Is a Company Required to Have an Accountant?

What Exactly is the Accountant Requirement?

When we talk about "the accountant requirement," we mean that a company is legally obligated to hire a licensed certified public accountant to conduct annual audits of financial statements. This is not something that the Tax Authority offers as a recommendation—it is a legal requirement that appears in the Companies Law and regulations.

The important point to understand is that not every company needs an accountant. There are clear criteria. If you don't meet these criteria, you are not obligated, and this can save you substantial money annually.

However, if you are required and fail to comply, this is not something that goes unnoticed. The Tax Authority can issue an audit notice, and there are penalties.

Who Exactly is Required to Hire an Accountant?

This is the question that most of our clients are uncertain about. The requirement is based on company size—primarily annual revenues and balance sheet size.

Generally, a company is required to have an accountant if it meets two out of three of the following criteria:

• Annual revenues: Above a certain threshold (typically around NIS 3 million in recent years, but conditions are updated through 2026)
• Balance sheet total: Total assets above a threshold (typically around NIS 1.5 million)
• Number of employees: More than 50 employees on average per year

If a company meets two of these criteria for two consecutive years, it is considered a "large company" and is required to have its financial statements audited.

There are also special cases: a public company, a bank company, an insurance company, or a company listed on the stock exchange—these always require an accountant, regardless of size.

What Happens If Your Company Does Not Meet the Requirements?

If your company is smaller — lower revenues, fewer employees, smaller balance sheet — you are not required to hire a CPA for an audit. This is a significant saving. Instead, you can make do with regular bookkeeping and an annual report filed with the Tax Authority.

Most self-employed individuals, exempt businesses, and authorized businesses are not required to hire a CPA. The same applies to small companies. If you fall into this category, we can help you with complete bookkeeping, annual reports, and tax planning — without the cost of an audit.

However, this comes with a condition: you must maintain accurate financial records. The Tax Authority may investigate at any time, and if your records are not properly organized, it will be much more expensive than hiring a CPA from the start.

What Is a Financial Statements Audit?

When a CPA performs an audit, he examines the company's financial statements — the balance sheet, income statement, and cash flow. He checks whether the statements accurately represent the company's financial condition and whether they comply with accounting standards.

This is not a simple check. The CPA examines documents, bank transactions, contracts, invoices, and reconciliations with suppliers. He checks for errors, fraud, or anomalies.

At the end, the CPA issues an audit report — a professional opinion stating: the statements are correct, or there are issues. This is a report that the Tax Authority and any stakeholder in the company must rely upon.

How Much Does an Auditor Cost? Is It Worth It?

The cost of auditing financial statements depends on the size of the company, the complexity of operations, and the level of organization of the records. For a small company that is required to have an audit, it typically costs tens of thousands of shekels per year. For a larger company, it can be considerably more.

However, when you are legally required to have an audit, there is no choice. The question is not "whether to pay" but "how to do it wisely". Organized work with an experienced accountant throughout the year can significantly reduce the cost of the audit at year-end.

If you are not required to have an audit, you save this expense entirely. This is one of the reasons small business owners are so pleased when they discover they do not fall into the "large company" category.

Common Mistakes We Encounter

• "We are a small company, so we don't need an audit": Generally true, but if revenue or assets suddenly increase, you may fall into the "large company" category without realizing it. This often happens with startups and e-commerce companies that grow rapidly.
• "We prepared an annual report ourselves, that's enough": An annual report that has not been audited by an auditor cannot replace an audited report. If you are required to have an audit, this is not something you can "get away with".
• "We did not report to the tax authority that we need an audit": The tax authority knows your figures from previous reports. If you are required to but do not submit an audited report, it can lead to an audit examination.
• "We always forgot to hire an auditor because it's expensive": This is dangerous. If you are found in an audit, penalties can be much greater than the cost of a proper audit.

When Should You Contact an Accountant?

If you are a business owner and think you might fall into the "large company" category, now is the time to check. You can contact us at Ben Or Kook Certified Public Accountants in Petah Tikva or Ramat Gan, and we can analyze your situation free of charge.

We will review your revenues, balance sheet size, number of employees, and provide you with a clear answer: whether you are required to have an auditor or not. If you are, we can offer you an audit at a reasonable cost. If you are not, we will assist you with bookkeeping and annual reports only.

There are also cases where it is preferable to hire an auditor even if you are not legally required to — for example, if you are planning to enter into a partnership, raise capital, or if you have foreign investors who want to see audited reports. Bank reviews or investment bank reviews sometimes also require an audit.

What is important to remember: this is not a decision you should make on your own without consultation. Every case is different, and a mistake can be costly.

Quick Comparison: When You Need a CPA and When You Don't

This is a general table. Each case requires individual review according to the specific conditions of 2026.