Step by Step Guide
Starting a Business in Japan
Thinking of taking your business to Japan or starting a new venture in the country? Here is a simple step-by-step guide to help you navigate your entrepreneurial journey in Japan.
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- By Saki Nakahara, Gyoseishoshi Lawyer
- Last Updated:
Table of Contents
*The information provided in this article is a general guide and not tailored to individual circumstances. For personalized advice and assistance with your specific business set-up process/visa application, it is recommended to consult a specialist.
Japan is becoming more enthusiastic about entrepreneurs and talented individuals from abroad
Let’s start with the good news.
Every year, Japan is becoming more enthusiastic about welcoming entrepreneurs and talented individuals from abroad, to empower the economy and technological innovation in the country.
These measures are evident not only in new visa types for aspirational entrepreneurs and foreign individuals seeking employment opportunities in Japan such as such as J-Skip and J-Find Visa but also in city-level initiatives to support for start-up companies.
First and foremost, you will need a visa to start a business in Japan. Here are some of your possible options:
Business Manager Visa
To start a business in Japan, the visa you will be aiming to obtain is a Business Manager Visa, one of the most difficult visas to get in Japan due to the complexity and the volume of the paperwork required.
Unless you have a permanent resident visa or other family-related visas like a spouse visa that don’t restrict your activities in Japan, this will be necessary for you to run your own business.
There are specific requirements that must be met, and typically, you will need to have initial capital of more than 5 million yen invested in the company you plan to register, as well as secure a physical office space, as virtual offices won’t suffice for the Business Manager Visa.
Additionally, a well-structured and convincing business plan, along with other essential documents, will be necessary to demonstrate the potential and viability of your business to the Immigration Bureau.
The level of detail in your business plan should be comparable to what you would submit when applying for loans from a bank.
Some of the required documents for Business Manager visa (case-by-case):
- Incorporation documents to show that the registered company has an initial capital of 5 million yen
- Leasing contract & photos of the physical office space that can fit more than 2 people
- Solid business plan & sales forecast, etc.
6-Month Business Manager Visa (Tokyo's Special Zone System)
Tokyo’s Special Zone System offers a unique six-month status, allowing entrepreneurs to conduct essential preparations before officially launching their ventures.
This innovative system, endorsed by the Tokyo Metropolitan Government, recognizes the challenges faced by foreign entrepreneurs and streamlines the initial stages of business setup.
Under this program, applicants can engage in business startup activities for six months upon entering Japan. The requirements for the Business Manager Visa, such as opening an office, employing two or more full-time staff, or investing a minimum of five million yen in Japan, are only necessary when renewing the visa after six months.
Start-up Visa
Similar to the special 6-month business manager visa offered by Tokyo, multiple startup visas are also provided on a prefectural or city basis. If your application is approved, you will be granted a startup visa that allows you to stay in Japan to prepare for your business, which can be extended up to one year.
This was introduced as a countermeasure to the business manager visa, which technically required individuals based overseas to find a partner or collaborator in Japan to meet the requirements, such as securing a physical office space and opening a bank account in Japan.
- Aichi Prefecture
- Fukuoka City (Fukuoka Prefecture)
- Gifu Prefecture
- Hamamatsu City (Shizuoka Prefecture)
- Hiroshima
- Ibaraki Prefecture
- Kaga City (Ishikawa Prefecture)
- Kobe City (Hyogo Prefecture)
- Kyoto Prefecture
- Mie Prefecture
- Niigata Prefecture
- Oita Prefecture
- Osaka City (Osaka Prefecture)
- Sendai City (Miyagi Prefecture)
- Shibuya City (Tokyo)
- Yokohama City (Kanagawa Prefecture)
If you already have a foreign company established in your home country and are seeking to expand your business in Japan, there are mainly 3 options you can choose from:
1. Representative Office
If you are not yet certain whether you want to expand your market to Japan or not, but would like to conduct market research to explore the possibility, then this could be a good option for you.
Since no registration is needed to establish a representative office, it is also the most cost-effective and easy to establish.
Downside is that as a representative office you will not be able to engage in sales activities and since this isn’t a legal entity, you also will not be able to use the name of the representative office for a corporate bank account or sign an office lease contract.
This could potentially affect your credibility as a business entity if you were to be engaged with Japanese corporations.
Activities you will be able to be engaged will be limited to the following:
- Market research
- Advertising, PR
- Purchasing and storage of assets, etc.
2. Branch Office
If you are ready to start operating sales in Japan, you need to establish a Branch Office or a Subsidiary.
These two options both require a corporate registration process and the difference between these options is that for the branch office, accountability and debts will be attributed to the parent company while it is separated in the case of a subsidiary company.
As Branch Office, the expenses will be covered by the parent company, and the profits will be counted to the parent company’s annual accounting numbers.
In order to avoid the complication of the process, businesses generally choose subsidiaries if they anticipate generation of profits.
