Employer of Record services are becoming more and more popular in Israel and for good reason! They have the reputation of being specifically for US citizens who want to avoid being self-employed and therefore required to pay 15% of their income to US Social Security. But this is far from the only purpose they serve, and EORs are definitely not only for US citizens.
Save the hassle and expense of accounting
When you get paid from abroad, you set yourself up legally and report your income to the Israeli government. If you do this by registering as a freelancer, you need to conform to all the rules of freelancing, including invoicing, sending receipts, reporting your income bi-monthly or annually (depending on how much you make), deducting expenses and paying VAT (if you earn more than 120,000 annually).
If you’re employed by an EOR, the company you work for pays the EOR and the EOR provides you with an Israeli pay stub, with taxes and other payments automatically withheld. You don’t need to hire an accountant or spend hours on pesky office work that takes you away from your actual job.
Save on currency exchange
Getting paid in foreign currency? As a freelancer, you have to maintain a bank account abroad or have foreign currency deposited in your Israeli account. You live in Israel, which means your expenses are all in shekels, so it’s pretty inconvenient and expensive to be constantly converting foreign currency so you can pay your bills. International bank transfers can be expensive on both ends and the company abroad may not like paying extra each month for the privilege of paying you. Some companies will just flat out refuse to pay into a bank account outside of their country.
EORs take the burden off you. They may have bank accounts in other countries or accept the transfers into their Israeli account and take care of converting to shekels without your involvement. You get paid in shekels directly into your Israeli bank account and can pay your bills without any hassle.
Get a stable paycheck
With an EOR, you get paid the same time of the month every month. Taxes and other payments are already withheld and you don’t have to guess what your take home pay actually is. Freelancers are often unable to tell you how much they earn, since so many payments are taken off after they get paid by their clients and these payments aren’t the same every month. So there’s value in seeing it all spelled out clearly on your pay stub and only getting money in the bank which is actually yours to spend.
When you ask the bank for a loan or mortgage, it’s easy to show your income by producing your pay stubs. Banks sometimes look askance at freelance income, considering it less stable than income earned from a job, so having a pay stub can be a big advantage there.
Is an EOR right for you?
It’s hard to know if an EOR is right for you without knowing the specifics of your job, income and finances. We recommend booking a consultation with us to discuss the details of your particular situation. Whether you have already accepted a job, have been working abroad for a while or are considering accepting a new job, we can help you figure out the best way to structure this. At Route 38, we give you the best advice tailored specifically to you, with your best interests front and center. Email us at info@route38.co.il to book your consultation.