Key Takeaways
- You open an Osek Murshe by registering with three authorities: Form 821 opens the VAT file, Form 5329 opens the Income Tax file, and National Insurance registration is separate. The VAT application goes through a representative linked to SHAAM, such as an accountant, tax adviser or lawyer, or in person at the regional VAT office.
- If your annual turnover exceeds 122,833 NIS (as of 2026), you must register as an Osek Murshe. In some professions, such as law, accounting, medicine and engineering, Osek Murshe registration is required whatever your turnover.
- An Osek Murshe charges VAT, issues tax invoices and deducts the VAT paid on business expenses. It files a VAT report every two months, or every month if turnover exceeds 1,775,000 NIS (as of 2026), by the 15th of the month after the reporting period.
- An Osek Murshe is not a separate legal entity, so you are personally liable for the business's debts. Separating your personal assets from the business requires a limited company (Ltd.).
- With Keep, an Osek Murshe pays the plan price plus a surcharge of 123 NIS a month, VAT included, and opening a file with the authorities is a one-time 99 NIS plus VAT. Unlimited tax invoices come with every plan, while a personal accountant and reports to the tax authorities come with the recommended plan.
Why Open an Osek Murshe (Licensed Dealer)?
Before diving into the details, let's understand why it's worth opening an Osek Murshe. The advantages are numerous and significant:
- Credibility - Customers and suppliers tend to trust registered businesses more. It conveys professionalism, seriousness, and legal compliance.
- VAT deduction on expenses - An Osek Murshe deducts the VAT it paid on business expenses from the VAT it charged clients, and when the VAT on expenses is higher, it gets a refund. Deducting recognized expenses and depreciation for income tax is open to every self-employed person, Osek Patur included.
- Growth potential - An Osek Murshe can issue tax invoices, which business clients need in order to deduct VAT, and it can also access financing and capital raising opportunities. Any registered business, Osek Patur included, can hire employees once it opens a withholding file.
Keep in mind: an Osek Murshe, like an Osek Patur, is not a legal entity separate from you. In law, you and the business are the same person, so you are personally liable for the business's debts, and creditors can also pursue your personal assets. If you want to separate your personal assets from the business, consider a limited company (Ltd.), which has its own costs and reporting duties, and even then banks sometimes ask for a personal guarantee.
How to Open an Osek Murshe: Step by Step
Step 1: Opening Files with Tax Authorities
In this step you open files with the Income Tax Authority, VAT, and National Insurance. An Osek Murshe file is opened either through a representative such as an accountant, tax adviser or lawyer who is linked to SHAAM (the Tax Authority's computer system), or in person at the regional VAT office with the documents. The online application on the Tax Authority website is meant for an Osek Patur.
- Income Tax - Fill out Form 5329 (Report of Personal Details and Declaration of Income Sources) with personal details, business details, and a description of your occupation.
- VAT - Fill out Form 821, the VAT registration form, to register as an Osek Murshe (licensed dealer).
- National Insurance - Fill out Form 6101 (multi-year report) with personal details and estimated income.
Step 2: A Bank Account for the Business
An Osek Murshe who is an individual does not have to open a separate business bank account, but it is recommended: a separate account lets you separate personal funds from business funds and simplifies bookkeeping. The bank account confirmation is attached to the VAT application itself, so it is worth arranging the account before Step 1. A joint account of spouses is also accepted if both sign a declaration that the account will also serve the business.
Step 3: Issuing Tax Invoices
As a licensed dealer, you're required to issue an invoice for every transaction and a receipt for every payment you receive. You may issue a tax invoice instead of a transaction invoice, and you must issue one when the customer asks for it. An invoice includes, among other details, the business name, address and licensed dealer number, the date, the customer's name, a description of the service or product, the quantity, the price and the total. A tax invoice also shows the VAT amount separately and, when the customer is a dealer, the customer's VAT number. As of September 2026, a tax invoice for more than 5,000 NIS before VAT needs an allocation number from the Tax Authority so that the customer can deduct the VAT on it.
Step 4: Bookkeeping
Every Osek Murshe is required to keep books according to the Israel Tax Authority's bookkeeping directives. Proper bookkeeping includes recording all income and expenses and maintaining all relevant documents.
After registering with VAT, you receive a temporary Osek Murshe certificate, and the permanent one is sent by post, usually a few weeks later. An individual's dealer number is their ID number, and it appears on every tax invoice, transaction invoice and receipt. The certificate is displayed prominently at your place of business.
What to Know Before Opening
- Business type - Your business type will affect the opening process and your obligations. There are differences between product-selling and service-providing businesses.
- Expected scope - The expected activity scope will influence whether to register as an Osek Patur or Osek Murshe. Above an annual turnover of 122,833 NIS (as of 2026) you must register as an Osek Murshe, and in some professions, such as law, accounting, medicine and engineering, Osek Murshe registration is required whatever your turnover.
- Business name - Choose a catchy, memorable name relevant to your field. It is worth checking that it does not clash with a registered trademark or an existing company name: there is no register that reserves a name for an osek, and if you want to protect it, you can register a trademark.
- Insurance - Check which insurance suits your business: professional liability, third-party, building insurance. These are usually not legally required, but some licensed activities must be insured, compulsory motor insurance applies to any vehicle, and landlords, lenders or clients sometimes require cover.
- Business plan - It's recommended to prepare a business plan including business description, target market, competition, marketing, and financial forecast.