3. Subsidiary Company
Foreign parent companies can invest in establishing a subsidiary company in Japan. Unlike a branch office, the liabilities and debts of the subsidiary company will not be attributed to the parent company but to the subsidiary itself.
If you prefer to keep the accounting of the new business entity separate from that of the parent company, then this option is suitable for you.
In contrast to a branch office, the representative doesn’t need to be a resident in Japan. However, in reality, initially, you will need someone who is a resident in Japan to assist in opening bank accounts and receiving the initial investment in the bank.
Representative Office vs Branch Office vs Subsidiary
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Representative Office
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Branch Office
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Subsidiary (KK or GK)
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|---|---|---|---|
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Business Activity
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Commercial activity is not allowed. Activities will be limited to market research, client meetings, etc.
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Commercial activity allowed
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Accounting Structure
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-
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Part of the parent company
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Separate from the parent company
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Registration
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|||
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Representative
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-
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Has to be a resident in Japan
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At least one representative director, technically better if a resident in Japan
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Capital
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Not required
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Not required
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At least 1 yen to establish KK
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Corporate Bank Account
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Cannot open a corporate bank account. Personal account only.
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Can open a corporate bank account
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Can open a corporate bank account
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Company Name
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Company name of your choice
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It should be the same as the parent company
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Company name of your choice
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Once you choose the right type of business (Representative Office / Branch Office / Subsidiary Company) you need to also decide on type of entity to establish, depending on your business objective and activities.
There are mainly two types of corporate entities that you can choose to establish in Japan:
Kabushiki Kaisha (Joint-Stock Company)
A Kabushiki Gaisha, or Kabushiki Kaisha, commonly known as K.K., is a type of company defined under the Companies Act of Japan.
It is commonly referred to as a “stock company” or “joint-stock company.”
One notable distinction in a Kabushiki Kaisha is the clear separation between shareholders and directors, resulting in more formal processes during both setup and operation. Additionally, Kabushiki Kaisha is required to publish financial statements, which adds to its credibility and transparency.
Although setting up a Kabushiki Kaisha is more expensive than Godo Kaisha, it offers higher credibility as it is considered the most reputable form of company in Japan by some businesses.
Godo Kaisha (Limited Liability Company)
A Godo Gaisha, or Godo Kaisha, abbreviated as G.K., is a business organization in Japan governed by the Companies Act and inspired by the American limited liability company, earning it the nickname “Japanese LLC”.
It offers limited liability to all investors and is distinguished by the ownership and management by partners, unlike the governance structure of Kabushiki Kaisha (K.K.).
The setup process is relatively straightforward and requires less time.
While not as widely considered credible as K.K., it is gaining recognition, as companies like Apple and Amazon have established Godo Kaisha in Japan.
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Kabushiki Kaisha (KK)
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Godo Kaisha (GK)
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Definition
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Stock Company
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Initial Setup Cost*
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¥ 300,000 - ¥500,000
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¥200,000 - ¥300,000
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Profit Sharing
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Profits will be shared according to the ratio of investment
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Profit sharing will not be restricted by the ratio of investment
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Governance Structure
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Clear distinction between shareholders and directors
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Partners own and manage the company
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Publication required
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Incorporation Process Timeline**
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2-3 weeks
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1-2 weeks
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Credibility
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Renowned and highly regarded form of company in Japan
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Not seen as credible as KK in Japan, but gaining recognition in recent years
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*The initial setup cost varies depending on the level of bilingualism required, the extent of assistance needed, and the complexity of paperwork involved.
**At Small Seasons & Co, we prioritize the quality of our services, and thus, we kindly request our clients to contact us at least three weeks before the intended date of business incorporation.
Step 1. Choose your business type and develop a business plan
If you are moving your business to Japan, first choose the right type of business (Representative Office / Branch Office / Subsidiary Company).
After that, if you are establishing a company, then decide on type of entity (Godo Kaisha or Kabushiki Kaisha) to establish.
You will also need to dedicate a certain amount of time in developing a business plan which is going to serve as a mighty compass for your entrepreneurial endeavor.
💡 Quick Tip 💡
If you were to apply for a Business Manager Visa you will need to submit this document to the Immigration Bureau.
Step 2. Secure an office space
Find the office to register your company. While there are multiple options for your business, including a virtual office, if you are planning to apply for a Business Manager Visa, you will most likely need to have a physical business office separate from your home.
Additionally, if you are currently not a resident in Japan, it may be difficult to rent an office so having a partner in Japan to assist you through the business start-up process becomes even more important.
Some foreigner friendly agency for rental offices:
Step 3. Create and notarize Articles of Incorporation (Teikan)
The preparation process for the articles of incorporation is crucial, as it not only outlines how your company will be run but also helps you clarify the next action points. These include determining whether you need to apply for business permits or licenses and checking the trademark/intellectual property situation for your business.
