Before setting up a business in any country, you should have a thorough understanding of the business laws and the legal formalities associated with starting a business venture in that country. Israel offers an environment that is appropriate for establishing and operating a business successfully.
In this article, we offer you a guide to setting up a business in Israel.
What Are The Different Types Of Business Entities In Israel?
The business entities that operate in Israel include:
A limited liability company with capital stock is the most common form of business entity in Israel. In a limited company, the liability of each of the shareholders is determined by the value of their shares.
A partnership can be a limited partnership or a general partnership. It is important for a limited partnership to have at least one general partner. A limited partner has no say in the managerial decisions of the partnership.
These kinds of business entities are usually found in transportation, agriculture and marketing operations linked to agricultural products. Cooperatives are built based on an ethical and social ideology of partnerships.
The members of the cooperative have joint purchasing power or joint ownership of the means of production.
Hospitals, charitable institutions and educational institutions are called non-profit organizations. They comply with a special set of rules and regulations dealing with their formation and operation.
How Can Foreign Companies Run Business In Israel?
Foreign companies that operate in Israel do so in either of the two ways.
- By registering a branch in Israel
- By working with an Israeli corporate subsidiary
A subsidiary is a separate legal entity that has a foreign company as its shareholder.
For a foreign company to run its business in Israel, it has to be registered as a “foreign company” under the Israeli Companies Law 1999. Foreign companies in Israel tend to operate through an Israeli Corporate subsidiary rather than by opening a local branch. Other considerations like tax may also affect the structuring decisions of foreign companies in Israel. To know more about the legal formalities linked to starting a business in Israel, get in touch with an expert Israeli attorney in the US.
If a foreign company starts its business operations in Israel without researching much about the country’s business laws and taxing system, it may face many operational difficulties.