Starting a business in Israel is quite simple. Company registration takes one day and does not require a large number of documents. The most common types of legal form of business in Israel are Osek Patur and Osek Murshe. This is the equivalent of the usual individual entrepreneur (IP).

Starting a business in Israel is quite simple. Company registration takes one day and does not require a large number of documents. The most common types of legal form of business in Israel are Osek Patur and Osek Murshe. This is the equivalent of the usual individual entrepreneur (IP).

The difference between Osek Patur and Osek Murshe is the following.

Osek Patur is the simplest form of business in Israel. Osek Patur is exempt from value added tax (VAT), but is limited by the size of the yearly turnover (about 100 thousand shekels per year). It has a number of restrictions on activities. For example, doctors, lawyers, auditors, translators cannot work in the form of Osek Patur, a full list of restrictions can be found in the law or as part of an accounting consultation. Osek Patur deals mainly with individuals or with those legal entities that do not claim to VAT refund. In order to start an IP in the form of Osek Patur, it is necessary to start a business in three tax authorities in Israel: in the Value Added Tax Office (Ma’am), in the Income Tax Office (Mas Akhnasa) and in the National Insurance Service (Bituach Leumi).

Osek Murche – has no restrictions on a yearly turnover and type of activity, but includes VAT in the cost of its goods and services. In order to start a company like Osek Murshe, it is also necessary to register it with three tax authorities.

Tax optimization for Osek Patur and Osek Murshe.

With the proper conduct of business, both the Osek Patur and the Osek Murshe can minimize their tax deductions by taking into account the costs of doing business and returning VAT (the latter is relevant only for the Osek Murshe). You can consult on the issue of optimizing taxation of Osek Patur and Osek Murshe in the audit company Shmuel Brodetsky Rohe Heshbon.

Accounting independently or outsourced

Statistics shows that 99% of private entrepreneurs give accounting and tax on outsourcing to professional audit companies. And there is a number of reasons for this:

Competence saves money. On the one hand, the taxation of such a business as Osek Patur and Osek Murshe is quite simple and understandable. But on the other hand, Israeli tax authorities are extremely intolerant of errors and inaccuracies in the reporting of companies. As a result, there can be fines and penalties, which can significantly reduce the profitability of the business.

Lack of language barrier. If you are a new immigrant or non-resident starting a business in Israel, then you will have to understand not only the new rules of doing business, but also do it in Hebrew. You can ease your task through cooperation with a competent Rohe Heshbon who speaks your language with you, and with the tax authorities in Hebrew.

The experience of many is in the service of everyone. A professional accountant knows not only the pitfalls of the Israeli tax system, but also helps to avoid the typical mistakes of entrepreneurs. This is the case when you can learn from the experiences of others and from mistakes of others, with the support of an experienced mentor.