End-of-Year Financial Checks for Israeli Freelancers and Business Owners

As the tax year draws to a close, self-employed individuals and business owners in Israel are advised to conduct thorough financial reviews to ensure they are not missing out on potential tax benefits, grants, and compensation. Financial advisor Maor Eliasi suggests focusing on three key questions: whether contributions align with profits, if insurance coverage is adequate for current activities, and if any entitlements have been overlooked.

The first step involves consolidating an up-to-date picture of income, savings contributions, and liabilities. Changes in business profits, family status, or operational scope may necessitate adjustments to past decisions. Eliasi emphasizes checking that pension contributions meet legal requirements and are appropriate for income levels, recommending consultation with an accountant or tax advisor regarding potential additional contributions for the 2026 tax year and their tax implications. For those working both as employees and self-employed, contributions from both income sources must be considered. Furthermore, it's crucial to review coverage for loss of work capacity or death, ensuring it matches income and family circumstances.

Contributions to study funds (קרן השתלמות) also require attention. Eliasi advises evaluating these contributions against income and relevant ceilings to understand expected tax benefits before making further deposits, while also considering immediate business and household needs. For existing funds, reviewing management fees and investment track suitability is recommended. Eliasi also notes that not all available funds should be directed to long-term savings; some should remain liquid, depending on when the money might be needed, risk tolerance, and cash flow.

Business insurance policies should be updated to reflect current operational realities, including changes in revenue, employee numbers, equipment, services, or work methods. Eliasi suggests reviewing coverage for professional liability, third-party liability, property, employer liability, and cyber risks. Personal income protection should also be assessed, considering compensation amounts, waiting periods, and conditions in case of illness or accident preventing work.

Businesses affected by security situations should investigate available compensation schemes based on their location, the duration of the impact, and eligibility criteria. Eliasi recommends gathering income reports, invoices, cancellation documents, and records of operational cessation. Self-employed individuals who served in the reserves should check their National Insurance reports and received benefits, noting that they may be eligible for an additional 25% compensation. Those combining employment and self-employment must ensure their status is updated accordingly. Low-income self-employed individuals might qualify for a work grant.

Applications for the 2024 tax year can be submitted until December 31, 2026, allowing individuals who haven't yet checked their eligibility to do so. Receipts for donations to eligible institutions should also be collected and discussed with a professional for potential tax benefits. Eliasi concludes that year-end reviews should integrate business and household needs, with joint consultations with financial professionals helping to identify necessary adjustments in savings, coverage, and expenses for the current tax year.