Business ideas in Israel. Business Ideas from Israel

Israel is a country with a strong domestic economy, developed international relations, a high level of technology development, simple and transparent business rules, as well as a balanced tax policy of the state. In addition, faced with a constant flow of repatriates, the state tried to create optimal conditions for the rapid and successful infusion of new citizens into the social and economic life of the country. Opening and running a business in Israel is quite simple, both for a citizen and a foreigner.

Is it possible to start a business without legal registration?

Israel strictly enforces financial discipline and record keeping for private enterprises. You should not start a business activity before legal registration: the very first refusal to issue a tax receipt (hashbonit mas) or a receipt for receiving money (bondage) may entail the customer’s appeal to the proper authorities with the most unpleasant consequences. But by contacting a roe heshbon (accountant-auditor), you can start your own business without violating the rules, and, if the situation allows, take advantage of special benefits for startups. Open your business in Israel the right way.

Choosing the legal form of the company

The choice of the form of ownership of a new business depends on many factors: the type of activity (including licensed or not), the number of owners and the obligations of the founders, the geography of the business (it matters not only whether international activity is planned, but also in which regions of Israel your company will operate) , it is necessary to predict the volume of annual cash turnover, the prospects for taxation and much more. Before registering a business in Israel, it is important to clearly know the answers to all the above questions. And a competent auditor can help you with this. By the way, for foreign companies it is also important to analyze whether it would be more profitable for them to enter the Israeli market as a subsidiary or open a representative office.

So, the laws of Israel define such forms of doing business: an individual entrepreneur, a company (an open or closed joint-stock company, LLC), a branch (or representative office), a partnership, a cooperative, etc. But, despite the diversity options, business in Israel is mainly registered in the form of an individual entrepreneur (esek patur, esek murshe) or as a company with limited liability(hevra baam).

The simplest form of an individual entrepreneur is ‑. This type of business is exempt from VAT and is suitable for professionals who independently sell their services or products to individuals. But there are activities that cannot be formalized as osek patur, because by law, they cannot be exempt from VAT. For example: auditors, lawyers, doctors, veterinarians, translators and other representatives of the so-called "free professions". Whether your type of business falls into this category, it is better to check with your accountant in advance. Osek Patur does not issue tax receipts, so he reports on doing business in Maam once a year in the form of a “tax return for exempt entrepreneurs.” But this type of company is limited in terms of annual turnover. In 2018, the allowable amount was NIS 99,003.

If your company will have a larger turnover, or plans to work with other legal entities, which implies the need to issue tax receipts, then it is better to open. The esek murshe has no restrictions in circulation. Here you already need to report on VAT every couple of months or every month with especially large incomes. An esek murshe submits a consolidated report once a year.

A business that involves large investments, several owners and a significant turnover is registered as a company with limited liability. Such an organizational and legal form implies rather complex reporting. In addition, it is impossible to open and manage a hevra baam business without an experienced accountant.

Opening a business in Israel for foreigners

There is no such thing as a business visa to Israel. Investments in the country's economy also do not imply obtaining a residence permit. Nevertheless, citizens of many countries of the world open and develop business here, visiting the country within the time limits allotted by visa restrictions. Citizens of Russia, Ukraine, Georgia and Belarus can visit Israel under a visa-free regime and stay outside the country for 90 days out of 180 every six months. Remote management of the company is also facilitated by the development modern technologies, and Israeli law. Including the opportunity to attract as confidant an Israeli citizen who will represent your company on the spot, sign contracts, deal with reporting and other operational activities.

A non-resident can register a business in Israel only in a special partnership with an Israeli citizen or through a trust company. To put it very simply, in order to open a business in Israel, a foreigner needs a local representative who will act as a guarantor before the tax authorities for filing tax returns and paying taxes on the foreigner's business. There are also restrictions on the form of business registration for foreign citizens.

Esek Patur and Esek Murshe can only be issued by a foreigner who is in the process of obtaining Israeli citizenship. For example, through a step-by-step procedure for the legalization of spouses. In this situation, the Israeli spouse or one of the relatives or friends can act as a guarantor - here the law does not put forward any requirements.

In Israel, the sole proprietor's registration number is the same as the teudat zehut number. Therefore, the business of the future citizen of the country, through a special registration procedure, is formalized as joint property with the current citizen. And after obtaining citizenship, a businessman will be able to change the registration of an individual entrepreneur to his teudat zeut and independently answer to the tax authorities.

Hevra Baam or a company in the form of an LLC (Ltd) is available for registration to foreigners who do not expect an Israeli passport. To open an LLC (Ltd), a foreigner also needs a resident guarantor. It can be both physical and entity.

Procedure for registering a new company

All forms of doing business are registered through the opening of a case in three instances:

1. V Value Added Tax Office (Maam) the legal entity receives a certificate and registration number, and also gets the opportunity to order and issue receipts.
2. V Income Tax Office (Mas Akhnasa) the size of the tax rate, the frequency and volume of reporting, the method of accounting are established. If, in order to open a company, an entrepreneur enlists the support of an experienced auditor, he can achieve favorable conditions, up to full tax exemption for the first year. In the future, the tax is charged based on the results of reporting, depending on profitability.
3. V National Insurance Service (Bituach Leumi) the amount of insurance premiums is set, which in the future will allow the entrepreneur and his employees to claim pensions, various benefits and other social guarantees. Each Israeli, on the basis of contributions to this organization, upon reaching a certain age, begins to receive an old-age allowance with a premium for seniority. Insurance is also important in the event of disability or long-term temporary incapacity for work. The amount of payments depends on the profit and the level of employment in the business, it is adjusted annually.

For an individual entrepreneur (esek patur, esek murshe), this completes the business registration.

Further, periodic reports are submitted to the same bodies and taxes are paid to the treasury through them. By the way, reporting is mandatory even during periods when your business was idle and did not generate income, otherwise a decent fine is inevitable.

