Opening an Osek Murshe (Licensed Dealer) is a significant step for freelancers and small business owners in Israel, but it can feel like navigating a maze of bureaucracy and obligations. This guide will walk you through preparing for your first year, using Keep's digital solutions to simplify the process, save time, and reduce stress. We'll present practical steps, smart management tips, and illustrative examples to help you feel in control.
Key Takeaways
- In your first year as an Osek Murshe you charge VAT and issue tax invoices, file periodic VAT reports, usually pay income tax and National Insurance advances, and keep all your income and expense documents. It pays to set all of this up in the first month, before your first VAT report is due.
- Osek Murshe registration is required once annual turnover exceeds 122,833 NIS (as of 2026), and in professions listed in the regulations, such as law, accounting, engineering and medicine, at any turnover. A smaller business can also choose the status, for example when its clients are businesses that ask for tax invoices.
- In your first year you usually make three regular payments: VAT, income tax advances and National Insurance advances. VAT is paid with the report, by the 15th of the month after each reporting period.
- The VAT you charge, 18% added to your price (as of 2026), belongs to the state and makes up about 15.3% of every VAT-inclusive payment. So set aside the VAT you collect, minus the input VAT you can deduct, and keep a separate reserve for income tax and National Insurance advances.
- Since June 2026, a tax invoice above 5,000 NIS before VAT to a VAT-registered business client needs an allocation number from the Tax Authority; without it, the client cannot deduct the VAT on it.
What It Means to Open an Osek Murshe
The Osek Murshe status is intended for businesses with annual turnover exceeding 122,833 NIS (as of 2026), for professionals whom the regulations require to register as an Osek Murshe at any turnover, such as lawyers, accountants, engineers, doctors and some types of consultants, and for those who choose to charge clients VAT and deduct the VAT they pay on expenses. Unlike an Osek Patur (Exempt Dealer), an Osek Murshe files periodic VAT reports, issues tax invoices and keeps fuller books. An Osek Patur must keep books too, but on a smaller scale.
This status supports growth, makes it easier to work with business clients who ask for a tax invoice, and lets you deduct the VAT paid on expenses such as equipment or services. The process includes registration with VAT, Income Tax, and National Insurance. An Osek Murshe opens the VAT file through an authorized representative, such as an accountant or tax adviser, or at the regional VAT office. Notify National Insurance separately as soon as you start working as self-employed. Keep provides a platform that simplifies registration and assists with ongoing management, so you can focus on your business instead of paperwork.
An Osek Patur whose turnover passes the ceiling does not open a new business. They ask the VAT office to change the classification of the existing file to Osek Murshe, and as an Osek Murshe they charge VAT, issue tax invoices and file periodic reports. Input VAT can be deducted only on expenses from the date the business becomes an Osek Murshe, not on earlier expenses that year, so it is worth requesting the change early rather than waiting for the payment that takes turnover over the ceiling.
Benefits of Digital Management for Your Business
Running an Osek Murshe business can be much simpler with technological tools. Here are the key advantages of using Keep:
- Time Savings: Digital invoices (every plan) and expense uploads by photo or file through the app (recommended plan) cut down on manual work.
- A Clear Picture: A dashboard shows your income, expenses and profit for any date range on every plan. VAT reports come with the recommended plan.
- Everything in One Place: All your business data is available in the system and the app on every plan, without depending on in-person meetings.
- Reduced Bureaucracy: On the recommended plan, reports and payments to the tax authorities are included, and the annual report is offered at a special price.
- Website Connections: An API for accepting card payments on your website on every plan, and Wix and Shopify plugins on the recommended plan. Both help e-commerce merchants and store owners.
For example, Dana Levi, 32, who runs an online lifestyle shop from home in Rishon LeZion, charges her customers by card on her own website through Keep's API and issues her invoices in the same system. She chose the recommended plan, which includes VAT reports, so she spends a little less time on paperwork and feels more confident dealing with the authorities.
