Opening a file with the National Insurance Institute is an integral part of starting a business in Israel. From the moment a person becomes self-employed, they are required to report this to the National Insurance Institute and pay insurance premiums according to their income level.
Proper registration allows the business owner to enjoy insurance coverage in case of illness, accident, pregnancy, periods of work disability, and even certain allowances. Understanding the process of opening a file, the requirements, and the financial implications will help every self-employed person start their business journey correctly and in an organized manner.
What is a National Insurance file?
A National Insurance file is a registration in which the status of the business owner as self-employed is defined. From the moment the file is opened, the National Insurance Institute calculates the amount of insurance premiums the self-employed person must pay and grants them rights according to the law. Reporting is mandatory, even if the initial income is low, and failure to register may result in unnecessary debts or loss of insurance rights.
The file includes information such as the type of activity, estimated working hours, expected income, and the amount of monthly payment. This information allows the National Insurance Institute to distinguish between a primary self-employed person and a self-employed person who does not meet the definition, which directly affects the amount of insurance premiums.
Who is required to open a National Insurance file?
Anyone who starts working as self-employed must declare this to the National Insurance Institute. This includes freelancers, service providers, exempt practitioners, licensed practitioners, and business partners. Even someone who runs a small business from home on a limited scale must register once the activity generates income.
Someone who establishes a private company and is defined as a controlling shareholder of the company is also required to register, but their payment mechanism is different and is integrated with a salary slip they withdraw from the company. Additionally, there are cases where a person is considered both an employee and self-employed simultaneously. In this situation too, there is an obligation to open a file and report on the self-employed activity.
How do you open a National Insurance file?
Filling out a report form on starting work as self-employed
The first step is to fill out a dedicated form in which you declare the start of work as self-employed. In the form, you specify the nature of the business, the scope of activity, the estimated number of working hours, and the expected monthly income. This information will serve as the basis for determining the amount of insurance premiums.
Attaching identification documents and business details
You are required to attach a copy of an ID card and sometimes additional documents such as a lease agreement for the business premises or confirmation of opening a file with the Income Tax Authority. These documents allow the National Insurance Institute to verify the nature of the activity and the identity of the business owner.
Submitting the report on the website or at the regional office
You can report the opening of the file online through the National Insurance Institute website or visit the regional office in person. Online reporting is quick and convenient, but in some cases, you may need to visit in person to present documents or complete details.
Determining the amount of insurance premiums and defining the status
After opening the file, the National Insurance Institute calculates the insurance premiums according to the information provided by the self-employed person. Additionally, it is determined whether they are defined as a primary self-employed person or as a self-employed person who does not meet the definition. This definition affects the amount of payment and insurance rights. It is possible to update the information during the year according to changes in income.
What happens after opening the file?
From the moment the file is opened, the self-employed person is required to pay insurance premiums on an ongoing basis, usually through a standing order or periodic charge. Failure to make payments may create debts that will accumulate interest and linkage. Therefore, it is recommended to update income on an ongoing basis and adjust insurance premiums to the actual business situation.
In addition to paying insurance premiums, it is important to understand that registration with the National Insurance Institute grants the business significant rights. A self-employed person who is injured, becomes ill, or enters a period of inability to work may be entitled to allowances, injury compensation, or other rights. Timely registration ensures that there will be no delay in rights when needed.