Every self-employed person, whether an individual, a company or a corporation, has a duty to open an income tax file when his or her business starts. Opening the file will allow your business to register lawfully with the tax authorities and conduct itself as an official taxable taxpayer. The file opening process consists of several stages and varies according to the nature of your business, the scope of your business activity and your expected income. To help you with the process that will actually be your first step as a business, CPA Guy Dovrat collected the information you need to open an income tax file.
VAT registration
You must reach the VAT offices before your business activity begins. One of two practitioner’s files can be opened during VAT registration.
Exempt practitioner
Practitioner exempt from VAT. Typically, the VAT exemption applies to a practitioner whose annual revenue cycle does not exceed NIS 107,692 per year. Also, as of 2018, an exempt practitioner is not subject to withholding tax.
Authorized practitioner
A self-employed person authorized to collect VAT from his clients and transfer the amounts collected to the tax authority.
Submit an application and notice to open an Income tax file
At the most initial stage, an application form must be filled in to open an Income tax file. There are two types of forms:
- Self-Employed Business Opening Form, Filling Out Self-Employed file opening form
- In order to register a company, you must fill out a file opening form for a corporation (4436)
The form will require us to provide personal details, detail the nature of the business and declare additional sources of income.
After a few days, the tax authority will officially notify us that the file is open. In the letter, the amount of the withholding tax will be determined, and the professional branch will be defined.
Opening a withholding tax file
If your business employs employees, pays rent or has other expenses that are subject to withholding tax, you will also be required to open a withholding tax file. The file can be opened by specifying the need for the withholding tax file in the application for opening a file.
Your business is ready for accounting
After completing all these steps, your business is duly registered with the tax authorities and can start its business activities and manage its books of accounts. Accounting management in a business can be complex and often requires the assistance of a professional. To ensure that everything is done properly and to help you examine the deductions and credits you legally entitled and save a lot of money each year, Guy Dovrat invites you to enjoy professional accounting assistance. Dovrat’s many years of experience with tax authorities and businesses from all industries allow him to provide you with customized service and plan your business operations effectively. For more details and for initial consultation, we invite you to leave your details today.
