Businesses and complex debt
The path is primarily for ages 13–18 and adult beginners. Younger children can learn alongside a parent or teacher. Levels describe prior knowledge, not a guarantee of suitability for every age.
What you will learn
- Explain the difference between incorporation and VAT classification.
- State a difference between money in the company's account and salary paid to an employee.
- Explain the example in your own words and check the calculation.
Practice example
What is a legal entity?
Noa runs a business as an individual and is an authorised VAT dealer. Yoav registers a company. Noa’s VAT status does not turn her business into a company; Yoav’s company is a separate legal person.
Explain the difference between incorporation and VAT classification.
A Business: Sole Proprietor and a Limited Company (Ltd.)
A fictional company has 20,000 ₪ in its account. The shareholder cannot assume that the entire amount is freely available personal money; there are liabilities and rules for transferring funds.
State a difference between money in the company's account and salary paid to an employee.
Recommended sequence
- What is a legal entity?
A legal entity is an organisation recognised by law as a separate legal person. A company is one type, but not the only type.
Level 6 · 5 minutes to read - A Business: Sole Proprietor and a Limited Company (Ltd.)
A company is a separate legal entity; 'Ltd.' indicates limited liability of the shareholders under the law.
Level 6 · 5 minutes to read - Issuing and trading shares: who receives the money?
Issuing new shares can raise money for a company. In trading between investors, the seller usually receives the money.
Level 6 · 4 minutes to read - Private company and public company
Private and public describe a legal status related to the company's shares; Ltd. describes liability, not the same classification.
Level 6 · 5 minutes to read - Exempt Dealer and VAT-Registered Dealer: Exempt from What?
Exempt Dealer and VAT-Registered Dealer are classifications for VAT purposes; being exempt does not mean exempt from all taxes.
Level 6 · 5 minutes to read - Transaction Invoice, Tax Invoice and Receipt
A transaction invoice documents a transaction; a tax invoice is a tax document; a receipt documents the receipt of payment.
Level 6 · 5 minutes to read - What is an allocation number for an invoice?
An allocation number is a number from the Tax Authority in the context of Israeli invoices, in addition to the business's invoice number.
Level 6 · 5 minutes to read - Company, Corporate Tax and Undistributed Profits
Company money is not automatically the private money of the shareholder.
Level 6 · 4 minutes to read - Wallet company: a company is not a tax shortcut
A wallet company is a term used in a tax context, not a separate form of incorporation in the Companies Registrar.
Level 6 · 5 minutes to read - Personal insolvency: what is bankruptcy?
Insolvency means being unable to pay debts when due, or having liabilities greater than the value of assets.
Level 6 · 5 minutes to read - Company insolvency: rehabilitation or liquidation
A company may be insolvent if it cannot pay debts when due, or its liabilities exceed the value of its assets.
Level 6 · 5 minutes to read
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