Unlike an individual entrepreneur (esek patur, osek murshe), the registration of a company (khevra baam) has two stages. First in government agency at the Ministry of Justice of Israel under the name "Registrar of Companies" (rasham hevrot), a special package of documents is submitted (information about the owners and top management, the company's charter and other data), and a fee is paid for opening a company in the amount of 2600 shekels (for 2017) , plus the services of a lawyer about 1000 shekels. Further, by analogy with an individual entrepreneur, the company's affairs are opened in three tax authorities, with subsequent reporting and payment of taxes. Plus, your firm will annually pay a fixed amount of tax (agra) to the "Registrar of Companies".

Choosing a company name

At this stage, it is important to consider that the name must be unique and not consonant with well-known already existing names of other companies in the market, especially in your sector. Otherwise, it will be possible to register a company only after a valid option has been selected. And of course, business registration will be denied if the name of the company contains something offensive or violating the foundations of Israeli society. Depending on the form of ownership, there may be special requirements. For example, a limited liability company must contain the abbreviation “LTD” in its name.

Usually the name of the company is difficult for a novice entrepreneur. We will give you a couple of tips from our experience. It turns out very well if the name of the company speaks about the essence of your business, then it is the first to start selling your product or services. Another approach is also possible - if your business is focused on individuals or is based on exclusive knowledge and skills, use your own name and develop what is called " personal brand". Remember, the name of the company will be successful if it is understandable, easy to pronounce and remember.

Taxes in Israel

Below, in very general terms, the main types of taxes and the range of rates as of 2017 are listed. What deductions will take place and in what amount - a question for a series of separate articles for each type legal form legal entity. To understand what set of payments awaits you, and how you can optimize taxes in your case, consult Rohe Heshbon before registering a company.

List of main taxes for legal entities:

• Corporate tax - 23%
• Tax on dividends – from 25 to 32%
• VAT - 17%
• Income tax – progressive rate from 10 to 50%
• Social insurance funds - from 3.5 to 17.5%

Submission of reports and payment of deductions

Communication with the tax authorities can be quite a headache even for the smallest entrepreneur with a small turnover, to say nothing of big business, which has many items of expenditure and income. Opening a business and at the same time delving into the peculiarities of Israeli taxation is not an easy task. At the same time, communication with tax authorities seriously affects the efficiency of your business: from choosing the optimal tax rate when registering a company to. Any errors or inaccuracies can result in hefty sanctions and fines.

Reporting on esek patur is quite simple. Recall that this type of business is exempt from paying VAT, if the turnover established for esek patur has not been exceeded in a year. Once a year, the entrepreneur submits to the Income Tax Authority (Mas Akhnasa) a report stating that set limit has not been exceeded. The management sends the form for reporting to Mas Akhnasa to the entrepreneur by mail. You can also report by sending the completed form by mail (do not forget to stamp when submitting), or via the Internet on the website of the Income Tax Administration.

If for a year the limit that is not subject to VAT was exceeded by your business, then you must either pay VAT (only for the exceeded amount) or re-register in esek murshe in advance, but it is better to first consult with your accountant.

Reporting volumes for esek murshe are determined during the registration of a company and may differ depending on the type of business activity, annual turnover, number of employees and other parameters. Therefore, it is very important to involve a competent auditor at the stage of company registration, who will help predict the optimal reporting volumes for your business or completely shift communication with the tax authorities to a specialist. The auditor with due frequency will request documentation and make the necessary payments, taking into account the income and expenses of the enterprise for reporting period, and at this time you can not be distracted by "paper work", but do exactly what makes a profit. It should be noted that in Israel 98% of companies use outsourcing.

You can open a khevra baam on your own, but according to the law, its annual reporting must be certified by roe heshbon. We recommend choosing one specialist and for accounting tasks, and for assurance of reporting. A personal auditor, who knows the work of your company from the very beginning, will be able to offer effective accounting models, help to optimize taxation correctly, in a word, save the company time and money.

Correct expense write-offs - tax cuts

Almost any type of business comes with operating costs. Learn to clearly record all business expenses from the start or entrust this task to your accountant. A competent write-off of expenses allows you to legally optimize taxable income and reduce the payment of VAT. At the same time, the Israeli tax authorities very severely punish any suspicious, in their opinion, attempts to hide income. Serious fines threaten not only for "gray" tax optimization, but also for elementary errors and inaccuracies. Avoid problems with tax and competently build a reduction in fiscal deductions for your business.

Three reasons why you should contact Shmuel Brodetsky Rohe Heshbon

• Good start. There is no need to go through the rake of beginners if an experienced accountant can immediately organize your business correctly. This is a real saving of time, effort and money, which is better to invest in development. Starting a business in Israel is easy, but developing a new business with the support of an experienced mentor is more likely to succeed.
• A complex approach. Our many years of experience in supporting businesses of various directions, markets and volumes, are always at the service of our clients. We do not just fill out and submit documents for you, the team of Shmuel Brodetsky Rohe Heshbon is ready to provide a full range of additional services, if necessary, to advise excellent specialists in other areas, as well as to suggest in advance bottlenecks that are often encountered not only by beginners, but also experienced entrepreneurs.
• Transparency and openness. Accounting is a difficult area, especially for a beginner, but we are always ready to explain to the client in detail and in an accessible way what kind of work we perform for him and how this helps his business.

With offices in Tel Aviv, Haifa and Atlit, Shmuel Brodetsky Rohe Heshbon is where you need to be.

09.06.2017 20.09.2017

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Until recently, Alexandra Zhebrak, an emigrant from Russia, worked as a financial analyst in a bank with a salary that was enough for all the joys of life: renting an apartment in the center of Tel Aviv, visiting good restaurants, traveling ... But one thing was missing - excitement. Boredom and the feeling that life is passing by made the life-loving woman break out of the "golden cage" and go in search of herself. Now Alexandra makes cakes to order, arranges cooking classes and plans to open her own pastry shop, writes biz360.