Below the ceiling, and in a field that does not require Osek Murshe registration, the decision depends mainly on your clients and your expenses. A business client registered as an Osek Murshe deducts the VAT on your invoice, so VAT does not make your service more expensive for them, while a private client pays the VAT (18%) out of pocket. A business with high expenses, such as equipment or materials, benefits from an Osek Murshe's right to deduct the VAT on them.
Reporting and Tax Payments
Licensed dealers are required to file reports and pay taxes on an ongoing basis:
- Income Tax - Filing an annual report and paying tax advances. The assessing officer sets the advances as a percentage of the business's turnover, excluding VAT.
- VAT - Filing periodic reports and paying the difference between the VAT you charged and the VAT you may deduct on business expenses. The Tax Authority sets the frequency by turnover: up to 1,775,000 NIS a year you report every two months, and above that every month (as of 2026).
- National Insurance - Monthly national insurance payments.
It's advisable to consult with an accountant regarding reporting and payment procedures. An accountant can help you save money and ensure you meet all your obligations.
You file the VAT report, and pay the VAT and the income tax advance, by the 15th of the month after the reporting period, and in most cases by the 19th if you report and pay online. Even in a period with no activity, you file a zero VAT report. National Insurance advances are set according to the income you declared, and if your income changes by at least 10%, you can ask to have them updated.
How Keep Helps You
At Keep, we understand that opening an Osek Murshe can be challenging. That's why we developed a user-friendly platform to help you with opening your file and day-to-day management:
- Opening files with the tax authorities - Keep can open your files with the tax authorities for a one-time fee of 99 NIS plus VAT.
- Tax invoice generation - Generate digital tax invoices, send them to customers, and track payments.
- Bookkeeping - Income, expenses and profit on one dashboard on every plan, and uploading expenses in a click (photo or file) on the recommended plan.
- Reports to the tax authorities - Reports and payments to the tax authorities and VAT reports, on the recommended plan.
- Accountant guidance - A personal accountant for professional guidance and representation before the tax authorities, on the recommended plan.
An Osek Murshe pays Keep 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 a surcharge of 123 NIS a month, VAT included. Opening a file with the authorities is a one-time 99 NIS plus VAT, and on the recommended plan the annual report is offered at a special price and is not included in the monthly price. There is no commitment, and you can switch plans at any time at no cost.
Tips for New Business Owners
- Plan your budget - Prepare a structured financial plan including all expected expenses and income.
- Know the laws - Learn the relevant laws and regulations: labor laws, consumer protection, and VAT law.
- Stay organized - Organized management of documents and accounts saves time and money.
- Consult professionals - Don't hesitate to consult with an accountant, business advisor, or lawyer.
- Invest in marketing - Don't expect customers to come on their own. Invest in marketing to reach your target audience.
- Be patient - Building a successful business takes time. Don't give up if you don't see immediate results.
A common mistake among new Osek Murshe owners is to treat the VAT collected from clients as income. After deducting the VAT on expenses, that money goes to the Tax Authority in the next report, so it is worth setting it aside as soon as a payment comes in. Books and documents are kept for 7 years from the end of the tax year, or 6 years from filing that year's annual report, whichever is later.
Summary
Opening an Osek Murshe is a significant step toward building a successful business. The process includes opening files with tax authorities, getting a bank account confirmation, issuing invoices, and maintaining proper bookkeeping.
At Keep, we're here to help you with opening your file and day-to-day management, and to make the process simple and organized.
An Osek Patur whose turnover passes the ceiling (122,833 NIS, as of 2026) must register as an Osek Murshe, and as an Osek Murshe it charges VAT, issues tax invoices and files periodic VAT reports. It is worth contacting the VAT office or an accountant as soon as your turnover approaches the ceiling.
Frequently Asked Questions About Opening an Osek Murshe
Can you open an Osek Murshe online?
Not in the same way as an Osek Patur. The online application on the Tax Authority website is meant for an Osek Patur, while an Osek Murshe file is opened through a representative linked to SHAAM, such as an accountant, tax adviser or lawyer, or in person at the regional VAT office with Form 821 and the documents. With Keep, you can have your files with the authorities opened for a one-time 99 NIS plus VAT.
What is the difference between an Osek Patur and an Osek Murshe?
An Osek Murshe charges clients VAT, issues tax invoices, deducts the VAT on business expenses and files periodic VAT reports. An Osek Patur does not charge VAT, issue tax invoices or deduct VAT, and once a year, by 31 January, it files a declaration of the previous year's turnover. You can be an Osek Patur only up to an annual turnover of 122,833 NIS (as of 2026) and in a field that does not require Osek Murshe registration.
What documents do you need to open an Osek Murshe?
The VAT application includes a completed and signed Form 821, your ID card, the lease or purchase contract for the place where the business operates, a bank account confirmation and proof of expected activity, such as invoices for equipment you bought or an agreement with a client. In some fields the Tax Authority may ask for more documents. An individual does not need a separate business bank account; an account in your name is enough.
Does an Osek Murshe have to pay income tax advances?
Usually, yes. The assessing officer sets the advances as a percentage of turnover excluding VAT, and you pay them every month, or every two months if that is the schedule set in your advance booklet. An Osek Murshe with annual turnover up to 122,833 NIS (as of 2026) who meets the conditions for a micro business may be exempted from advances. If your income drops, you can ask the assessing officer to reduce the advances.
