Establishing a company in Israel opens new opportunities for business development. It’s important to note that the main difference between conducting business as a private individual and through a company is a financial liability, which becomes personal in the case of an individual and limited when conducting business through a company. The most popular form of company in Israel is a Limited Liability Company (LTD).
Company name
To apply for company registration, you need to choose three optional company names. This is necessary so that the company registrar can smoothly register the company if the first or second optional name is already in use by other companies.
Document preparation
To apply for company registration, it’s not only necessary to choose a company name but also to prepare the company’s charter and sign the founders’ declaration.
Company founders
The founders and shareholders of the company can be both private individuals who are of legal age and legal entities. Typically, one of the shareholders is appointed as the company director. If a shareholder is a legal entity, the director is appointed as a private individual who is not a shareholder of the company.
Opening a tax file with Tax Authorities
After registering the company and obtaining a certificate of registration, the company must open a case with the Israeli tax authorities. This includes obtaining a tax number and registering for VAT.
Opening a bank account
For the company to engage in business activities, it is necessary to open a bank account. In cases where the shareholders or director of the company are foreigners, the bank may refuse to open an account, citing a different reason. However, in reality, banks in Israel prefer to provide their services to companies whose shareholders and directors are Israeli citizens. In such cases, it is easier for banks to collect debts if they arise.
Reporting
According to Israeli law, an LTD company must submit bi-monthly financial reports and an annual audit report at the end of the year. For this, companies use outsourcing services of auditors.
Conclusion
Establishing a company in Israel requires careful planning and understanding of laws and regulations, despite the apparent simplicity of the procedure. If you have decided to open a company, it is recommended to consult with a lawyer specializing in corporate law. Our office will be happy to assist you in this matter.