What I want to do is this post, is briefly cover why I use Paypal for the majority of my online transactions and then also go into some specifics of using Paypal as an Israeli. Especially for the niches that I operate in, Paypal works extremely well. In the business to business marketplace, Paypal is
Especially in Jerusalem, it seems that networking OFFLINE is the new online. It is rare that a week goes by when there is not a networking event to attend. Obviously, there are regular groups that meet such as GBN and BNI, but I am referring to specific events which are put on to ‘get people
Hi, Just a bit of an introduction on why I chose to create this blog and more importantly what I hope to achieve. I’ve been doing business in Israel for about 6 years now. 5 of those as an atzma’i (freelancer) and the last few months as a company. In another post, I will probably
In 2013, I changed my business to be part of a company rather than an atzma’i. What I want to do in this blog post is to explain the advantages and disadvantages of doing this as well as the differences. I am NOT an accountant, so please do take your own advice, but hopefully this
Edit: As of 2016, this information is mainly outdated as there is now officially Netflix in Israel, so there is no real need to use a VPN. However, you can still use a VPN if you would like to see Netflix from another country where there may be a different choice. So, although this
In 2013, I changed my business to be part of a company rather than an atzma’i.
What I want to do in this blog post is to explain the advantages and disadvantages of doing this as well as the differences.
I am NOT an accountant, so please do take your own advice, but hopefully this post will give you an idea of what questions you should be asking.
As a sidenote, as an American there will be different considerations. The difference being that you will have to pay National Insurance also in America as a freelancer which can make some fairly large differences to your take home.
(I am not an American!)
In simple terms, as an atzmai, you can be osek patur or osek murasha. If you are osek patur, then you don’t charge VAT (Ma’am), but you also aren’t able to claim back VAT from purchases. The way to decide is whether you earn a certain amount of gross income per year. It is around 100,000nis.
If you earn over this amount and are an atzmai, then you will need to charge any Israeli company or person VAT for your services (currently 17%).
When you make a purchase for your business, you will be able to claim back 17% of the purchase price of anything that you buy in Israel where you are charged VAT – almost all purchases with a few exceptions.
As an atzmai, the taxes that you pay (apart from VAT) are bituach leumi (national insurance) and mas (income tax). These are both calculated by your net income according to your tax return of a fiscal year (1st January-31st December).
Every month (or two depending on your income level), you will pay a certain percentage of your gross income as tax in form of mikdamot (advanced payments) as well as National Insurance. You are told the amounts to pay by calculations done by the tax office based on previous years.
In my experience, these have been between 7-17% of my gross income, although they will depend vastly on your business.
For example, if you are selling 20m NIS a year, but only making 1% profit, then it would be crippling to be paying 7% when in reality, you should be paying less than 1/2%.
Once again, you will not lose or gain by underpaying or overpaying as you will need to pay or receive the balance when your end of the year tax return is filed by your accountant.
However, a word of warning…
As tempting as it is, you don’t want to underpay.
What this will mean, is that once you do a tax return, you will owe the government money and you will NOT have a choice whether to pay them or not. It’s an awful situation to be in as you will need to either find the money somewhere – likely that you don’t still have – or set out a payment schedule with them that means that you will have to pay it off over months or years.
On the other side, you don’t really want to overpay either as it means that you are spending money which you may not have. However, ultimately you will get this money back.
You will pay or receive interest depending on whether you over or underpay and it is at a higher rate than a bank.
However, for your sanity and also knowing where you stand financially, you want the percentage to be as accurate as possible both with your income tax and with your national insurance. If necessary, you can change the amounts that you pay if you predict that they are too high or too low.
As a company, things work slightly differently but make use of the same concepts.
As an owner of a company, you have a few ways of getting money out of the company into your personal bank account.
The first is by paying dividends and the second is by paying yourself a salary.
If you are paying yourself a salary, then you are treated more or less as a normal employee for tax and national insurance purposes.
If you pay yourself a dividend, then you will pay a percentage of that dividend payment as tax to the company.
The trick is, to balance your payments so that you have the correct combination of dividend payments and salary so that you can minimise the tax that you pay.
The difference really comes with the bituach leumi payment. There is a limit in the maximum amount of bituach leumi that you will need to pay however much you earn.
(It gets a bit complicated, but try and follow me on this one…)
For this example, let’s say that the maximum anyone in the country will have to pay is 5,000nis a month (60,000) shekels a year.
