There are lines of business in which only businesses with VAT accrual are allowed by law to be opened (IAAM). They include: most medical and pharmaceutical specialties, working as a lecturer, in the field of all branches of law (lawyers and notaries), of business and acquisition of vehicles, of architecture, technical and engineering services, and many others.
Remember: the firm Brodetsky Shmuel Roe-Heshbon is guided by your interests, determines the most tax-efficient type of business registration, does everything that will allow you to get the most favorable terms of taxation. Registration of documents, accountant services for IE, upholding your interests with the tax authorities – all this is done for entrepreneurs who are new immigrants. We are with you from the first step, we help our clients in everything.
To work alone or with a companion? How to apply for a partnership? What are the options for dividing the profits received and paying for the necessary services? How should the IE accounting be maintained? Decisions on these and many other issues are, of course, taken by you. But do not decide upon anything definitively before consulting a specialist.
Preparation of necessary documentation
Our company renders all services for opening a business to new immigrant businessmen who do not know Hebrew well enough. All the necessary forms are filled in by the auditor, explaining to you what is contained in them.
The auditor’s services include finance and tax audit, that is, full support both when processing documents, and in your further operation.
The first visit is made to the VAT Charging Department (in Hebrew “Makhleket MAAM" (mas erekh musaf). There, the auditor, who has a power of attorney from you, registers the company as an Osek Murshe, receives its personal number (for small businesses without partners, as a rule, it coincides with the identity card number), whereupon you can order tax receipts at the printing house and begin to write out bills.
Remember:
- Receipts are financial documents, they are numbered, given out strictly in numerical order, the date on a subsequent receipt cannot be earlier than on the previous one.
- The receipt is filled out in triplicate/THREE copies (the first going to the customer, the second to the auditor, the third remaining with you). In the printing house, be sure to require that the copies be of different colors – this way it is easier for you to navigate.
- All other details of keeping record of orders and issuing tax receipts will be explained to you by the roeh-heshbon.
Registration with the Internal Revenue Service is also mandatory. The firm Brodetsky Shmuel Roe-Hesbbon will fill in all the complicated Hebrew documents for you. An experienced rohe-heshbon will help you get the most favorable terms, including exemption from taxation for the first year of operation. This will allow you to save money so much needed at the initial stage, invest it in the promotion of business, and increase turnover. The tax may eventually be adjusted according to the results of the year.
The National Insurance Service (Bituah Leumi) – it is necessary to file yor business there also. An experienced auditor, who knows all the intricacies of the legislation, Brodetsky Shmuel Roe-Heshbon, can, if so desired, get you exemption from or minimal insurance sums, which will save you thousands of shekels annually. Tax payments are adjusted after submission of the annual report.
All documents confirming your business identity will be issued within a week from the date of registration.
Reporting
Once every two months, until the 15th day of the next tax month, you are required to hand over to the auditor all the tax receipts you have written out and received. We will calculate the actual amount that you have to pay on the basis of the results of the period (deductions to Bituah leumi are automatically withdrawn by a standing order to the bank). The report is accompanied by checks confirming payment of bills. Expenses for the services of the auditor are deducted from your income, thereby reducing your taxable profits.
There are expenses that are written off once a year (transportation, representative expenditures, etc., a complete list of them you may also get from the auditor). They are accounted for in the annual report.
The firm Brodetsky Shmuel Roe-Heschbon does not treat its work formally, we are with you always and in everything. Your success is our success!
Rules of registration of Osek Murche for foreigners
Only a non-resident who is in the process of obtaining Israeli citizenship through the stepwise procedure for the legalization of spouses (STUPRO) can open a business as Osek Murshe. At the same time he will need a guarantor with the citizenship of Israel. It does not have to be an Israeli spouse or a close relative. But it is necessary to understand that the guarantor will be liable with his property for compliance with the tax laws by the business of the foreigner. A non-resident and an Israeli citizen register Osek Murshe as a joint property, which a foreign businessman will re-register in future to his teudat zehut and, having become a full-fledged citizen, will be independently responsible to the Israeli tax authorities.
If a non-resident does not intend to obtain Israeli citizenship, the individual entrepreneurship will not be opened to him, even if there is a guarantor. You can learn more about this issue in the section: “How to open a business in Israel for foreigners."
