For those who wish to do business in Israel, they must register their business legally. This allows the country to learn about various industries that are growing within the local economy. When someone is thinking about starting a business. It can be difficult to know where to start. Fortunately, several business types are accepted by Israel, which may be better suited for one type of company or another. This guide will help you determine which is right for you.
Before choosing a business type in Israel, entrepreneurs may choose to register the company as a “Private Company” or a “Public Company”. These two designations allow the company to have securities on the Stock Exchange. With these business types, annual reports must be provided to all shareholders.
It’s important to note that any private company with up to 50 shareholders and a director are not permitted to sell shares to any member of the public. Additionally, the Articles of Incorporation must list all restrictions of how members can transfer their shares. On the other hand, a public company consisting of 7 or more shareholders is permitted to sell stock to the public once issuing a prospectus that is in line with the rules laid out by the ICO and the Securities Law. Additionally, the public company must provide and file an annual report with the Companies Registrar. These documents will be available to the public.
One of the business types allowed in Israel is Osek Morshe. This is a registered corporation correctly formed with Israel in accordance with all local laws. Specifically, a Osek Morshe has an annual financial turnover of at least 100,187 shekels. This amount can change annually, based on the government’s changes in regulations. Additionally, the company issues tax receipts with valued added tax (VAT).
A company may register with the Companies Registrar with English, Hebrew, or Arabic documents. However, the Companies Registrar needs the Articles of Association also properly translated to Hebrew.
A company may choose to limit the personal liability of its members. In this case, the company would not register as a Osek Morshe. It would register as a Chevra Baam. The company must have a set charter that defines how members of the company can operate, and it must include the term “Limited” (or the abbreviation “Ltd”) to be part of the company’s legal full name.
Someone is self-employed if, as an entrepreneur, they work entirely for themselves and be fully liable for the business. This individual is responsible for all aspects of the business and will register as Osek Patur. This type of business will register as VAT-exempt, which helps self-employed individuals avoid costly compliance guidelines larger businesses must follow. The earned annual income must be less than the stated amount, which changes yearly. Currently it stands at ILS100,187
Any company formed outside of Israel can form a brand or local office within the Israeli borders. This company must register itself as a foreign Osek Morshe, Chevra Baam, or Osek Patur with the Companies Registrar within one month of entering the country. There are no requirements to provide annual reports of financial documents.
If the company has used the term “Limited” or “Ltd.” in its name in its original country of origin, it must also use the term here in Israel. Additionally, the company must include its country of origin in every document, advertisement, invoice, and official publication.
Another one of the business types in Israel is a partnership. The country defines a partnership as an entity that enters a contract to do business together. Personal liability is not limited in a partnership, unless the partners wish to become limited partners. The term “Limited” or its abbreviation must be part of the official name.
Foreign partnerships can do business in Israel. They must follow the same registration procedure as a foreign company.
A non-profit organization focuses on providing certain needs or services without asking for payment in return. Many of these organizations run on small annual budgets based on donations. Many non-profits are academic, medical, municipal, or charitable organizations. These organizations fall under special laws and registration requirements.
Israel has a unique form of cooperative called a kibbutz or moshav. This means a small town can form a cooperative as a town business entity for, mostly, agricultural sectors, but can be beyond that.
The ability to form a variety of business types allows entrepreneurs and companies of all sizes the chance to work for themselves and grow their dreams. However, they must meet more than is more than just registration requirements.
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