As Bituach Leumi at the higher level is approximately 10% of your pay, this means that after you earn 50,000nis a month you are not increasing your payment in terms of bituach leumi.
That is great. However Bituach Leumi sometimes changes the limit.
For example, in recent years they doubled the maximum to about 10,000nis a month.
At one point in the past, they actually took away the limit entirely.
What this meant, was that at the higher salary level employees would be paying an unlimited amount of bituach leumi and their take-home pay would be lower.
So, if you are at the higher salary level, one way of avoiding paying so much bituach leumi would be to be paid as a company and then you would not be paying as much as a salary but take out the additional money as a dividend.
As an aside, there is nothing illegal about doing this. There is a concept in Israeli law that you are actually allowed to minimise your tax payments as long as you keep within the law.
In summary, from a tax point of view you want to calculate if it would be cheaper to pay tax as an atzmai (income tax+bituach leumi) or as a company (income tax + bituach or dividends/income/corporation tax).
The calculations are not so simple and you would need to see an accountant to do the maths, but as a rule of thumb if you are earning above 60,000nis a month as an atzma’i then it might be worth doing.
However, it is not all rosie on the other side… 😉
A big disadvantage is that you need to pay a bookkeeper to do your accounts. This make be anywhere between 1,000nis to 5,000nis plus a month depending on the complexity and volume of your business. This can really eat into any savings that you make.
So, let’s briefly look at the advantages/disadvantages:
1. Extra costs involved such as bookkeeper, company registration (about 1,200nis a year) and accounting fees. You will also need to pay a lawyer to set it up (approx 1,000nis?)
2. You will need to have an annual audit by your accountant leading to increased fees.
3. You have to have a dedicated bank account to your business. A company account in a bank also has increased fees. And generally NOT an overdraft.
4. With a company, you need to do double-entry bookkeeping. As mentioned above, you will generally pay someone else to do this so you don’t need to technically know what this is. However, in practice what this means is that your accounts need to balance. ie. you need to note every single penny that comes in or out. Hard to explain why that is hard, but what it means is that if you take money out of the company then that needs to be accounted for.
5. I only discovered this was recently, but if you are a company then you are unable to take another person or company to small claims court meaning that any legal fees will be far higher.
1. If you are sued, then you are not sued personally unless it can be proven that it is you personally who was liable. That means, that the total amount that you can be sued for is to the limit of your company’s assets.
If you were sued personally then in theory, you may need to sell all of your personal assets also. Therefore operating through a limited company does give yourself a certain amount of protection legally.
2. You have more control over taxes as explained above. Also, you are able to carry over losses to the next year to reduce your tax expenditure in the future. I am not 100% sure that this isn’t the case with atzmai also…
3. You are building an asset. What this means is, that if you do decide to sell in the future, then it is much more concrete what you are selling and means that the buyer knows what they are buying.
4. It looks more professional to have a company rather than being an individual.
5. There are certain government tenders that you can only apply for if you are a company.
Apart from the above, whether you work as an atzma’i or a company it is very similar. You can employ people with both. You can do work for people as both. Expenses that you can claim for are also very similar.
I hope that I have given a pretty good overview, but as always speak to an accountant before taking any steps.
As pointed out by DZ:
There are certain professions where you cannot be an Osek Patur, irrespective of how much you earn, e.g. lawyers, accountants, architects, insurance agents, doctors ….
For the full list see here (in Hebrew) http://www.keren-cpa.co.il/?page_id=796
Guested from Miriam Schwab:
PSA announcement regarding banking and small businesses in Israel:
No matter how many years I’m in business, I’m constantly learning things that I can’t believe I never knew. Like how to properly calculate overhead and how it needs to properly factor it into pricing (no, I’m not totally dumb, but I never quite got it until my amazing bookkeeper showed me the light recently. I can get into this another time).
Anyways, for years we’ve been paying ridiculous bank fees at Bank Mizrahi for our business account. The fees were often double and triple those that we would pay in our personal account. For example, a bank transfer via the website cost 1.20 NIS in our personal account, and 12.90 NIS in the business account! It drove me crazy, but I figured that’s how it is and there was nothing to do about it.