Notarization is only needed if you are establishing a Kabushiki Kaisha (Stock Company), not if you are establishing a Godo Kaisha (Limited Liability Company). An immigration lawyer can assist you in getting your Articles of Incorporation notarized at a Notary Public Office.
Examples of items to be included in the Articles of Corporation
- Company name
- Company address
- Main business activities
- Board of Directors and Officers
- Fiscal year
- Dividends and Reserves
etc
Step 4. Deposit the initial capital in a personal bank account
You can only open a corporate bank account after the company is officially registered. This means you will need to use one of the investors’ personal bank accounts in Japan to deposit the initial capital.
Step 5. Get company seal and prepare paperwork for company registration
There are many documents that need to be prepared prior to company registration at the Registry Office, including:
- Articles of Incorporation
- Personal Seal Certificate (for investors & directors)
- Letter of Appointment Acceptance from Directors
- Documents proving deposit of initial capital (copy of bank passbook pages)
- Seal Notification Form, etc.
From 2021, you will not need the notification of the company seal if you register your company online. However, in reality, there are still many situations in business where you will need it, so we recommend you prepare this document.
Step 6. Register company at the Registry Office
Submit the required documents at the Registry Office to apply for company registration. The registration process could take about a week for your company to be officially registered. Additionally, the minimum registration fee for a Godo Kaisha is 60,000 yen, while it is 150,000 yen for a Kabushiki Kaisha.
Step 7. Get Registry Certificate, Company Seal Certificate and Corporate Number
Once registration is complete, you will be able to receive a registry certificate, a company seal certificate, and a corporate number. You will need these for opening a corporate bank account and other follow-up procedures post-setup.
Step 8. Apply for business license and/or permits if necessary
Depending on your business activity, there are permits that you need to obtain. Depending on the type of business, you will have to fulfill the requirements regarding the amount of capital, size of the office, etc.
Examples of business activities that require permits include:
- Real Estate and Construction
- Recruitment Service
- Dealing in Second-Hand Busines
- Financial Service
- Cosmetics
- Food Industry
Step 9. Submit notifications to authorities
There are miscellaneous paperwork that needs to be completed, and these include submitting notification to the pension office, local tax office, labor inspection office.
The documents you will need to submit after registering your company can vary, but here is a basic list:
- Notification of Incorporation (to the Tax Office, Prefectural Office, & City Ward Office)
- Application for “Blue Form” Tax Return (to the Tax Office)
- Notification of Establishment of a Salary Payment Office (to the Tax Office)
- Application for Special Approval for Deferred Withholding Tax Payment (to the Tax Office)
- Application for Enrollment in Health Insurance and Employee’s Pension Scheme (to the Social Insurance Office)
- Notification of Eligibility for Health Insurance and Employee’s Pension (to the Social Insurance Office)
- Notification of Dependent(s) Eligible for Health Insurance (to the Social Insurance Office)
- Notification of Establishment of a Workplace for Employment Insurance Coverage (to the Employment Insurance Office)
- Notification of Eligibility for Employment Insurance (to the Employment Insurance Office)
Step 10. Set up a corporate bank account
Corporate bank accounts can be opened once the company registration process is complete. It is recommended however to contact a bank in advance and consult with them to inquire if you can open a bank account for your business. In Japan it is getting harder for companies to open a corporate bank account due to anti-money-laundering regulations.
Some English-speaking banks in Japan:
- Japan Post Bank (Yucho Bank)
- Rakuten Bank (online bank)
- SONY Bank (online bank)
- Shinsei Bank
There are specialized lawyers in various fields important for your business, and having the support of a specialist whom you can trust can contribute greatly to the success of your business.
Tax Accountant - Zeirishi
Establishing a corporation will incur taxes. After completing corporate registration, don’t forget to submit the notification letter to the Tax Office with jurisdiction over the company’s location, as well as notify the prefectural tax office and city ward office.
Finding the right tax accountant to support you on the process is key.
Social Securities Expert - Sharoushi
If you are hiring someone at your company, consult with a social securities expert to have them enrolled in workers’ compensation and employment insurance.
They can assist you with the communication process with the pension office and labor office.
Legal Advisors - Gyoseishoshi / Shihoshoshi
Shihoshoshi lawyers can help you with the company registration process, and Gyoseishoshi lawyers can support you with the creation of Articles of Incorporation, obtaining business permits and ongoing legal admin for your company.
While the practice areas of the two types of lawyers differ, they usually collaborate internally to offer a one-stop service so you don’t have to worry about finding one for each procedure.
Small Seasons & Co. is an English-speaking immigration lawyer’s office in Tokyo. Whether you’re establishing your business or navigating visa applications, we’re delighted to be your guide through the process. Let’s ensure your venture in Japan is both smooth and successful.
- By Saki Nakahara, Immigration Lawyer
- Last Updated:
