After you have made the decision to become self-employed (atzmai) you will be required to open files with three offices: Income Tax  (Mas Hachnasa),  Value Added Tax (Maam) and the National Insurance Institute (Bituach Leumi).

Income tax
The Income Tax Authority will send you a form indicating what percentage of your revenues must be paid against you year-end income tax obligation. Each month, you will have to pay the percentage fixed on account, after allowing for any tax withheld at source by the payer. 
Personal Income Tax (for both the employed and self-employed) is a progressive tax starting at 10% and increasing to a maximum of 46%.
Allowance points are granted on the tax due which reduces the tax payable (an allowance point is worth approximately $600 a year).

Value Added Tax (VAT)
You will be required to collect Value Added Tax (VAT) on all of your revenues. The rate of VAT is currently 15.5%, and it is charged on all goods and services (with some exceptions). Your accountant or tax advisor, will show you how to keep your accounts books. You may deduct the amount of VAT paid on certain business-related expenses from your VAT obligations each month.

National Insurance
Monthly National Insurance payments are calculated as a percentage of your income (after expenses). Your tax advisor will help you estimate the appropriate level of payment in your first year of being "atzmai".
Payments to the National Insurance Institute include coverage for basic health services (Kupat Cholim), child allowances, maternity leave benefits and compensation to soldiers when they serve their IDF reserve duty (miluim).

If you employ workers, you are required to open a Workers' File at your local Income Tax Office. The Income Tax Department will transfer the information to the National Insurance Institute which will open a separate Workers' File.

Your accountant can also give you specific details of allowable deductions for business expenses (also car expenses). If your office is located in you home, a portion of household expenses, such as rent, utilities and telephone, are deductible.

For a map location and contact details of the field offices of the Israel Tax Authority (Customs and VAT), please click here

Registration as Self-Employed with the National Insurance Institute
If you conduct your business as a sole practitioner or in a partnership, you will have to register as a self-employed person. You need to fill out a long-range report as soon as you open your business or commence commercial activity. Registration is with the National Insurance Institute (Bituah Leumi).

Printing Tax Receipts and Stationery
Once you obtain a VAT registration number, you should print invoices and receipts that display that number appropriately.
At the same time, it's a good idea to order the stationery you require: letterheads, envelopes, business cards and the like.

Receiving a Business License
There is a list of the types of business that have “licensing requirement” status, meaning businesses that need a license in order to operate under the Business Licensing Law.
Electricians, engineers, architects, dentists, medical and paramedical professionals, tour-guides and many other types of professionals need licensing or authorization from the appropriate authorities to practice.
In some cases, further training, internships and exams may also be necessary. It is recommended that all professionals investigate exactly what is required of them.
Furthermore, all commercial enterprises must have business permits to operate. Permits are usually issued by the municipalities after prior approval by other government departments such as the Ministry of Health. Permits must be renewed annually.
Application forms are usually available from the municipal licensing authority. It is necessary to prepare and file detailed drawings of the premises. Contact your local municipality or local council for detailed information.
Procedures and directives setting out all that needs to be done to receive a business license can be obtained on the Israel Police website (in Hebrew).
Make sure that local regulations do not prohibit your opening a business at the designated site.