Zhebrak was born in Voronezh, and at the age of 17 she emigrated to Israel, now lives in Tel Aviv. She graduated from the Hebrew University of Jerusalem, Faculty of Economics and Statistics.

From Voronezh to Tel Aviv

“I was 17 when I emigrated. From the age of 13, I had a clear feeling - I had to get out of the house. I didn't care where. But I heard that you can go to Israel. Mom didn’t let go, didn’t let go, didn’t let go: “I need to finish school, I need to enter a special class, I need to go to university, I need to finish ...”

Sasha studied at Voronezh University for six months and then left. Not knowing the language properly, she came to the Hebrew University in Jerusalem and passed the exams for the Faculty of Economics and Statistics.

“To be honest, in my lectures on economics, I understood only prepositions. In mathematics, it is still somehow clear - sigma, delta, lambda. She came home, took a lecture from the Israelis - translated into Russian, then solved and translated back. But at the age of 17, everything is simple - this is a fairy tale, not life.

After graduating from university, Sasha began working: first as an insurance agent, then as an accountant, then as a financial analyst in a bank. “Everything was great. There was money - and rent an apartment in Tel Aviv, and travel abroad - and in general for everything, for everything, for everything. But at the same time, it seemed to me that life passes there, outside the window, and not in the office. After all, you can almost see the sea from the window, but I didn’t go to the sea at all: during the day I work, and in the evening you return home - the sun is already setting. I began to understand with horror that my job is to transfer numbers from one column to another and show it to the big uncles who make some decisions. Out of boredom, I began to look for something to do, a business.

In search of myself

Thoughts about his business constantly wrapped Sasha in the kitchen: “I often went to restaurants and I was wondering - how do they do it? After all, they have not just fried chicken, but some kind of magic!

At first, Sasha tried to repeat what was served to her in the most sophisticated restaurants in Israel: “I came and cooked at home what I tried in restaurants. I began to read, study, watch videos about food. I thought: out of nothing - flour, egg and sugar - hop and you can make something bright, tasty, people like it! They started praising me. It bought me!"

The food turned out to be tastier, and interest only increased, and Sasha went to confectionery courses at the Bishulim School of High Culinary Art in Tel Aviv (The Israely Institute of Culinary Art).

“I only had home cooking experience. I wanted to know how desserts are made. I went to the most extensive course that could be found in Israel, and studied there for half a year - after work. About halfway through the course, I realized that I wanted to try this for real. Not at home, not on weekends, but for real. Live this life. At the same time, I started going to trainings. personal growth where I learned how to use my potential, how to find myself in this life.”

Sasha had saved up enough money to not work for some time and continue to “search for himself”. She began to think about quitting.

“It was quite difficult to get out of this “golden cage”. The salary was very good. The firm is great. The people around are nice. But the job itself is boring.”

“Before that, it was like this: you need to learn, you need to find a job, you need to advance at work, you need more O Big salary, need even more interesting place. And when I realized that the salary increases from place to place, but there is no interest, then I began to think about what I want. It wasn't depression, it was an exploration of myself."

After completing the courses, Sasha submitted a letter of resignation, which surprised her colleagues and friends a lot.

Tested on myself

The experience of working as an analyst suggested that it was necessary to explore the market. Therefore, Sasha first went to the Avantage Patisserie factory, where they produce pastries, muffins, shortcrust pastry, pies, mousse cakes and cookies. There she worked for a week in each department. Then she got a job in the most famous Israeli chocolate boutique Ika chocolate. At the factory and at Ika chocolate, she worked for free - for the experience.

“At Ika chocolate, I learned how this business works – it is 60% organization and 40% very hard work. non-stop. This is a boutique, these are small chocolates, handmade, not a pipeline flow, but you don't stop, you work all the time. If you're not making chocolate, then you're talking to suppliers, or those who buy, or those who bring packaging material."

"Chocolate" is the brainchild of one girl who makes this chocolate herself. There my eyes were opened that it was all very difficult, but very interesting. And in the factory, everything was so full of life, unlike the office. And every second something exciting happened. Either someone shouted at you in the kitchen, or something fell and broke on you - ahhh, everything, the end of the world, fell, broke!!!

But this was not enough for Sasha - and she got a job in the kitchen at the best restaurant in Tel Aviv "ToTo":

“It’s like in the movies - everyone is shouting at each other, and the chief is the most important one walking around and saying -“ quickly, quickly! ” The kitchen is necessarily very small, there is no place, and you rub with everyone, the fire burns, someone pushed you - you scream “awww”. It was physical fire. I worked in a pastry shop - she is always in the kitchen, just a little off to the side. And everyone else infringes on us - they don’t take us for real chefs. ”

Despite the fact that Sasha worked in the restaurant for money, she survived only three months. Moreover, the monthly salary was only enough to pay for parking in Tel Aviv. It was very interesting, but financial analyst She wasn't prepared to be yelled at all the time.

Having received another portion of experience, Sasha hired a business coach who helped her formalize her business and suggested the first steps. Then she began to bake cakes “to order”.

“I had everything to start my own business – but I wasn’t pressed, you know? I still had money, and I did not feel the urgent need to earn money. So I… got smeared.”

And instead of “earning money”, Sasha took up charity work - she conducted master classes for the elderly, baked something sweet, distributed it, told how it was done, until she suddenly realized that she still lacked knowledge.

Then the girl got on the Internet and stumbled upon the website of the confectionery school of Maria Selyanina in Barcelona (Maria Selyanina House-Pastry Lab. & Atelier Gourmet), where, without thinking twice, she left for three weeks.

At first, Sasha wanted to go to Le Cordon Bleu, the oldest culinary university in the world, in France. Tuition cost 5,000 euros for one semester out of three. “I had to go there for a year. But I found a cheaper option - 1,500 euros per week, including food and accommodation.

