Starting a business in Japan
13 December 2011
Yoko Majima - Legal Advisor, Immigration Lawyer
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Education
◦ One year students exchange program at a high school in Melbourne,
Australia
◦ Graduated from Sophia University, majoring in French studies (language,
sociology), including one year exchange at Université Aix-Marseille I (Aixen-Prevence)
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Work history
◦ Japanese fashion designer’s office in charge of International Dept.
◦ Japanese importer of French wine and food
◦ Permanent Mission of Japan in Geneva, Switzerland
◦ Mission Economique, l’Ambassade de France au Japon
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Two ways of doing business – as a sole
proprietor (kojin jigyo / auto-entrepreneur)
or by setting up a company
SOLE PROPRIETOR:
◦ Business entity owned and run by one individual
◦ Possible to use a different commercial name
◦ No legal distinction between the owner and the
business
◦ All profits/losses, assets/debts of the business
belong to the owner
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Advantages of sole proprietorship
◦ Easy to start – no registration required
◦ Simple tax procedure
◦ Low cost, no corporate tax
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Disadvantages of sole proprietorship
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Less credibility
Unlimited liability
No corporate bank account available
Difficult to manage when there are several partners
Higher tax rates when the profit exceeds certain
amount
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What is a company?
◦ A legal entity that can be defined as an “artificial person”
registered at the registry office (homukyoku)
◦ Different types of legal entities – Kabushiki Kaisha (KK),
Yugen Kaisha (YK), Godo Kaisha (GK), NPO, Association
(shadan hojin), Foundation (zaidan hojin), LLP…
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Advantages of a company
◦ Credibility
◦ Limited liability
◦ Easier to manage when there are several partners
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Disadvantages of a company
◦ Registration required for setting up, changes,
closing down – more time and costs involved
◦ Complicated tax procedures (need to hire an
accountant)
◦ Two levels of taxation – corporate tax and personal
tax
 However your visa category doesn’t always give
you a free choice.
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Visa categories
Visa status without
work restrictions
(Permanent Resident, Long Term
Resident, Spouse/Child of
Japanese national, Spouse/Child
of Permanent Resident)
Work visas
(Specialist in
Humanities, Engineer, Intracompany Transferee etc.)
Non-working visas
(Dependent, Student,
Cultural Activities)
Sole proprietor
Company
OK without any
restrictions
OK without any
restrictions
Possible under certain
conditions
Need to change to an
“Investor/Business
Manager” visa
Possible with restrictions
or change to a work visa
Possible with restrictions
or change to an
“Investor/Business
Manager” visa
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Visas that allow you to become a sole proprietor
◦ Visa status without work restrictions
◦ Freelance under a work visa – need to have stable
contracts with Japanese companies (translator, IT
engineer…)
◦ Dependent, student, cultural activities visa – within 28
hours/week under a permission from Immigration office
(or change to a work visa if working on full-time basis)
◦ Working holiday visa (change to a work visa when the
WHV expires)
◦ Investor/Business Manager visa if 5 million yen
investment can be proven without a company
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Visas that allow you to run a company
◦ Visa status without working restrictions
◦ Investor/Business Manager visa
◦ Other types of work visa if someone else can
become the Representative Director
◦ Dependent, student, cultural activities visa – within
28 hours/week under a permission from
Immigration office (or change to an
“Investor/Business Manager” visa if working on fulltime basis)
◦ Working holiday visa (change to an
“Investor/Business Manager” visa when the WHV
expires)
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To invest 5 million yen from foreign source
(foreign company or individuals)
◦ Investment from the visa holders without work
restrictions doesn’t count
◦ Doesn’t need to be your own funds
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To have a physical, dedicated place of business
(office, shop, etc.)
◦ Virtual office is not accepted.
◦ If working at home, a written consent from the landlord
authorizing you to use the residence as an office is
required
◦ Could be a place rent out from a friend for free
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Company’s financial stability
◦ Ideally the company needs to generate a profit or have
no loss.
◦ It’s still possible to renew the visa even if the company is
in loss, as long as the capital hasn’t been exhausted.
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Payment of personal income and resident tax
◦ The company needs to pay you a sufficient monthly
salary (ideally 200,000 yen/month or above) and
withhold the income tax to pay to the tax office on your
behalf.
◦ It is necessary to pay the resident tax (jumin-zei) to be
able to provide a tax certificate (nozei shomeisho) for
the visa renewal.
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Kabushiki Kaisha (KK)
Godo Kaisha (GK)
Credibility
Most credible
Less credible
Setting up cost
Around 380,000 yen
Around 220,000 yen
Governance
Possible to separate
those who invest and
those who run the
company
Necessary to invest to be
able to participate in the
company’s management
Operation
At least one shareholder
and a Representative
Director who needs to be
resident in Japan (could
be the same person)
At least one partner who
needs to be resident in
Japan
Advantages
Most credible.
Easier to have other
investors or to
transfer/sell shares
Possible to decide freely
the profit dividing rate
regardless of the amount
of investment.
Simple to manage.
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Required documents
◦ Inkan shomeisho (seal certificate) issued at the city hall
or signature certificate issued by the Embassy or
certified by a notary public abroad
◦ Personal bank account in Japan (for deposit of capital)
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Necessary to decide:
◦ Office address in Japan
◦ Representative Director who needs to be resident in
Japan
◦ Amount of capital (minimum 1 yen / 5 million yen for an
Investor visa)
◦ Other detail such as company name, activities…
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Importing and selling products such as medicines,
cosmetics and other products that have contact
with skin or could damage the health
Restaurant, café, catering, hotel, spa (sanitary
requirements)
Importing and selling alcohol
Sale of used items (including auctions)
Travel agency
Real estate agent
Recruitment, temp agency
Investment brokerage, advisory
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Corporate taxes
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Corporate income tax (hojin-zei)
Corporate inhabitant tax (hojin jumin-zei)
Enterprise tax (jigyo-zei)
Effective tax rates from 25% to 40% (on taxable income)
Minimum tax 70,000 yen (even if the company is in loss)
Consumption tax (shohi-zei) 5% : 2 years after making 10MY sales
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Personal taxes
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Social insurance
◦ Income tax (shotoku-zei), withheld from your salary (5, 10, 20, 23, 33 and
40%)
◦ Inhabitant tax (jumin-zei): 10%
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Health insurance
Pension
Limit of “dependent” status: 1.3 million yen income/year
No unemployment insurance available as a business owner
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Manage from overseas: necessary to hire
someone in Japan
Make company dormant
◦ Until you can decide what to do or if you might
come back to Japan
◦ Still necessary to file the tax declaration once a year
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Sell the business to someone interested
Close down the company (cost around
200,000 yen, 2-3 months procedure)
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Yoko Majima
– Legal Advisor, Immigration Lawyer
www.juridique.jp
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info@juridique.jp
2F Minami Azabu Centre, 4-12-25 Minami-Azabu
Minato-ku, Tokyo 106-0047
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Thank you for
your attention!
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