How to Open an Osek Patur - A Step-by-Step Guide
Opening an osek patur (exempt dealer) file is mostly an administrative process, and you can get through it in a single working day if your documents are ready in advance.
Step 1 - Open a file with the Tax Authority
You open the file with the Income Tax authority (or through an online or phone service, depending on which track is currently active). Bring your ID card, bank account details, and a short description of your line of work. At the end of the process you get a business number, usually identical to your ID number for a sole proprietor.
Step 2 - Register with National Insurance (Bituach Leumi)
You need to report the start of your self-employment within the timeframe set by law from when you actually started working. Bituach Leumi sets monthly advance payments based on estimated income, which get reconciled against your actual income at the end of each tax year.
Step 3 - Check that you qualify for osek patur status
Not every profession can operate as an osek patur, and even those that can are subject to an annual turnover ceiling that’s updated every year. If you expect your turnover to cross that ceiling in your first year, it’s usually better to open directly as an osek murshe (licensed dealer), to avoid a forced switch partway through the year.
Step 4 - Open a business bank account (recommended, not required)
An osek patur can technically operate through a personal bank account, but separating a business account from a personal one makes tracking income and expenses much easier, and most banks will require it anyway once business activity picks up.
Step 5 - Set up a system for issuing documents
From the very first moment of business activity, even before your first payment, you need to issue customers a valid document: a transaction invoice and a receipt, following the rules for osek patur. Issuing documents by hand in Word or Excel isn’t illegal, but it quickly runs into trouble with sequential numbering, the 7-year retention requirement, and keeping everything available to your accountant.
What to check at the end of your first month
- Every payment received has a matching document with a sequential number.
- Cumulative income is tracked against the annual osek patur ceiling.
- Business expenses (even ones that aren’t VAT-deductible for an osek patur) are documented and kept for the annual income tax report.
How Slate helps from day one
Signing up for Slate includes choosing your business type (osek patur, osek murshe, or company), and from that moment the system issues the correct document type with sequential, retained numbering, with no manual setup needed.