Business Talk with Baruch Swinkin Part 1: Establishing Route 38

International companies are increasingly looking for ways to hire talented Israelis to work remotely.  What was once the domain of highly specialized experts in specific fields has now increased significantly with the broader acceptance of remote work as the new normal.  The challenge for many companies and workers is to find an effective means of paying salary, taxes, and managing liabilities. 

Baruch Swinkin (Courtesy)

Many companies use an employer of record service (EOR) to mediate between them and the worker.  To understand this mechanism, I turned to Baruch Swinkin. 

Baruch Swinkin is the Co-Founder and CFO of Route 38 Professional Services LTD, a payroll advisory services company based in Beit Shemesh.  Baruch established Route 38 after an extensive career in corporate accounting, finance, and auditing, where he worked at companies such as PriceWaterhouseCoopers and Hewlett Packard.

This talk is the first part of a series with Baruch.  In this part, we will discuss how he established Route 38.  In Part 2, we discuss an overview of what an employer of record is.

In Part 3, we look at the kinds of companies using employer of record services. In Part 4, we talk about Route 38’s unique role in the Israeli market.  Finally, in Part 5, we discuss the impact of COVID-19 and Baruch’s vision for the future

How did you start Route 38?

The story of Route 38 began about fourteen years ago. When I moved to Israel in 2007, I bumped into an old friend at the grocery store, Mike Kashnow, whom I had known at that point for 15 years since our yeshiva days together.

We quickly realized that we lived one building away, and after catching each other up on our lives, I pitched him an offer to begin studying together in the mornings, which he accepted.  Those study sessions led to many (post-session of course!) conversations about different business ideas.  I had come to Israel with a job that I expected to last six months, which had been extremely helpful in my Aliyah transition. But, thank God, that job lasted me ten years!

Mike Kashnow (Courtesy)

Over time, the job became less stable.  I started looking for other opportunities.  A few people had approached me with requests to help them with budgeting and financial accounting needs.  I didn’t have the infrastructure to support them because  I couldn’t give an official receipt, which is necessary in Israel. 

I didn’t know anything about the Israeli system because I had been working in the States.  I thought at that time, with my job in the States looking less secure, it was time to invest in some infrastructure and build a company in Israel (which I would never recommend to someone to do now).

At the same time, Mike needed a payroll solution for his own business, and we opened the company together. 

Over the course of the following year, someone else approached us who needed a payroll solution. Mike’s mind started percolating (he is the visionary here), and we began to realize that there was a need – there were companies that had been doing this, but they didn’t have the best reputations.

Through Mike’s existing employee, we had begun to learn the basics of payroll processing, but now we started to pay a little more attention and focus on a genuine opportunity. During this time, Mike brought in our COO and the backbone of our company, to help his other business and support Route 38.  Slowly, the COO began to move more and more towards full-time Route 38 operations and learned every possible detail there is to know about payroll in Israel. 

How did you know there was a need for another Employer of Record in Israel?

There had been some smears and some high-profile legal issues in the country.  So there was a need for this and a need to do it right.  There was also a need to provide much more robust support for the Anglo community, which had significant deficiencies in this area. So we embarked on a two-year journey to learn as much as we could about the industry.

To learn about the legalities, accounting rules, what we could and couldn’t do, what we could and couldn’t offer, understand the best and most legal way to structure our company, and provide our service to individuals and companies.  And we are still learning.  We are always learning and keep ourselves as up-to-date as possible.

Did you start slowly or try to grow as fast as possible?

We started slowly, working with family and friends. As mentioned above, we took about two years to research and learn as much as possible through Mike’s existing employees. We would talk about the industry and the legal and accounting hurdles we would have to approach correctly. We took on a few individuals here and there, and word of mouth spread slowly for the first few years.  In the last couple of years, we have developed a massive network of accounting professionals, specifically in Israel and the US. 

These CPAs try to help their clients as much as possible and we are always happy to reciprocate with new leads for them. We have been slowly building a social media presence on Linkedin and Facebook and getting recognized in various social media groups. As a result, we are starting to expand and capture people’s attention in Israel and worldwide.

How did you expand the team?

Slowly.  As mentioned earlier, we brought on our COO, five years ago — a tremendous asset to the company. She provides the backbone and the spine of everything we do.  She is there to focus us at all times and gives us perspective when Mike and I are ready to jump and run before we are grounded. 

Her insights and expertise in this area complement our talents—from her execution to understanding where every shekel goes.  We marvel at her ability to account for and manage well over 100 accounts at any given time.

We are incredibly thankful for everything that she has provided and continues to provide. 

We then continued our expansion with experienced bookkeepers, billing, management, and administrative professionals to service our ever-growing clientele.  

How would you describe your team?

We have an incredible team of professionals. Our focus is on the Jewish, Anglo, Israel-centric community and we are looking to expand and grow – sales managers and account managers who are experienced, capable, and meticulous yet warm and receptive; people who are eager to jump in. We are looking to build a platform with which we can help as many people as we possibly can to be able to thrive in Israel. 

The next part will discuss employers of record and how it can help the employee and the company.