Even when your documents are produced digitally, retaining your books and records is the business owner's duty: for 7 years from the end of the tax year, or 6 years from filing that year's annual report, whichever is later. A paper expense document can be replaced by a scanned copy only when the scan meets the bookkeeping rules, including marking it as a scanned document and signing it with an approved electronic signature. Otherwise, keep the original as well.
Practical Steps After Opening an Osek Murshe
The first year requires planning to avoid confusion or mistakes. Here is the detailed process:
- Register with VAT: Submit Form 821 through a representative or at the regional VAT office, or open your file through Keep for a one-time fee of 99 NIS plus VAT. The Tax Authority publishes no fixed processing time.
- Register with Income Tax and National Insurance: Open an Income Tax file with Form 5329 and notify National Insurance that you have started working as self-employed. The assessing officer sets your income tax advances, and an Osek Murshe who qualifies as a micro business may be exempt from them. National Insurance advances are a separate payment, due by the 15th of each month for the previous month.
- Open a Business Bank Account: This separates personal and business income, making cash flow management easier.
- Issue Tax Invoices: With Keep, you can generate invoices and send them to clients on every plan.
- Track Expenses: On Keep's recommended plan, upload business expenses through the app, as a photo or a file. To deduct the VAT on an expense, you need a tax invoice issued to your business.
- Periodic VAT Reporting: Submit a report every two months, or every month if annual turnover exceeds 1,775,000 NIS (as of 2026). The Tax Authority sets your reporting period, and the report and payment are due by the 15th of the following month. VAT reports come with Keep's recommended plan.
- Professional Support: On Keep's recommended plan, a personal accountant provides guidance and represents you before the tax authorities.
The law does not require a sole trader to open a separate business bank account, and VAT registration needs only a bank confirmation for the account the business will use. Still, the Tax Authority can examine any account that carries business income, so a separate account makes bookkeeping and cash-flow tracking much easier.
Manual vs. Digital Management Comparison
| Action | Manual Management | Digital Management with Keep |
|---|---|---|
| Invoice Generation | Handwritten, sent by mail | Digital invoice issued and sent to the client from the system, on every plan |
| VAT Reporting | Manual calculations, printed forms | VAT reports on the recommended plan |
| Expense Tracking | Collecting physical receipts | Upload to the app as a photo or file, on the recommended plan |
| Payment Tracking | Checking by hand who has paid | Document and payment status, and a list of clients who still owe, on every plan |
Smart Management Tips for Your First Year
To succeed in your first year, here are five tips to keep things organized:
- Plan Your Cash Flow: The VAT you collect from clients belongs to the state, so set it aside, minus the input VAT you can deduct on expenses. Also put aside a separate amount for your income tax and National Insurance advances.
- Use Efficient Payment Processing: Card and bit payments through Keep come with every plan, including an API for accepting card payments on your website, which is especially useful for e-commerce merchants. Plugins for Wix and Shopify come with the recommended plan.
- Track Recognized Expenses: Hold on to the documents for expenses like equipment or marketing, and ask suppliers for a tax invoice in your business's name. You can deduct input VAT only against a valid tax invoice, within 6 months of its issue date.
- Set Report Reminders: Mark your VAT and income tax reporting dates in a calendar. Filing a VAT report late carries a fine of 247 NIS for every two weeks or part of two weeks of delay (as of 2026).
- Get Support Early On: The first months raise many questions, and Keep's recommended plan includes a personal accountant for professional guidance.
Even when there is no money to pay right now, it is worth filing the VAT report on time, because the late-filing fine is separate from the charges for late payment. Late payment adds inflation linkage and interest, plus a surcharge of 0.25% for each week in the first six months of the delay and 0.5% for each week after that.
An Example: Moving from Osek Patur to Osek Murshe
Noa, a 29-year-old graphic designer from Tel Aviv, moved from Osek Patur to Osek Murshe status once it was clear her turnover would pass the Osek Patur ceiling. She was worried about VAT reports and tax invoices, but with Keep she issued tax invoices and digital receipts, and she chose the recommended plan, which includes VAT reports and expense uploads through the app. After a few months her day-to-day admin was in order, and she could focus more on clients and less on paperwork.
