Features of the Opening of Osek Patur in Israel


Osek patur is a small (in terms of annual turnover of funds) business. Osek patur (https://auditing.co.il/en/bookkeeping-services/osek-patur/) is not obliged to charge value-added tax (VAT) – (in Hebrew – Ma’am) on its services and it has a very simple approach to taxation.

It is important that you can open osek patur (individual entrepreneur) not in every branch of the sale of services or goods. Therefore, the first step is a consultation with an accountant who will tell you if osek patur is suitable for your type of activity.

Osek patur (it should be remembered) is limited in circulation of funds. The amount is recalculated every year. At the beginning of 2017, the turnover was limited to 98,707 shekels. How to deal in case of exceeding this amount – you will be prompted by the auditor.

The advantages of this form of business:


  • There is no need to issue tax receipts and asses a value-added tax; you will issue only regular receipts (kabala).


  • You do not have to report on the results of short periods (once in two months); osek patur makes only an annual report.


  • A simple tax optimization scheme, in an interview with an auditor you will receive a list of approved expenses for your professional profile.

Opening a bank account

Brodetsky Shmuel Rohe Hashbon (https://auditing.co.il/en/) recommends opening a separate bank account for business, which allows you to clearly distinguish between business costs and profits from non-business income, household expenses, etc.

Registration in the VAT (Ma’am) department

Registration in the VAT (Ma’am) department is an obligatory step, although small businesses which do not issue tax receipts, do not charge VAT. All further steps without this registration are impossible.

Tax Administration (Mas Hachnasa)

Any business owner, small or large, applies to the tax authority (Mas Hachnasa) to register an enterprise. The important point is to determine the tax rate. Initially, the amount of tax prepayments is set fairly arbitrarily. Experienced rohe hashbon will help to reduce the amount of tax, or even to achieve for your first year full exemption from income tax.

National Insurance Service (Bituach Leumi)

Registration with the national insurance service (Bituach Leumi) is also an obligatory entry point for the enterprise. Bituach Leumi covers the costs of disability, prolonged temporary incapacity for work of the business owner and other insurance claims.

After completing all of the above-mentioned formalities and filling out the necessary forms, you can start an independent activity. The auditor will teach you how to keep order books, accounting of income and expenditure of funds, explain the procedure for issuing receipts, and advise on many other business development issues.

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