I recently had to meet with the bank manager. During our meeting, I mentioned that the fees they are charging are ridiculous. She said “Companies with revenue of under 5 million NIS a year can pay the same rates as personal accounts. We don’t do this automatically because we can’t tell if a company has different accounts elsewhere.”
What? You let me pay these rates and lose thousands of NIS because you couldn’t be bothered informing your long-time client about how the fees work?
So now I’m telling you. If you are running a small business and have a business bank account, you may be entitled to lower bank fees if you aren’t already getting them.
Often see people asking about how much they should price their product for, so thought I would give my views on it:
1. What is your ultimate goal of your launch? Is it to build a list or to make money or some other reason? In theory, the lower that you price your product, the more sales that you will make and therefore have more customers. In theory, the perfect price depends on the elasticity of the market. For example, would it be easier to sell it once for $1k or a thousand times at $1.
In practice though, there are other factors also at play…
2. Do you have affiliates or JV partners? Are they promoting you to make money or are they doing you a favor or do they want reciprocation? Depending on the answer, you need to decide how much commission you want them to have. For some affiliates, 50% of $7 may be plenty to persuade them to mail. For others, they would want 100% of $27. Depending on who your affiliates are and the aim of your launch should help you to price your product and decide on a percentage of comms to give out.
3. What does your product consist of? Is it justifiable compared to similar products in the marketplace to charge a certain price. Or should you be charging more or less? Compare what similar products have been priced at and how successful they were (or not).
4. Do refunds bother you? If so, make sure that you are not increasing the price higher than the ‘value’ of the product.
5. VERY IMPORTANT: How good is your salesletter? Are you able to sell the product at the price that you want. Are you able to justify why you are selling it for so much. Or in the case where you are building a list, is the price too good to be true.
6. What is your backend? Depending on the price of your backend and the conversions and commissions that you are giving to affiliates should affect the price of your product. For example, are you selling the frontend as a teaser (perhaps with 100% comms) so that you can make the cashola on the backend? Backend sales are an excellent weapon to be able to give away a huge bribe to affiliates on the frontend so that you can make more on the frontend and ultimately they can make more also.
7. There is a lot of psychology at play with pricing. Especially with an intangible product, the price is dependent on the value that you build up. One easy way to build up value especially in the IM niche is to compare it to the return that they will be getting. Will it make them an extra $x whereas they are only paying $y? Is there a similar product that is selling for 10 times as much whereas your software does the same thing?
8. Build up value by offering bonuses. Always put a price to them. Offering a $97 bonus on a $7 product can do wonders to sell that product. Obviously, be true to the value…
9. I’m not a massive fan of dime-sales, but they can work. Be sure to spell out that 10 people have already purchased and that if they don’t purchase now, then they will pay more.
10. Saved the best until the end…test! Test to your own list. Buy a solo ad. Buy FB advertising etc. If you are genuinely testing so that you ultimately make your affiliates more money, then that is fine and will not be seen as selling to your own list first…Test at the beginning of launch. Test during launch. No-one truly knows the answer of what the best price will be, but whether you are making your money on the frontend, backend or ultimately setting up your product to make more money in the future, the price can make a massive difference in how much you ultimately make, so definitely worth doing.
(Please feel free to share this article as long as you attribute it to Ben Shaffer and this blog)
Am writing this post because had such a problem and it was so easy to fix so hopefully will be useful to others and save you spending hours yourself!
I was exporting from mysql database in PHPmyAdmin to a csv file. However, when I opened it up in Excel, all of the Hebrew was gibberish.
Instead, I opened it up in Google Sheets via the web and all looking good now.
Simple but effective 🙂
Admittedly, this is a personal post, which is out of the typical subject of this blog. However, also seems a good place to share my opinions and experiences.
To give a bit of background, I have been snoring for about 10 years. I have tried just about everything from sprays to pillow to nose plasters to sleeping on my back,side,front etc.
But nothing really works.
And let’s be honest, my wife is not exactly a fan of my snoring and when it becomes too much, I wake up in the morning on my couch!
Contrary to what I said above, there was one thing that worked reasonably well and that was a snore/mouth guard which I wore a few years ago, but gradually became mangy and broke.
So, when I was recently at the dentist I asked her if she could make me one. She said that she wasn’t allowed to until she was sure that I didn’t have sleep apnea.
So, I went for an appointment with a sleep Dr. at Misgav Ledach (Dr. Kahane) who then sent me for a sleep study at Shaarei Tzedek.