Marina Selyanina taught Sasha a course in working with chocolate, modern and classic French pastries. During her studies, Sasha actively posted the results of her work on Facebook: “boasted about what she had learned.” The number of subscribers grew, friends began to ask how they could place an order and where to try her culinary masterpieces. “And it kind of went on by itself.”

But earnings were barely enough for personal expenses and products. Doubts began. Sasha allowed herself to pause and left for three months - to Altai and Karelia.

step by step

“When I returned, I realized that the savings were left for six months. It was a turning point, I had to decide - either I stay in the "confectionery" or return to work and live like all normal people.

Sasha chose "kitchen". I quickly found and rented an apartment with access to the roof in the center of Tel Aviv, brought a stove into it and started working. “It was difficult - I still did not consider myself a real confectioner, but due to the fact that“ I had to ”- I just did it. Wrote posts on Facebook, led her Instagram, brought her products to sales, to bachelorette parties, to beauty salons. I did everything to get to know me.”

Business went uphill after the cake was ordered from Sasha by the well-known artist and blogger in Moscow and Israel Nastya Tsvetaeva (more than 100 thousand followers on Instagram). “Someone of her friends advised me to her, and she offered me to make a sweet table for her daughter's second birthday - for PR on Instagram. After her post, my number of subscribers grew from 200 to 800 overnight. It inspired me. And orders for cakes from acquaintances of Nastya Tsvetaeva rained down.

“I take pictures of my creations myself and post them on Facebook and Instagram. The only thing I can't do is describe my cakes beautifully. I only have enough for a post of two sentences in which I can list what the cake consists of. I thought about taking courses to learn how to write, but no. Enough courses for me - I have to work!

Now Alexandra Zhebrak has about 3,000 friends and followers on Facebook, and about 4,000 on Instagram. She does not have her own website. All clients are social media users. All advertising is word of mouth.

After that, Sasha went to Barcelona two more times for additional courses. The last one was a course in confectionery consultants, where she learned how to arrange confectionery business– in case the time comes to open your own bakery: “So, in theory, I’m already smart and experienced enough to open my own pastry shop. But I don't want to yet."

“I call it intuitive business. Everything is according to the situation. Here, for example, if I have few orders in a certain period, then I make more posts on Facebook. Or I'll do a sale. Or I'll come up with a new product. Or I will conduct an additional master class. Master classes - yes, they take more strength, but they bring more money. Or another format - bachelorette parties and children's birthday parties on the road: they invite me instead of a stripper or a clown - I will make both a show and delicious pasta!

First results

By this time, three years had passed since Sasha quit her job and went on an independent voyage.

“Somehow I decided to count everything that I spent and spend now - up to 1 shekel, and compare with what I earn. And it turned out that I was in profit. It was happiness! I realized that my business is developing, that I can postpone or invest in development. And my life settled down.

Alexandra Zhebrak’s immediate plans are to rent a workshop and move production out of the home kitchen, while maintaining exclusivity and a high level of production: “Working at home is certainly good, but when there is a lot of work, I sometimes can’t separate whether I’m at home or I’m at work . You wake up, put your feet in slippers - you drink coffee and immediately warm it up, take it out, that is, you are already working.

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At the beginning of his business career I was friends with the head of the board of trustees of the state "Center for Support of Business Initiative". He liked to joke that their organization had two goals. The first is to help people who should be businessmen to start a successful business and succeed in it. The second, less public, but no less important, is to help people who should not open a business - not to open it and not go bankrupt. Therefore, those who are not an Israeli citizen, but want to open their own business there, first of all should make sure that their idea has economic law to existence. Hoping to transfer your knowledge and skills from doing business in Russia to Israeli soil on a "copy-paste" system is a bad idea.

Lucky with the state

The main difference between doing business in Israel and Russia lies in the relationship between the state and citizens.

Russia seems to me to be a very overregulated state. But Israel is not. Israel understands that the state is not the most efficient business agent. And that any contact between an official and a citizen costs the state money, and twice.

First, you need to pay the salary of an official and cover all the expenses around: for an air-conditioned office, coffee, breaks, social rights etc. And in Israel, officials know how to defend their rights: the Israeli trade union, if necessary, achieves its demands.

Secondly, and even more importantly, is the time that a citizen spends sitting in line and communicating with an official. He could, in a parallel reality, spend that time to found another startup that could sell for a billion dollars, like Waze.

Unlike Russia, the Israeli state does not think it knows better what businessmen need to do. Moreover, the state does not even pretend to know how to properly allocate budget money to support business.

In Israel, you should not build a business relying solely on state support. Of course, there are benefits for business, but these are segmental benefits - "on the edges". Yes, Israel has Innovation Management, which in the past was called the Institute of Chief Scientist. It supports startups. There is also funding for the opening of hotels - after all, Israel is a tourist country. And there is a law to encourage capital investment, but, unfortunately for small businesses, the main money under this law goes to Intel and Teva ( pharmaceutical company). Because the state understands that it is impossible to fully rely on trust, and building a complex tool that will monitor hundreds of small businesses for targeted use of benefits is completely unproductive.

Therefore, the attitude of the state to business can be assessed as positive. And in this sense, the best thing it can do is not to interfere with regulations and checks, or with help.

Startup training ground

Opening a limited liability company in Israel is very easy. For this, one shareholder is enough. At the same time, to open a business, you do not need to receive a million certificates from various authorities and contribute any assets to the company's charter. This greatly simplifies the procedure for starting a business.

But unlike Russia, in Israel it is much more difficult to make money in this business, because the business is mainly export-oriented. Israel is a very difficult place for businessmen and entrepreneurs, but a very good testing ground for running global ideas.

