Many self-employed individuals starting out are convinced that an exempt business owner is a type of "small business," some cute label meant for those who earn little. In reality, it's much more precise than that. An exempt business owner is not a profession, not a definition of the type of service, and not a way to present yourself. It's simply an accounting category whose purpose is to say one thing: how much money you bring in per year.
In other words, the real question is not what you do, but how much you do it for. You can be a financial consultant, photographer, graphic designer, air conditioning installer, fitness trainer, translator, or even a content creator, and as long as you're below the annual turnover ceiling set by the tax authority, you can be an exempt business owner. No one asks what the nature of the service is, but rather what the size of the transactions you conduct during the year is.
So it's only related to the level of income?
An exempt business owner is determined by your annual turnover, not by the type of income.
That's it.
The ceiling changes every year, and once you're below it you can register as an exempt business owner. It doesn't matter if you're selling oil paintings, installing computers, or providing legal advice. The state only looks at the numbers. Nothing else is taken into consideration.
And what about the type of business? Are there professions that are not allowed to be exempt business owners?
There are specific cases where you cannot be an exempt business owner even if your income is low, but this is not related to the number, it's related to the professional category. For example, certain liberal professions must be a licensed business owner: doctors, architects, psychologists, engineers, and other limited groups defined by law. But most self-employed people in Israel, about 95 percent, don't touch these areas at all.
Therefore, for most people, the type of occupation is not limiting. As long as it's not a profession that requires special licensing or a specific definition in law, you can be an exempt business owner regardless of the nature of the service.
So who is suitable to be an exempt business owner?
Someone who is starting out, slowly building a client base, working on the side, or starting a freelance path. Someone who earns relatively small amounts per month, someone who provides occasional service without significant expenses, or someone who works with private clients and not with large companies.
Later, when you grow and reach higher turnover, you move to a licensed business owner. But the beginning, for too many people, is accompanied by unnecessary fear. An exempt business owner was created precisely for you: a legal, simple, and non-threatening start.
The bottom line
An exempt business owner is a matter of numbers, not profession.
The annual turnover ceiling is what determines it, and almost anyone below it can usually be an exempt business owner.
To open an exempt business owner account with one click, click here