When you close a business in Israel, you must report this to Mas Hachanasa (the income tax office), Bituach Leumi (National Insurance), Maam (VAT office) and your pension company. Failure to do so will result in your continuing to be liable for reporting and taxes.
Reporting the closure of your Osek Patur or Murshe should be done as soon as possible. These are the forms that you or your accountant must fill out:
- Declaration to Maam (up to 15 days from closure)
- Form 2550 to Mas Hachnasa (up to 90 days from the date you closed down)
- Form 2552 if you have employees
- Form 6101 to Bituach Leumi (with attached proof from Maam or Mas Hachnasa)
Other things you may need to take care of include:
- Severance and other payments that might be due to employees
- Letting your municipality know about the business closure if you were paying Arnona as a business owner
- Canceling any insurances
- Canceling relevant phone and internet services
- Announcing on social media and directly to your customers that your services or products are no longer available
After the business closes
You will have to report your business profits for the calendar year in which you closed down, even if you only operated for a few months.
All paperwork related to the business should be saved for seven years in case of an audit.
If you’ve closed your business in order to become an employee (including of an Employer of Record service), you can ask your new employer to contribute to the same pension fund you were using as a business owner. You will have to be in touch with your pension company (either directly or through an agent) to set this up.
Closing your business might feel like the end of an era, but hopefully it’s the beginning of many wonderful things to come in your professional life.