First, in the same way that many Russian businessmen succeed abroad due to their hardening in Russia, Israeli businessmen, having entered foreign expanses, achieve success through “pumping” in a very competitive market. Sticking a stick into the ground, as in the dashing 90s in Moscow, and hoping that in six months it will begin to bear golden fruits, is not necessary in Israel.

Secondly, the Israelis are people who are open to changes, to the introduction of new technologies. True, this does not mean that they always receive these technologies. For example, the Israeli banking system is very stable and not customer-oriented at all. Despite the fact that a huge number of banks in the world work on the programs of Israeli companies, Israeli banks are cars hollowed out of a piece of wood.

If we talk about new businesses, then a startup that comes to an investor and says: we have a brilliant idea, we will very quickly capture the entire Israeli market and limit ourselves to this - it will not receive investment in development. Israeli startups should be focused on exports.

But Israel is a very interesting platform not only for Israeli startups.

Russia is perceived by many Western investors as a problematic country, and starting a startup in America is expensive. And yet, for the time being, Israel is called the nation of startups, not Germany or Lithuania. And in any case, many Western investors and funds include Israel in their relocation plans. Therefore, many Russian new businesses operate on the Western market under the Israeli guise.

Opening a business does not mean living

Israel is an unregulated country. If a foreigner wants to open a business in Israel, provide services here and pay taxes here, then there is no reason for a foreigner to interfere with this.

At the same time, you need to understand that the presence of a business in Israel does not give this very foreigner the slightest right to be in Israel. Moreover, his business may even make it difficult to enter Israel: there is a simplified visa regime for tourists from Russia, but not for businessmen.

In practice, foreigners come and open limited liability companies with ease - this is a very simple and fast procedure. But moving to live in Israel will not work. But if you have opened a large company with dozens of employees, millions of turnover and preferably export sharpness, then there is a chance to get a "management visa" in order to manage your business. successful business from Israel without even being a citizen.

2.5 forms of business

There are two and a half forms of business organization in Israel. The first of them is "LTD" - a limited liability company. For large firms, this is a mandatory form. For many businesses, it is more convenient, despite expensive and strict bookkeeping. In such firms, it is easier to sell shares.

On the other hand, the perception that Ltd companies are more credible than individual entrepreneurs, is a myth.

An alternative to registering Ltd is individual entrepreneurs. With this form, a person carries full responsibility on debts own business. All income is automatically considered the income of the owner and is taxed in the current regime - unlike the company Ltd, which allows you to pay corporate tax (today it is 23%), do not pay additional tax on dividends (30% of the delta), do not approach the tax rate of 50% rather continue to invest money within the company.

The best example is about the purchase of real estate. If you want to buy an office for a million dollars, then in order to buy it in an individual entrepreneur, you need to earn 2 million, of which 1 million to give to the state, and the second to spend on real estate, buying it in your name. If you buy real estate for your company, then it is enough to earn 1.33 million and pay 23% tax. The difference is very significant.

The third form of business organization is the so-called "simplified". That is, an individual entrepreneur with a simplified reporting system, as in Russia. Only if in Russia it is possible to smuggle a business with a turnover of $ 2 million through it, then in Israel the maximum size of the “simplified tax” is a hundred times less. And splitting the plant into a dozen such companies is not a very good option.

Banks are doing great without you

The joke that banks will gladly give you an umbrella in sunny weather and take it away as soon as the clouds appear is a bitter truth in Israel in the context of business financing. You can get money from the bank, but you need to pledge something for this. As the cat Matroskin said: “To sell something unnecessary, you must first buy something unnecessary, but we don’t have money!”

If there is nothing to mortgage, you will have to work on your own money or on what is called FFF in the field of high-tech (friends, family, fools - friends, family and fools).

Opening an account here is also not easy. Especially a non-Israeli citizen.

The fact that the company is a resident of Israel upon registration in Israel is wonderful. But the bank will want to know everything about the beneficiaries of the company. If they are not Israeli tax residents, then financial control will check documents for weeks. And this is still an optimistic assessment.

If the goal is for this company and account to be a secret from your other tax residence country, then that goal is unattainable. Just then you should not open a business in Israel.

If you do everything transparently, in compliance with Russian law about taxing controlled foreign companies, the banks will drink your blood, but you will open an account.

There are no minimum amounts that the bank requires to see on your account. But you need to understand the big picture. In America, for example, there are 3.5 thousand banks. And in Israel 5.5. But not thousands, but banks. It's not a competitive environment at all. Accordingly, the banks have so much money that they are doing just fine without you. It should be accepted in advance that the bank does not want companies or money.

Of course, the more money in your account, the more currency transactions and deposits, the more the bank will be willing to work with you. And what you will do there, the bank will have to tell in advance so that it builds your client profile. If you take actions that are very out of your profile, then they will want to ask you questions.

The name will have to think

Israel has a register of joint-stock companies (Ldt companies), which tightly regulates everything related to company names. For example, it was not easy to register a company called Pareto Capital because there was already a company called Pareto Investment.

Many years ago, a zealous travel agent decided to open an agency and call it Boeing, arguing that he does not sell aircraft and does not compete with anyone. The court did not appreciate the creativity of this approach, saying that it violated at least two rights of Boeing.

The first is the right to license someone for money to open a travel agency with such a beautiful name. The second is the right to ensure that this name is not “diluted”, rinsing in low spheres. No wonder the brands Toyota and Lexus, although they belong to the same holding, are promoted differently and in different price ranges.

Office rent: you can also have an aunt

As regards the indication legal address firm, then here you can easily specify the address of your auditor or second cousin.

In Israel, oddly enough, there are no virtual address services. Or rather, in Israel there is no “rubber apartment” service. Of course, we have firms that provide "office by the hour" and postal address services. But there is no obligation for the business to have rented premises. If a business manages without a rented premises, then the state will not put spokes in its wheels. If a company is trying to write off the cost of premises, VAT, then in this situation the tax office may want to see where they are physically sitting.