They put a load of wires on me and I slept there for the night.
They said that I would probably find it hard to sleep there with all of the machinery, but not to worry as it was normal.
What they didn’t realize, was that I had one of the best night’s sleep for months if not years as I wasn’t woken up by little squidgelings (aka. children). As my wife said when the results came back:
“OMG, you had 7 hours and 20 minutes of pure sleep!”
Anyway, a few weeks later the results came and I took them back to Dr Kahane who said that I have severe obstructive sleep apnea. On average, I wake up around 40 times every hour that I am asleep – yes, hour!
It affects around 15% of males and 3% of females. There is also a very strong genetic connection. As well, as an extremely close tie-in to snoring.
Simplifying it, sleep apnea is when you stop breathing and so your body wakes you up and then you start breathing again. An ‘incident’ is when you stop breathing for 10 seconds or more.
Apart form it disturbing your sleep, there are also many other dangerous effects that it can have on your body including diabetes, heart problems and weigh loss.
I basically have two options. The first is to have an operation. The second is to use a CPAP machine.
The operation has a reasonably low success rate. In addition, I kind of feel a bit funny having what could be a fairly serious operation unless I really have to.
So, for the moment I am trying a CPAP machine.
A CPAP machine is something which has a hose and facemask attached and you wear it whenever you sleep. There is a continuous flow of air through your nose and if it senses that you have stopped breathing, then the pressure increases which keeps you breathing and stops you from waking up.
The machine itself costs around $1k but is heavily subsidized by health insurance.
So far, I have tried it for two nights, and these are my results:
Weirdly, I was really excited to wear it the first night. I very very rarely have a problem falling to sleep so the thought of wearing a mask wasn’t so bad. I found that I woke up every hour or so. Not so sure why. In addition, as air also expels from the machine, at one point Gina told me to face the other way as she was being treated to airconditioning which at that point was not desired.
At around 2pm, night adventures started with number 2 child as he started to get a bit too friendly on my side of the bed, so I stopped with the machine and acquiesced to being chucked out of my bed…
I was woken up at 6am by squidgeling number 3 and felt absolutely exhausted for the rest of the day, actually having a rare shluff in my office.
Night two, I had firm words with number 1 and number 2 squidgeling telling them that it was important that I wasn’t disturbed in the night.
I slept until about 1.30am when I found the mask was letting out air in the direction of my eye. I tightened the mask, but couldn’t really get comfortable and was waking up the wifey when I was adjusting the velcro.
So, I abandoned the machine and slept until about 7 with only one interuption by number 3 when for some strange reason she was desperate to have cuddles with me. If only she were so affectionate during waking hours!
So, tonight I am hoping for a jackpot and am going to try and sleep with the machine away from the rest of the family.
My hope was that when I wore the machine, I would wake up in the morning feeling more bright and awake than I have been for years.
Not happened so far, but still reasonably positive about that happening tonight!
New baby coming soon PG.
Number 4 coming soon PG.
Therefore car upgrade necessary.
So, before a few weeks ago, I have never even bought a new car, nevermind sold one.
So, the likelihood of me writing a blog post giving advice on it would have been almost non-existent.
However, things change and a few weeks ago, we were briefly a 2 car family. Which was lots of fun. But also totally unnecessary due to the fact that neither of us have a ‘job’ and 99% of our journeys entail picking the kids up or dropping them off.
So, decided that we would try and sell our old car.
In summary, Toyota Corolla RunX, 2003 was bought new 10 years ago. Low mileage of 117,000KM. Quite a few dents and scratches but no major accidents or repairs.
Having no idea how to sell it, I put it on Facebook to my friends and had no response.
So, next call was to put it on yad2.co.il, the second hand website which is extremely popular in Israel.
Almost from the moment I put it up, I started having lots of calls. At the beginning about 10 a day and then descending until Sunday when they would increase again.
I also printed out a notice from Yad2 which I taped to the back of my car.
A typical call would go something like this (licence taken to translate to English):
Them: I saw that you have a car for sale.
Me: Yes. What would you like to know?
Them: (Ask some questions when the details were actually on the site including the price)
Them: So how much do you want?
Them: What is mechiron?
(Actually thought this was an incredibly weird question. Either they have checked already. But if they hadn’t then surely they wouldn’t trust me?)
Them: How much would you take?
Them: Will you take 2x,000nis?
