Small and Medium Businesses
Business Registration and Start-Up
There are three primary forms of doing business in Israel:
- Individual entrepreneur (Osek Patour or Osek Murshe);
The choice of the appropriate business form is mainly influenced by tax considerations, legal considerations and other aspects that depend on the future capital structure, investment attraction and credit.
Also, other factors such as the scope of business, personalities of customers, employment of employees, and many more also influence the selection of the best business structure.
Support in the process of starting and registering a business by our firm actually starts at the first stage, in which we analyze and advise you on the choice of a suitable business form.
The complete and correct registration of a business is a series of actions that need to be done before the tax authorities. These actions include submitting applications, obtaining certificates, answering questions and queries to the authorities, and setting up the business on computer systems for accounting and payroll.
At the end of the registration process, the client has all the necessary certificates for the smooth operation of the business.
Our firm specializes in business registration in Israel: depending on the type of business chosen, we collect all the necessary documents for starting a business and, through representation in the tax authorities, “take care of all the hassle.”:
- Filing documents and answering questions from the authorities, often without the client’s participation or physical presence.
- Choosing the correct form of business and fully complying with the appropriate registration procedure saves our clients from unnecessary friction with the tax authorities. It allows you to concentrate on your business from day one.
Our office provides accounting services for the company’s financial and economic activities and the calculation of employee salaries, including the calculation of mandatory payments for transferring funds to various insurance funds, etc. Our office provides accounting services for the company’s financial and economic activities.
Accounting is performed using state-of-the-art software approved for use by the Israeli Tax Authority. The software is equipped with an interface for uploading digital documents. All exchanges of electronic documents and other information are secure.
The transfer of accounting materials is done online. This method completely eliminates the need for physical delivery of documents to our office, and everything used for accounting purposes remains available for review and analysis.
In the process of accounting, regular adjustments are made to the current state based on primary documents received from the client (changes in the status of the bank account, credit cards, and documents from suppliers and consumers of the company).
Making adjustments allows for timely deduction of all expenses and correct reporting to the tax authority. Another advantage of such adjustments is the guarantee that the accounting data reflects the business’s actual results and financial condition.
Practice shows that competent accounting, which allows you to analyze the results of the financial and economic activities of the company – is an essential tool for the effective financial management of the business. And we guarantee our clients that this essential tool will be filled with accurate, timely, complete and high-quality information.
All businesses in Israel, whether they are private entrepreneurs of various types or medium-sized enterprises, international companies or even monopolies, are required to submit regular and periodic reports to various government bodies. These are mainly tax control authorities, but in some cases, companies and businesses are required to submit reports to other authorities as well. For example, companies that have received a grant from the Office of Innovation are required to submit quarterly reports on the effectiveness of their investment.
Our Office provides reporting services to tax and other government agencies. The office staff ensures that the report is submitted correctly, accurately, and on time.
Using special computer programmes, the Office staff monitor the status of clients’ reports, ensuring that no report is missed and submitted to the appropriate authority on time.
Planning the Office’s work throughout the entire period allows the required report to be prepared in advance and coordinated with the client. For example, before a VAT report, clients receive a notification with the payment amount and the report’s results. This notification allows the client to study the report in advance and receive comments on all points of interest. Timely joint work on the report before its submission ensures that the data presented in it is correct and complete.
After submission of the report, in most cases, there is a requirement to pay the funds according to the report to the tax authority, or the right to receive a refund for the payment of this or that tax. Our control system ensures that the tax payment has been made and received by the tax authority or that the tax refund, including VAT, has been received by the client.
Additional control over the correctness and timeliness of reports prepared for all clients of the Office is performed through internal cross-checks. This methodology ensures that the Office can prevent errors and submit client reports to tax and other state authorities promptly and properly.
Tax planning is a process in which existing tax laws are used in such a way as to minimize the tax burden of individuals and companies as much as possible.
The process of tax planning should not be confused in any way with tax evasion. Tax planning is a lawful and legitimate action undertaken within the law, while tax evasion is a serious offence of both a criminal and civil nature.