October 23, 2017

I am starting a series of articles about doing business in Israel. If you are interested in how it works, what are “esek patur”, “osek murshe”, “khevra baam” and “amuta”, we are on our way. Reading.

The article is for reference only. No recommendations or advice - you take actions with your business and finances at your own responsibility and at your own risk.

Before reading! If you remember, at school we were told that you can't divide by zero. Despite the fact that this is not true and it is possible to divide by zero, this rule worked within the framework of a school mathematics course and successfully helped to understand the necessary things. This article is written according to the same principle: to simplify understanding and create a basic picture, many facts are given from the position of “divide by zero”. And since in many cases the system works more complicated, these complex explanations are enclosed under spoilers. The most inquisitive can expand them and delve into the theory.

After a long break, during which I managed to go through several rush jobs at work, get very sick and recover, be lazy many times and even build myself a new computer, the time has come for articles about entrepreneurship. Two are planned. I know you missed my opuses, and here I am again with a whole pack, determined and unstoppable.

I'll start with two news: good and bad sobering. The good news is that starting a business in Israel is very easy. It will take no more than half an hour. The bad news is that according to 2016 data, 850 businesses a week were closed in Israel. Despite the simplicity of opening, growing an enterprise and making it profitable is a difficult task. But the last phrase already smacks of introductory remarks from business training, but I'm not talking about that at all. This article is purely about theory.

Business Forms

What are NGOs, individual entrepreneurship and firms, you already knew before coming to Israel. I will talk about them adjusted for local specifics.

Non-profit organization

In Israel, an NGO is referred to as "amuta". Non-profit organization not interested in making a profit ("irgun le lo matarat revah"). However, this does not mean that amuta cannot make money. How else can, and what else. Amuta has the right to spend money only on those things that are indicated for the purposes of the amuta. It can be salaries to employees, charity, the preservation of the world's population of adequate human beings, and so on - the main thing is that it be within the framework of the specified goals of the organization.

Amuta falls under the prohibition of the distribution of income between the founders and / or its members. In addition, there is a ban on withdrawing funds from the amuta for any purpose other than those specified during registration. This must be strictly adhered to. Amuta, whose goal is to support sports, cannot spend money on treating patients. The goals, however, can be changed, but if they differ greatly from the original ones, then this happens only by a court decision.

Unlike “khevra baam” (more on that below), the leadership of the amuta will be directly responsible for serious violations, despite the fact that the amuta is a legal entity.

Many do not need this structure at all, since charity can be done without it, but if the amuta is already open, then it is necessary to strictly adhere to the rules established by law. In addition, there is an improved version of the amuta - "khevra flying toelet acibur". This is a more convenient option in terms of bureaucracy, but with the same privileges.

Let's insert a remark

However, doing charity work without a structure is extremely difficult and even dangerous, since without it it is impossible to write a check for the money received. Moreover, the tax authorities can classify the money received as income.

It is also worth noting that a legislative process is underway today, which should ultimately equalize the bureaucracy in amut and khevre letoyet azibur.

About amutot (plural) you can roll a separate canvas, but we are not interested in this area, so we put a tick and fly on.

Individual entrepreneurship

Esek murshe. Literally translated as "permitted activity." This form of activity obliges the entrepreneur to submit a VAT report (מע׳׳מ) every two months (or once a month from a certain turnover and number of employees), an income report once a year and a report on accumulated capital once every five years.

Lyrical digression about VAT. It must be remembered that it is not the entrepreneur who pays it, but the buyer. If you are selling a product, you must include 17% of the value you add in the price so that the buyer pays it and you get your income. You put your income in one bag, and every 17% in another: they will have to be given to the state.

In the case of esek murshe, it is recommended to have an accountant to save time and nerves. An accountant for an esek murshe costs plus or minus 400 shekels per month, including VAT. That is, approximately 4800 per year (the price depends on the size of the business). However, if you have a great love for numbers, no one forbids you to do all the reports yourself.

Esek Patur. Literally translated as "liberated activity." Since filing tax reports every two months is a headache, the state decided to make life a little easier for small fry. If you earn up to 100,000 shekels per year, then you do not need to submit a VAT report, because there is no VAT for esek patur. You only need to file an annual report once a year, and pay income tax contributions every two months if you receive a salary in parallel with the business.

By and large, if you are an esek patur, then you can come to the tax office with receipts and checks that you put aside from each transaction, where they will help you draw up an annual report. However, according to a familiar auditor, this is not worth doing. It's best to sort it out and fill it out yourself. To do this, you do not need to pay for anyone's services, especially considering that it costs 1200-1400 shekels, and you only earned 1500. If we are talking about serious amounts, then you can think about the services of an accountant.

Firm

I know three types of companies (maybe more):

• "hevra baam"
• "khevra tsiburit"
• "hevra memshaltit"

There is no point in talking about the latter. This is a state-owned firm (for example, in the field of military industry), and for those who read this article and are interested in how to open a business in Israel, it will not be related with a probability of 146%.

"Khevra tsiburit" in Russian has the equivalent of "OAO" - Otkrytoe Joint-Stock Company. The company is going to raise capital, issue stocks or bonds, go public, shares are publicly available, and so on. At the same time, it becomes absolutely transparent: all financial reports, owners, and so on are in the public domain. Perhaps this is your option, but we will not talk about it in detail.

By firm, we will mean a structure called “khevra baam” (בע׳׳מ), which in Russian has the equivalent of “LLC”, and in English - LTD. What are the main differences? In the case of self-employment, you are both an individual and a legal entity at the same time. The firm, on the other hand, is a separate legal entity, and you, its owner, are an individual. You can even work as an employee in your own company.

Actually, it's a little more complicated

"Khevra tsiburit" and "Khevra memshaltit" are subspecies of "Khevra baam". A firm cannot be “khevra tsiburit” without being originally “khevra baam”.