Me: Have you seen the car?
Me: So come and see the car and then we will talk.
Them: Does it have any scratches?
Me: Yes. Like every other car in Israel.
Them: So will you come down in price then?
Me: No. If it was a new car and it had scratches then I would. But it is NOT a new car.
And it went on in a similar vein.
After having the same conversation many many times, I realized that people were either looking for a bargain or in higher likelihood they were dealers.
As we had a new car already, we weren’t in a particular hurry to sell so I had the luxury to not be pressurized to take a low offer.
When people came round to see it, they obviously wanted a test drive. Do note, that you need to make sure that they are insured on your car. This will mean speaking with your insurance agent. In our particular case, we have insurance for all drivers over the age of 30 so it wasn’t such a problem.
It is very common for a buyer to want to take it to one of the test centers. IMHO, if a buyer doesn’t do this then they are off their rocker. However, on the other hand, the test centers are paid to find faults with even the best car so does make it hard for the seller.
If you are buying a car, then you should definitely be using this in order to bargain on price. This was one of the reasons why as a seller I didn’t even want to start bargaining until I knew that they were actually ready to buy.
Eventually I sold the car for 500nis less than I was advertising for due to the fact that her garage said that they would have to do 500nis of work.
The transfer is actually very easy although is slightly harder if you bought the car on Aliya rights as we did.
If you did also, then you have to have the car ‘released’ before you can sell it or the Post office won’t transfer the name on the car. This involves going to Meches (Givat Shaul in Jerusalem) with your teudat zehut and a copy of the license and the nice lady there does it in a few minutes. You can also do it by fax although possibly not advised if you want to be sure that it is done before transferring ownership. The fax number is:
With regards to transferring the car, you go to the post office with the buyer. The owner of the car must be present and also the new owner. The buyer has the option to run a check that all tickets have been paid and that there are no longer any debts on the car. And then they transfer it. The transfer fee is 214nis which we split.
In summary, the price that you get for the car will depend on how desperate you are to sell it. Every potential buyer will tell you what is wrong with the car and why it should be cheaper. They will also tell you that no-one pays mechiron. Well, they do… 🙂
Any questions, please feel free to ask below!
Edit: As of 2016, this information is mainly outdated as there is now officially Netflix in Israel, so there is no real need to use a VPN. However, you can still use a VPN if you would like to see Netflix from another country where there may be a different choice.
So, although this post is about watching Netflix on your iPad in Israel, it could actually be applied to (virtually) any country in the world.
The problem, is that Netflix is not currently available outside of US/Canada
The bigger problem, is that Netflix is actually REALLY good and for not much moolah, you have almost unlimited access to download TV and Films.
So, here is the general way to do it:
1. Signup with StrongVPN
2. Use your VPN settings to connect to Netflix on your iPad/computer.
3. Sign up to Netflix. You will need to use a credit card, but this can be any credit card. And also any US address
4. Create a new Apple ID with a US address (credit card not needed) and download the Netflix app
5. Using the VPN, you can now connect to Netflix
You’re probably thinking that it must be more complicated than that…and it kind of is. So I will go through the steps and try and show you as easy as possible exactly how to do it.
1. Click Here to sign up for Strong VPN. You should click on Packages from the top left and then just choose the cheapest. Any of the packages are good enough. I went for the LITE PPTP which is currently $7 a month.
a. You will probably have to wait a bit from them to accept your order, but even though it doesn’t look like it is going through. It actually is and they will approve it. You should do the phone verification also (by Skype)
b. Just to explain, VPN stands for Virtual Private Network. You are using it, because you want to appear as if you are from USA. In non-technical terms, you connect to one of Strong VPN’s servers and then they retrieve the webpage or the data which you want.
