Payroll Accountant in Jerusalem

Why Do Payroll Records Require Attention?

If you employ workers in Jerusalem — in a company, as a self-employed person, or even just a single employee — you are required to maintain accurate payroll records. It is not merely administrative; it is a legal obligation. An incorrect salary slip, failure to withhold mandatory deductions properly, or delayed reporting to the Tax Authority and National Insurance — all of these can lead to substantial fines and legal complications you would rather avoid.

Most employers we work with in Jerusalem come to us because they seek peace of mind. They want to know that taxes are withheld accurately, that employees receive correct salary slips, and that the Tax Authority and National Insurance receive reports on time. This is exactly what we do.

In Jerusalem, as elsewhere in Israel, wage reporting is managed through digital systems of the Tax Authority and National Insurance. We handle all of this — from calculating monthly deductions to filing annual reports.

What Does Payroll Record Management Include?

Payroll management is far more than simply paying an employee at the end of the month. It is a process that begins with calculating gross salary and ends with reporting to the authorities.

Each month we calculate:

• Gross salary — the basic wage according to the employment agreement.
• Mandatory deductions — income tax, National Insurance, health tax, and training fund. Each has a different rate and depends on the employee's salary and personal status.
• Employer expenses — employer contributions to National Insurance, training fund, and pension insurance (if applicable).
• Salary slip — a document that details precisely how much the employee received, what was withheld, and what they actually take home.

At the end of each month, we submit a report to the Tax Authority regarding all deductions and to National Insurance regarding all payments. If there are new employees, the authorities must be notified. If an employee leaves, this also requires a special report.

Who Needs Payroll Records in Jerusalem?

Essentially anyone who employs workers. This includes:

• Self-employed persons exempt and authorized — if they have employees, they must maintain payroll records.
• Limited company owners — they typically pay themselves a salary, which requires accurate wage management.
• Associations and public institutions — they are also required to maintain payroll records with full reporting.
• Employers of part-time or seasonal workers — even a single employee requires payroll record management.

If you are in Jerusalem and have one employee or one hundred, the legal requirement is the same: accurate payroll records and timely reporting.

Payroll Management Process — Step by Step

When you come to us, we begin with a consultation meeting. We learn about your business, how many employees you have, what their salary structure is, and whether there are collective agreements or special provisions. In Jerusalem, as elsewhere, every employer is a bit different.

After that, we set up the system:

1. Collection of Initial Documents — employment agreements, employee ID documents, bank details, and information about any special salary terms (bonuses, travel allowances, housing, etc.).
2. Notification to Authorities — when a new employee starts, we report to the Tax Authority and National Insurance. This must be done on time, otherwise you may face a fine.
3. Calculation of Monthly Deductions — each month we calculate taxes, national insurance, continuing education fund and all other deductions based on the salary for that month.
4. Issuance of Payslips — each employee receives a detailed payslip showing their gross salary, deductions, and net amount.
5. Monthly Reporting to Authorities — we report to the Tax Authority on all deductions and to National Insurance on all payments. All of this is done through digital systems.
6. Annual Report and Year-End Summary — at the end of the year, we file an annual report summarizing all salaries, deductions, and reports for the entire year.

Every step is important, and every step must be done on time. If there is an error along the way — for example, a deduction that was not processed correctly — we catch it and correct it.

What Do Employers Usually Forget?

A question we receive often: "What do I need to know to avoid getting into trouble?" Here are some common mistakes we see:

• Failure to Report a New Employee — if you don't report to the Tax Authority and National Insurance on time, it can lead to fines.
• Incorrect Tax Deduction Calculation — employers often try to calculate themselves and make mistakes in the process. Every salary is different, and each employee may be in different tax circumstances.
• Failure to Report Employee Departure — when an employee leaves their job, you must notify the authorities. If you don't, it can result in false reporting.
• Late Payment of Employer Contributions — as an employer, you are required to pay contributions to National Insurance and the continuing education fund. If this falls behind, it can accumulate and become a big problem.
• Ad-hoc Payroll Management — generally, this doesn't work. Payslips must be accurate, and reporting to authorities must be digital and timely.

Ben Or Kook Accountants help you avoid all of this. We manage the entire process, so you can focus on your business.

Tax Rates and Deductions — What You Need to Know?

When you pay wages, there are several deductions that must be made. This is not optional, it is the law. In Jerusalem, as everywhere in Israel, the rates are set by the Tax Authority and National Insurance.

Typically, the following are deducted from an employee's salary:

• Income Tax — depends on the employee's salary and marital status. This rate changes annually.
• National Insurance — a fixed rate deducted from the employee's salary, and the employer also pays additional fees.
• Health Tax — a small rate deducted to a healthcare fund.
• Study Fund — usually 7.5% of the salary, unless there is a different agreement.

As an employer, you also pay:

• Employer fees for National Insurance — at a fixed rate on every salary you pay.
• Study Fund fees — usually an additional 7.5% on the salary.
• Pension insurance — if applicable in the company.

This may seem complicated, but it is exactly what we do every month. We calculate each deduction precisely and report everything to the authorities.

Practical Example: Payroll Calculation for One Employee in Jerusalem

Let us look at a concrete example. Suppose you have an employee in Jerusalem who was hired at the beginning of the year. His gross salary is 8,000 shekels per month.

Every month we calculate:

• Income tax: approximately 600–800 shekels (depending on his circumstances).
• National Insurance: approximately 300 shekels.
• Study Fund: 600 shekels (7.5%).
• Total deductions: approximately 1,500–1,700 shekels.
• Net salary: approximately 6,300–6,500 shekels.

Additionally, you pay as an employer:

• Employer fees for National Insurance: approximately 400 shekels.
• Study Fund fees: 600 shekels.
• Total employer expenses: approximately 1,000 shekels.

This means that to pay an employee 8,000 shekels, you are actually paying approximately 9,000 shekels (including employer fees). All of this must be calculated precisely, reported on time, and an accurate payslip must be provided to the employee.

When Should You Contact a Payroll Accountant?

If you are in Jerusalem and have employees, it's a good idea to reach out now. However, there are situations where it's more urgent:

• You have just established a business or company and have employees — if you haven't reported to the authorities on time, this could be a problem. Let's fix this today.
• You're unsure whether your payroll accounts are correct — if you're uncertain about deductions or reporting, it's better to conduct a review now rather than discover a problem during a tax authority audit.
• You have new employees and didn't know how to notify the authorities — this happens frequently. We handle it in a minute.
• You employ part-time or seasonal workers — this requires special management, and errors are easy to make.
• You have questions about training fund, pension insurance, or bonuses — all of these affect payroll accounts, and it's important to do it correctly.

Ben Or Kook Accountants are based in Jerusalem and also serve clients from Ramat Gan and Petah Tikva. We're ready to offer you a free initial consultation so you can understand what you need and start on the right path.