Business

Steps for creating business in Israel

Organizational options

1. Self-employed עצמאי
2. Working under aegis of agency like Yeul-Sachir
3. Partnership שותפות
4. Company (corporation) חברה

All options but "company" have the downside of unlimited personal liability in case of lawsuits. But "company" has the downside of being much more complex to set up and maintain.

Agencies

Setting up as atsma'i is fairly easy:

• Verify with local gov't (iriya) whether a business license is required 02-541-8974/8931
• Get legal advice regarding form of business and requirements, contracts
• Open tik at VAT מע"מ
• Open tik with Income Tax מס הכנסה
• Open tik with National Insurance ביטוח לאומי
• Meet with accountant to consult about reporting and collection.

Pro and cons

Atsmai:

• Subject to US self-employment tax (Social Security)
• No insulation from liability
• More difficult to raise investment capital

Yeul Sachir:

• takes 7% of gross for their service
• you become their employee from a legal perspective
• they pay taxes etc on your behalf
• they do NOT insulate from liability

Corporations:

• expensive to start (how much?)
• expensive to maintain (how much?)
• lots of reporting to gov't (incl US gov't)
• good insulation from liability
• considered "more serious"
• capable of passing profit from year to year

What kinds of service to offer? What kinds of customers?

• Israel only, or international as well?
• Anglo only, or non-Anglo too?
• Small jobs (less than three days) ?
• Medium jobs (up to a month) ?
• Large jobs (more than a month) ?
• Work as individuals or as team?

How to structure income/profit split?

• withhold X percent of all gross for expenses/profit
• credit Y percent to person bringing in job? (salesman??)
• income from job goes to staff working on it, or distributed?
• benefits? car? various expenses? -- need to consult CPA

Links

• How-to of starting a business in Israel
• NBN Entrepeneurs Forum
• NBN Business Directory
• MATI
• Ahavat-Israel Small Business info
• CPA Eliezer Alperstein - 02-9934955 - eliealp@zahav.net.il He handles the US side of things (filing w/ IRS - 1650 NIS plus VAT)
• CPA Yossi Davidman - 02-678-0983 (Eliezer's associate). He handles the Israeli side of things (whatever is required in terms of filings, advice etc)
• accountant/tax advisor: יוסי ברק 02-625-5170 (recommended by David Winter)

Names

I'm developing "AccordOS" - a Linux distro for SOHO. So I want a name like "Accord Systems" or something. So far, the following domains are still available (as of 2009-02-04):

• accordsystems.co.il
• accordos.co.il
• accord-os.com
• accord-os.co.il
• accord-sys.com
• accord-sys.co.il
• acc-sys.com
• acc-sys.co.il