2. Set up your iPad VPN.
a. Click on settings
b. Click on general/network/VPN/Add VPN Configuration
c. Enter in the details that you have been given by StrongVPN. Both L2TP and PPTP have worked fine for me.
d. Click on save
e. Click on ON next to VPN which then should correct. If it is connected, then you will see VPN in the top left of your screen
3. Sign up to Netflix. You will need to be connected via your vpn else you will not appear that you are from USA
b. Enter a credit card number. Does not need to be a US credit card
4. Download the Netflix app (VPN not needed)
a. As the netflix service is only available in US, it means that you can only download it from the Apple store if you are a US member. As it happens, I do actually have a US credit card, but getting them to accept the US details was not working, so I found a free workaround.
b. Open up itunes on your computer and click on iTunes store
c. Go to the bottom right and click on the flag
d. Click on US flag
e. Click on App Store
f. Choose any free app and click on the word free
g. Click on Create New Account
i. Fill in details as necessary. Is advisable to use a real email address, but don’t use one you have used before for Apple.
k. IMPORTANT: Click on None
l. You will need to put in a genuine address. For example, the address of Google is:
1600 Amphitheatre Parkway
Mountain View, CA 94043
Phone: +1 650-253-0000
m. Verify your email address
n. Logout of your apple id (settings/store/click on address)
o. Login with your new id
p. Go to the app store and download netflix app
Kaching…you should now be in business 🙂
Note, that if you ever get weird error messages, you can usually solve them by turning your iPad off and then on again.
Also note, that the app for the iPhone seems to crash the whole time.
Oh…and really importantly, you will only be able to use the app while you are connected through the VPN.
Especially in Jerusalem, it seems that networking OFFLINE is the new online. It is rare that a week goes by when there is not a networking event to attend. Obviously, there are regular groups that meet such as GBN and BNI, but I am referring to specific events which are put on to ‘get people together’.
Is there value in this? Yeah, of course there is…however, I personally think that there are things that are of greater value than spending around 2 hours standing around awkwardly or meeting and speaking to someone that has little to do with your current business plans.
However, let me stray slightly and come up with counter arguements:
1. But you could meet someone who will (give you big business)/(give you that big idea)/(refer you to someone)…
I’m sure that you could . But is it likely? Perhaps. Has it happened in the last 10 networking events that you have attended? If yes, then great. If not, then who are you kidding? It actually reminds me of when I was single and used to attend singles events or go on blind dates. Remember your married friends who told you that there was no harm on going and that she could be the one ?
(For more on the perils of going on lots of dates, see http://habitza.com/) We actually went on a date once, but she has forgotten – but I digress)
2. As a freelancer, it is important for me to meet people who are in a similar situation to me…
I actually agree with this in a way. I work in an office on my own and rarely meet other people. I am lucky to have a wife who is in a similar (but very different) business and we can and do brainstorm at times. However, it is doubtful to me whether meeting with a set of semi-random people who generally want to talk about their own business and have little interest in your’s is the best way to do it.
3. Sometimes I need to get out of the house…
Agreed. Majorly important. However, I prefer the cinema/restaurant/pub etc.
Alright, I realize that I am being slightly cynical. I think my point really is that there is a value to everything that you do in addition to your time. If you are just attending networking events because that is what you have been told that you should do as a business owner then you may want to think again whether that is the best use of your time. Whatever business you are in, there are ALWAYS additional things that you could be doing especially in the marketing of it.
I think that a good think about networking events is that everyone is there to network and therefore you feel less embarrassment to approach someone and to ultimately pitch them. However, if you have something genuine and useful to the person that you are pitching then there is no reason to feel that nervousness.
A great alternative to networking at all is to phone someone up.
Who is the leader in your industry?
Who can be a great connection to you to introduce you to new business?
Who is the most likely person or company to purchase your product?
You would be surprised at just how effective it is to pick up the phone and tell someone how you can help them. Ask them first what their problem/concern is and then tell them how you can help them. Reciprocity is extremely powerful (read Robert Cialdini’s book and weep) and if you offer someone, then you are majorly likely to score a hit.
My point (again?)?
Spread yourself thickly rather than thin and make sure that you spend your time wisely. Be laser targeted to the ONE person who can help you the most rather than meeting with a load of people who there may be a small chance of them helping you.
Keeping it fairly real,
PS. Didn’t really fit in above, but definitely another post coming soon about the usefulness (or lack of) of the ‘breakfast’ networking clubs…any thoughts?
Are you a networking fan? Am I totally missing the point? Do you find networking ridiculously useful and has it made a different to your business? Please let me know by commenting below:
What I want to do is this post, is briefly cover why I use Paypal for the majority of my online transactions and then also go into some specifics of using Paypal as an Israeli.
Especially for the niches that I operate in, Paypal works extremely well. In the business to business marketplace, Paypal is accepted as a standard and people feel comfortable making payments.