But let's start from the very beginning to form a complete and correct picture. There is a legal term - "Tahagid". This is a corporation. A corporation is an association of one or more persons into a legal entity. The corporation operates separately from its owners, is competent to perform legal actions and bear legal obligations. She obeys special laws and rules for the type of corporation to which it belongs. A corporation can be owned by individuals, a group of individuals, or other corporations.

So, a company (“khevra”), a partnership (“shutafut”), an NPO (“amuta”), a cooperative society (“aguda shitufit”) are all types of corporations. There is another type of corporation - a statutory corporation ("taagid statutori"). This is a corporation, the creation, purpose and modes of operation of which are determined by law. Vivid examples of statutory corporations are the Bank of Israel, the Bar Association, Magen David Adom. These corporations operate on the basis of and within the framework of a specific law and by-laws (“tecanot”).

This allows you to do different tricks. For example, you personally (not the company) have a sausage factory. You want to sell it to your own company for, say, 1,000,000 shekels. But wait, you just opened yesterday! The company does not have not only a million, not even a table with a chair was bought!

So the firm takes a loan from you. And you become her creditor. And as long as the plant gives you a loan, it does not pay taxes. Now such things can be cranked, but there are rumors that this will not last forever. The tax office is not stupid either.

There are other differences between a firm and a sole proprietorship. You esek murshe, earned yourself a yacht and a mansion, and then things went badly, you can’t pay for the purchased goods with the supplier, you got into debt. In this case, you are responsible with your property, and, most likely, you will lose your yacht, mansion, and, in general, everything will be taken out.

The situation with the plant is different. Your yacht remains with you, as it belongs to you, and the sausage shop has nothing to do with it. This immunity, of course, is also not unconditional. If it turns out that you were scamming, knowing that a mouse hung in your bank, then by a court decision, the yacht will still be taken away, and a bonus will be tapped on the neck.

For the most inquisitive

In order for the shareholder of the firm to bear responsibility for its actions, a procedure called “aramat masach” (raising the legal curtain) is carried out. If we are talking about the usual financial difficulties of the company, then no one will let this curtain be lifted. This is the meaning of its existence. But if direct intent is detected, a deliberate attempt to avoid responsibility, this procedure is provided for this case.

The easiest way to understand this is with the following example. If the company has ordinary debts, it has not succeeded for some reason, the salaries of employees are delayed, then it is impossible to lay the responsibility on the shareholders for this. However, if we are talking about non-payment of pensions or specially planned actions directed against workers, then the curtain will be raised with a high probability.

There is a whole list in the law on the basis of which things the curtain is raised.

Also, when starting a new business, when you go to the bank for a loan, it is given to you personally and not to the company, because no bank will lend to a green company that has nothing. And at the moment when you put the appropriate signature, the protection of the company ends: if you fail, they will ask you.

Corporate income tax 24% . This is a fixed amount, which is both a plus and a minus at the same time. The downside is that with small incomes, the tax on the company is greater than the tax on esek murshe. If you sell sausages by trucks, then from a certain moment it becomes extremely unprofitable to be an esek murshe: it’s better to pay 24%, not 50%.

But there is one caveat

To be more precise, 24% is only a tax on the company's profits. In order to withdraw money, you must also pay tax depending on the method of withdrawing funds. To an employee through “tlush” or to an entrepreneur through “hashbonit”. Covering these nuances is already beyond the scope of this article, I just want to clarify that the system works more complicated, and if you are in such a situation, you should consult a good auditor. He will sort out all the numbers and nuances on the shelves based on the information that was relevant at that time.

The big downside is the content. Today, the maintenance of the company בע׳׳מ is approximately 25,000 shekels per year. Five times more expensive than murshe. Approximately 18,000 will cost an auditor, 2,000 registration, the remaining 5,000 are spent on a lawyer (a one-time expense for a lawyer). A lawyer is needed to register a company, write a charter, support in various contracts. In addition, every year the company holds a meeting of the board of directors. Even if the entire board of directors is you alone. And the lawyer fixes this meeting with a signature.

At the same time, employer-employee relationships (if you have them), intellectual property protection, participation in large tenders, and many other specific factors may come in favor of the firm.

How does an entrepreneur earn?

There is an interesting postulate in entrepreneurship. The most high paying job- This free work. Despite the fact that, at first glance, it sounds like nonsense, this phrase has its own meaning.

For example, you are writing a book. Nobody pays you for this job. You get income from a book when it is sold, and you are no longer doing anything. And that income is often higher than if you were writing this book for someone and getting paid for it. This works in almost everything: doing work for yourself and investing in yourself, in the end you get more than working for someone else.

The hired worker first pays taxes, and then lives. An entrepreneur first lives and then pays taxes.

Now more specifically. Let's start with the term "expenditure". Expenses These are expenses necessary to make a profit.

Costs can be divided into "white list", "grey list" and "black list".

• White list- these are the expenses that are guaranteed to be recognized by the tax service as expenses for doing business. If you bring in tax receipts for payment business advice, advertising, consumables, then you do not need to prove anything - these costs are recognized as expenses.
• Black list- these are expenses that under no circumstances the tax authorities will recognize as expenses. For example, lunch with a client or partner used to be considered an expense. The people dined on astronomical sums and the tax office decided that you could at least kill yourself, but that's enough. Do business on an empty stomach. Although, until now, coffee with a bun at a meeting with a client can be written off as an expense.
• gray list. This is not actually a list. The fact is that the tax does not check your reports. More precisely, if this is your personal report, then she can check it, and if this is a report signed by the auditor, then they are not checked without exception, but some are checked selectively.
  So when you bring the auditor a receipt for a two-week reservation of the Presidential Suite at the Hilton because your client wishes to close the purchase of a container ship of sausages there and nowhere else, and say that you need to write it off as an expense, the auditor may grunt in surprise and twist his finger at the temple But often this does not mean that your suite will not really be accepted. This can only mean that the auditor does not want to bother with it. Therefore, in this situation, we turn to a couple of auditors, explain the situation and ask. If at least one says yes, just go to him. If all three say no, then the jacuzzi and Cristal were for their money.
  But if you act wisely, then you need to choose an auditor not the one who just says “yes”, but who knows how to work competently in the gray zone, on the one hand, optimizes the tax as much as possible, and on the other hand, does not put you in unpleasant situations before the tax .