A common mistake in the first months is issuing a tax invoice before the client has paid. The VAT on that invoice goes into the report for the period in which it was issued, even if the money has not arrived. That is why many service providers first send a transaction invoice (heshbonit iska) as a payment request and issue the tax invoice when the payment comes in.
Tailored for Different Businesses
Solutions like Keep are suitable for a variety of businesses, helping every type of business owner manage their accounting smartly:
- Graphic Designers: Generate invoices for clients on every plan, and upload expenses on design software or equipment on the recommended plan.
- E-Commerce Merchants: Accept card payments on your website through an API and manage payments on every plan; the Wix and Shopify plugins and VAT reports come with the recommended plan.
- Consultants: Track income from sessions and issue tax invoices and receipts to clients without limit, on every plan.
- Store Owners: On the recommended plan, upload documents for inventory or operational expenses, with periodic VAT reports included.
Avi, a 37-year-old marketing consultant from Nes Ziona who is registered as an Osek Murshe, uses Keep to send payment requests for his business clients' monthly retainers, charge them by card and issue his tax invoices. With invoices and payments in one system, he spends less time chasing paperwork and more on his clients.
If you work with business clients, as designers and consultants often do, you need to know about allocation numbers: since June 2026 one is needed on a tax invoice above 5,000 NIS before VAT to a VAT-registered client. The business issuing the invoice requests the number, through its invoicing software or the Tax Authority's personal area, and writes it on the invoice. It is best done before the invoice is sent, because the client cannot deduct the VAT until the number exists. Sales to private consumers need no allocation number.
The Formula for Success in Your First Year
Your first year as an Osek Murshe doesn't have to be complicated. With proper planning and tools like Keep, you can open your business file and manage invoices, and on the recommended plan also upload expenses through the app; that plan also includes reports and payments to the tax authorities. Keep brings your invoices, payments and business data into one place, so it is easier to focus on growing your business.
The accounting for your first year does not end when the year does. You file an annual income tax report for it, which works out the final tax against the advances you paid, and National Insurance recalculates the year's contributions from the assessed income, then bills any shortfall or refunds any overpayment. So it is worth keeping a reserve even after the year closes.
Want to see how it works? You can start with Keep, and the first month is on us.
Frequently Asked Questions About Your First Year as an Osek Murshe
Does an Osek Murshe file VAT reports monthly or every two months?
A new Osek Murshe with annual turnover up to 1,775,000 NIS files every two months (as of 2026), and above that every month. The Tax Authority sets the period, not the business. The report and payment are due by the 15th of the month after the period, or the 19th if you report and pay online and are not required to file the detailed report. Detailed filers, such as individuals with turnover above 500,000 NIS, have until the 23rd.
Does a new Osek Murshe have to pay income tax advances?
Usually yes. The assessing officer sets the advances as a percentage of turnover and sends an advance booklet; you pay by the 15th of each month, or every two months if the booklet says so. An Osek Murshe who qualifies as a micro business, with turnover up to 122,833 NIS (as of 2026), may be exempt and pay the tax with the annual report. National Insurance advances are a separate obligation.
Can I deduct VAT on an expense with an ordinary receipt?
No. Input VAT is deducted only against a valid tax invoice issued to your business, or an import declaration, within 6 months of its issue date. An ordinary receipt, or a document from an Osek Patur, who charges no VAT, does not entitle you to a deduction. The expense itself can still be recognized for income tax if it serves the business, unless the business is on the micro-business track, which deducts 30% of turnover instead of actual expenses.
How much does Keep cost for an Osek Murshe?
An Osek Murshe pays the plan price, 39 NIS a month plus VAT on the basic plan or 105 NIS a month plus VAT on the recommended plan, plus an Osek Murshe surcharge of 123 NIS a month including VAT. Opening a file with the authorities through Keep costs a one-time fee of 99 NIS plus VAT. The annual report is not included in the monthly price; the recommended plan offers it at a special price. There is no commitment, you can switch plans at any time at no cost, and the first month is on us.
