If I sell baked goods from home (Israel)

kalsee

Sun, Aug 20 2023, 6:49 am

If you want to do it legally, then you register as a business

If your yearly income is under a certain amount (average 9000 shekel a month) then you register as a עוסק פטור and you don't have to pay or collect VAT (מעמ)

June

Sun, Aug 20 2023, 7:07 am

You're supposed to register as a business and pay taxes from the first shekel you earn.

The osek patur/murshe difference is not as simple as your annual income, because certain businesses can never be patur. I don't know which category baked goods fall under, but it might be subject to VAT.

Also, if you are a food business you have to register with misrad habriyut, and one of their requirements is that you have a separate commercial kitchen for your business.

Basically it's illegal to run a side biz selling homemade goods. You have to decide if you care about that or not.

amother

Hibiscus

Sun, Aug 20 2023, 9:29 am

June wrote:

So your first sentence is saying, if a 15 year old girl babysits for neighbors and earns 100 shekel a year, or makes and sells slime to her little neighbors and earns 50 shekel a year, she needs to be registered as a business. That can’t be right. (Cost of registering is probably more than the year’s earnings, for one thing.)

banana123

Sun, Aug 20 2023, 9:37 am

amother Hibiscus wrote:

It's free to register.

Everyone understands that a teenager making pennies babysitting is doing it technically under the table, but no one really cares. But yes technically she should register.

amother

Hibiscus

Sun, Aug 20 2023, 9:41 am

banana123 wrote:

It's free to register.

Everyone understands that a teenager making pennies babysitting is doing it technically under the table, but no one really cares. But yes technically she should register.

I don’t know about Israeli law, but United States law allows for the first certain minimal amount to be earned without needing to pay taxes.

ETA: I just checked it up; for a single in USA, for first earnings under $12, 950 don’t need to pay taxes; and for head of household if under around $20k-depending whether under/older 65 years.

banana123

Sun, Aug 20 2023, 9:43 am

amother Hibiscus wrote:

I don’t know about Israeli law, but United States law allows for the first certain minimal amount to be earned without needing to pay taxes.

Registering doesn't mean you pay taxes.
The teenager above isn't going to pay taxes but should technically still be registered.

amother

Sun, Aug 20 2023, 9:43 am

June wrote:

so if there's a lady selling kugels every Friday she either has a commercial kitchen or she's doing something illegal?

notshanarishona

Sun, Aug 20 2023, 9:46 am

Most home businesses are illegal technically.
Personally I don’t think it’s so bad, the government makes it practically impossible to do things legally from home. I do think taxes should be paid especially if you get any benefits , but permits are a waste.

amother

Hibiscus

Sun, Aug 20 2023, 9:46 am

amother OP wrote:

so if there's a lady selling kugels every Friday she either has a commercial kitchen or she's doing something illegal?

It’s true, there are kids whose lemonade stands have been taken down for this reason. Doesn’t exactly make it sensible.

LovesHashem

Sun, Aug 20 2023, 9:49 am

notshanarishona wrote:

Agreed. I think if someone is just starting out a business there's no reason for it to be legal.

I don't mean like a real storefront business. Like something like this, or nails, or copy writing etc. Once it takes off and you have regular clients and can afford an accountant you should get on the books. But someone who is getting a couple orders here and there and is just trying to get off shouldn't stress themselves about the beuroctatic side of stuff.

June

Sun, Aug 20 2023, 10:14 am

Yes, most home businesses, especially those run by chutznikim, are illegal.

I also know people with homemade food businesses who are on the books, meaning they report their income and pay taxes, but they don't have a misrad habriyut permit.

Unfortunately Israel makes it really hard to start your own business. (Unless maybe you're a startup; Idk enough about that sector.)

B'Syata D'Shmya

Sun, Aug 20 2023, 10:34 am

The better question is what happens if you are busted? Is it worth the nervous feeling, uncertainty and tension?
Ask a professional and do it by the books. If its just once in a while, you may be surprised by the answer.
What are you doing about getting a hechsher? You may need to ask a Rav if you need one.

amother

Sun, Aug 20 2023, 11:30 am

B'Siyata DiShamaya wrote:

so I should build a commercial kitchen to sell cookies on Fridays??

June

Sun, Aug 20 2023, 11:33 am

amother OP wrote:

so I should build a commercial kitchen to sell cookies on Fridays??

You could share space with another kitchen, theoretically.

But it's very, very unlikely you'll ever get busted. I was just telling you what the law is.

B'Syata D'Shmya

Sun, Aug 20 2023, 7:36 pm

amother OP wrote:

so I should build a commercial kitchen to sell cookies on Fridays??

Thats up to you. You asked an honest question and got some answers. Balls in your court.
Personally I wouldnt buy from a home based business if they dont have hashgacha on their kashrus and dont respect local laws which are intended to protect and ensure safety etc. The laws for businesses are there for a reason. Taxes are in place for a reason even as I resent them, as an adult I contain myself and try to do the right thing. I honestly believe in oversight and accountability.
Its OK if you dont.
Good luck with your business, I hope it grows and your next question is what Kollel to adopt!!

amother

Beige

Sun, Aug 20 2023, 7:40 pm

amother OP wrote:

so I should build a commercial kitchen to sell cookies on Fridays??

When I lived in E”Y we sold apple and potato kugels every Friday. It was small change, just to pay the grocery bill, maybe 200 nis a week. I didn’t even think to get a license .

LovesHashem

Mon, Aug 21 2023, 1:58 am

B'Siyata DiShamaya wrote:

Gosh the gov is not going after her small business. They are going after the many illegal businesses that are raking in 10k or 25k a month. There's thousands of those.....

It's not worth their time.