– it is perceived as secure
– people see it as ‘play’ money and are more likely to spend
– there is a certain amount of protection in some ways more and some ways less than paying with a normal credit card
– people indirectly use their credit card with Paypal, so it is an added bonus
– it is fairly explicit in the terms and conditions of a transaction
As an online business owner, there is an additional benefit in that it integrates very well with turnkey scripts. Also, there is far less hassle than using a regular merchant account provider as Paypal takes care of the background hassle for you.
There is no need to have your own secure server, or deal with credit card numbers or make sure that your payment page is set up according to terms and conditions of the providers – not always as easy as you may think – infact V difficult.
What interested me though, was that I was speaking with a business consultant (Daniel O) at a Bris a few weeks ago who said that he actually thought when a site was just offering Paypal that it gave less credibility as they had not bothered to get a ‘proper’ merchant account. Apples and Oranges I guess…
As an Israeli, there are some additional advantages of using Paypal over a merchant account provider:
– it is notoriously difficult to do any reasonable volume online through an Israeli credit card provider
– no need to fill out long forms in Hebrew (not even joking!)
– with a normal processor, your customer wherever in the world that they are is charged in Shekels which are then converted to their currency. How would that go down in Iraq?! 🙂
To give you a bit of background about using Paypal as an Israeli:
1. Officially you are only allowed one Paypal account internationally
2. Paypal was introduced to Israel fairly recently and even more recently allowed you to withdraw money via your bank account and/or your credit card
3. There is no easy way to get money into your own Paypal account via your Israeli credit card or bank account, so you need to either be creative, receive a payment or make a purchase by using your credit card on your paypal account.
4. There IS a small Israeli office in Israel for Paypal who are currently working to make it more friendly for Israelis.
5. At present, Paypal does not accept or show screens in Hebrew – not so great if you are using Paypal to sell to Israelis who don’t know English…
A few tips if you are using Paypal as an Israeli:
1. Make sure that you have the correct address details. If your account is ever limited (convo for another time) then you will find it almost impossible to reopen otherwise.
2. If you are limited, then provide a translation that is signed by your lawyer of whatever they ask for you (probably also a convo for another time)
3. It is free and relatively quick to withdraw money to your bank account. If you withdraw to your credit card, it still ends up going to your bank account – it just costs you more and usually takes longer.
4. There is an option to automatically add VAT to anyone making a purchase from you in Israel. This is incredibly useful not just so you don’t lose the (currently) 16% but helps you also spot Israelis so that you can write them a separate receipt and pay the VAT. After all, is your usual price for a service $31.36?
5. Check your end of month spreadsheet line by line to check that there are no payments from Israelis. You can do a search in the downloadable Excel spreadsheet for Israel. Also do a search for netvision and other Israeli ISPs in the email address field – any other tips for noting Israeli transactions greatfully accepted.
In my next Paypal post, I will go into further details on how it seems one can handle their bookkeeping when using Paypal – not as easy as you may think. Especially if you have hundreds or thousands of transactions a month…
Am sure that I have missed something out. Let me know if any questions or comments below…
Keeping it real in an ‘Israeli’ world,
Just a bit of an introduction on why I chose to create this blog and more importantly what I hope to achieve.
I’ve been doing business in Israel for about 6 years now. 5 of those as an atzma’i (freelancer) and the last few months as a company. In another post, I will probably go into more detail on why I made the bureaucratic change, but my post is, that I have done it from a number of different angles.
Without tooting my own horn, I feel that I have learnt a huge amount over the last few years about conducting business in Israel and perhaps more so, from Israel.
I run a semi-successful business online reaching an international market. I do very little business anymore within Israel apart from consulting. Any additional business that I do to the Israeli market is more coincidence rather than intentional. What I mean by that, is that anyone in the world is welcome to purchase my products, and sometimes that happens to be Israelis.
Topics that I intend to cover in this blog are:
1. Processing payments as an Israeli (business) with a special focus on Paypal
2. Networking in Israel
3. Accounting and tax issues and how to overcome them (not an accountant, but spend a lot of money on them!)
4. International legal issues and whether they are relevant (not a lawyer, nor played one on TV…)
5. Recruiting partners and clients internationally
6. How to position yourself internationally
7. Doing business with Israelis
Very interested in your comments below on whether you think that you will find the above useful, if you have any specific questions and also if you have any other ideas for topics.
Keeping it real in an ‘Israeli’ world,