It is essential to realize that the vast majority of financial transactions in Israel have tax implications. Whether we are talking about actions that occur every day, such as business income, receiving a pension or trading securities, or referring to transactions that go beyond everyday life, such as selling or buying real estate, redeeming compensation or pension funds, etc.
Business owners and companies carry out tax planning regularly, as they are often accompanied by an auditor who can be consulted on the tax implications of certain transactions and events. However, when it comes to individuals who do not have regular contact with an accountant, in this case people do not always find it necessary to engage in tax planning.
For most, every financial event in our lives, whether an investment, retirement, entering into a business partnership, or a change of residence, has significant tax implications.
Tax planning allows us to use the tax laws to our advantage and save significant money.
Audit and Reporting
Our Office provides its clients with financial statement preparation and review services as well as company audits.
The obligation of companies to appoint an auditor and prepare audited financial statements arises from the Companies Law. Companies with low turnover (less than NIS 615,408 in 2021) may exempt themselves from appointing an auditor. However, the Income Tax Ordinance requires companies to submit audited accounts to the tax office. For this purpose, all companies conducting financial and business activities in Israel are required to appoint an auditor.
The primary purpose of the audit is, of course, the preparation of financial statements that adequately and reflect entirely the results of economic activity and the financial condition of the company’s business for the period. In addition to its primary purpose, the audit identifies deficiencies in accounting, recommends measures to reduce tax debts and enables tax planning for subsequent periods of activity.
The final product of the Office’s audit activity is a complete financial report with a signed opinion of an accountant-auditor. This report is submitted by the Office to the tax inspectorate at the client’s place of registration, to the registrar of companies and other state authorities (as instructed by the client).
The Office ensures that the audit is carried out efficiently and by the schedule agreed with the client. It is important to note that the schedule is drawn up so that the report is provided promptly to all stakeholders: tax authorities, investors, creditors, etc.
Auditing and editing the report is carried out using special software that enables accountants and owners of client companies to work in an understandable and acceptable mode. Upon completion of the audit, the working documentation of all audits performed, supporting documents, and audit evidence remain at the company’s disposal.
At the client’s request, the financial statements are provided in Hebrew and English, as well as in accordance with Israeli accounting standards or one of the world’s leading standards, IFRS or GAAP, USA.
The Declaration of Capital
The Income Tax Ordinance permits the Israeli Tax Authorities to require any report on a person’s assets or income in order to obtain information for further taxation purposes.
One such report is the “Capital Declaration” report. That is actually a statement of assets and liabilities as of a specific date (personal balance sheet). The tax authorities require this report for self-employed persons, business owners and employees whose annual income exceeds the amount set by the tax authorities. “Capital declaration” is usually required once every five years, and this report aims to provide cross-referenced information regarding declared income and capital.
“Capital Declaration” is prepared on Form 1219 and is a detailed statement of the reporting person’s assets and liabilities: bank accounts, securities, reserve funds, real estate, vehicles, loans, etc. Some peculiarities and subtleties must be considered when filling out this form. An adequately prepared “Capital Declaration” will avoid unnecessary fines and questions from the authorities.
Our Office specializes in completing and filing the “Declaration of Capital.” The history of filed “Capital Declarations” is stored electronically in our offices and transmitted to the Tax Authority in the prescribed manner with the necessary annexes and calculations.
Before filing a “Capital Declaration,” our Office performs a comprehensive review of the capital differences to ensure in advance that the capital differences are consistent with the income reported for the period between the filing of the previous and current returns.
In addition, the Office makes sure to refer to the existing exemptions for reporting assets from abroad for new repatriates, non-residents and returning residents.
Roman Tzerelstein is a licensed auditor in Israel, professional accountant (Roe Heshbon).
Registering and starting a business, taxation, Esek Murshe, Hevra Baam, Amuta and Halatz registration. Annual report, capital declaration.
Tax refunds, counselling, pension taxation. Professional accounting services for businesses at any level.
Ramat Gan, 52573
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