It is imperative for an entrepreneur to know exactly his expenses and strive to maximize them in order to optimize the tax burden. Of course, “increase” means not to squander all the savings, but to place the maximum possible amount of expenses in the category of expenses.

Even if you are an esek patur and do not have VAT (and if you are a woman with a child, you have a “zikuy” and do not even have income tax), it is still extremely important to take into account expenses. For what? Just to know how much you have earned. If in a year you received 100,000, and the expenses amounted to 10,000, you are great, keep up the good work. If the expenses amounted to 99.000, close your business before it gets worse.

In addition, you need to carefully remember that there are contributions to Bituah Leumi (National Insurance Institute). It is taken from the difference between arrival And expense. Therefore, it is in your interests to maximize the expense: less tax will be taken from a smaller difference. From the same difference is deducted and (if you issued it yourself). It's the same logic here. It is necessary to strive for the maximum (and this is a little less than 20%) to put Keren Ishtalmut into retirement as well, because tax is not paid on this money.

However, Bituah Leumi does not know what tax to take from the newly opened case. So they ask how much you plan to earn. You, filled with optimism, answer that every month you will earn 10,000 shekels. Bituah Leumi, without any hesitation, starts deducting 1,000 shekels from you every month. After 3-4 months, you realize that you have not earned a penny, but you have already paid 3,000 shekels. They will, of course, be returned at the end of the year, when it turns out that they have not earned anything, but in order not to get into such a situation, it is better to name more modest amounts. Indicate that after opening, earnings will be 1000 shekels per month. There will be more - then you will pay the debt.

Now knowing what an expense is and how taxes are paid, we move on.

After deducting expenses and deductions, Bituach Leumi is left with “dirty profits”. Or "gross salary". It pays income tax.

Yes, this is another cool infographic!

A little about income tax

The tax system in Israel is tiered. This means the following. If you earn up to 74.640 per year, the tax is 10%. If you earn 74.641 shekels, then you will be charged 10% from 74.640 and 14% from that one shekel and from subsequent shekels.

This must be understood, because there is an opinion that "if income becomes larger, then you can move to the next tax level and net income will become less."

Keep up-to-date tax rates for 2017. And who is interested in delving into this topic, welcome to a useful site.

In Hebrew, such a system is called "mas shuli".

Accountant or Auditor?

There is a category of people without whom, very likely, business in Israel cannot exist. They have already been mentioned above. He is an accountant, auditor and tax consultant.

With the latter, everything is relatively clear. Tax Consultant(yoetz mas) is needed to tell you how to approach the taxation system in your particular case. It functions as a reference.

There are cases when the tax consultant, and the accountant, and the auditor are one and the same person. First, for example, he studied to be an accountant, then he became a tax consultant, and then he studied to be an auditor. Like a triple action shampoo. However, the accountant and the auditor perform different functions and should be distinguished.

Accountant(menael heshbonot) is needed in order to write. You bring your documents to him, and he knows how to write your numbers correctly in the right boxes. There are first, second and third degree accountants. This does not mean a university degree, but something like a discharge. Like locksmiths 🙂 A first-degree accountant literally only knows how to enter your data into programs. Any other activity does not lie within its competence.

Accountant of the second degree, knows what the reports consist of. A payroll accountant can count salaries (“hashav sugar”), and “hashbonai” can make reports. But it all depends on what kind of accountant it is. An accountant working in an audit firm is different from an accountant working with suppliers. This is a narrow specialty.

Auditor(roe hashbon) is a person who checks accountants and reports. If you suddenly have a company, then you must have an auditor. In the general case, his task is simply to check that the accountant has not screwed up anywhere. He is not obliged to tell you how best to write off taxes.

If you are an esek patur or an esek murshe, then, in theory, you can do without an accountant and an auditor at all.

Features of business in Israel

Here I will tell about a couple of curious facts that now and then pop up in the speeches of various kinds of specialists and which are easy to notice for yourself. Business in Israel suffers from the following: few people, they are all Jews.

This means that, firstly, you need to actively look for a client, and, secondly, the client will almost always try to do what you offer himself, and will pay you only if he himself fails.

Transactions in Israel are concluded "with legs", through personal meetings. Often, if you call by phone for some service or product, then instead of the price you will be stubbornly told: “come, let's talk”. Part of it is a matter of mentality. Partly, the fact is that those who provide the same services, 10 pieces per person. Therefore, it makes no sense to waste time and resources on someone who simply will not reach you. To a greater extent, however, this works with those companies that already have a customer base, who are not afraid to lose a customer. The young company is forced to fight for the client, so the entrepreneur will be much more accommodating over the phone.

promise and given word in Israel mean nothing. You can have a great conversation even with a supplier, even with a plumber, he will smile at you with all his teeth and say that tomorrow everything will be done. Most likely, nothing will be done either tomorrow or even next week, and moreover, the person will not even consider that he has done something reprehensible.

Conclusion

It may seem that I end on a negative note. This is wrong. As my observations of successful Russian-speaking entrepreneurs show, it is worth treating the peculiarities of business in Israel as peculiarities, and not as obstacles that interfere with life. You can get used to a lot, you can turn a lot to your advantage.

I set the goal of this note exclusively educational program. Therefore, he described only the forms of businesses, touched a little on taxes and income generation, and also talked about the differences between an accountant and an auditor. The next note will be devoted to practice - on a personal example, I will describe,. So subscribe to OLE HADASH, ask questions in the comments or on