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Set up company in Japan

With the development of globalization, an increasing number of foreign companies are planning to establish their presence in Japan to meet their business or investment needs. Japan has always been a popular destination, and the local government welcomes the entry of foreign companies.

However, setting up a foreign-owned company in Japan requires compliance with legal procedures and corporate management requirements, as well as facing cultural differences and market competition. Nevertheless, establishing a successful foreign-owned company can bring many business opportunities and opportunities for growth.

I.Japanese company type

When establishing a company in Japan, companies are divided into four types according to the Company Law: “joint stock company”, “limited liability company”, “partnership company” and “joint venture company”. Therefore, it is necessary to determine what type of company to establish. Foreigners generally set up corporations (joint-stock companies) and contract companies (limited liability companies) with relatively simple procedures.

Kabushiki Kaisha: A company (joint-stock company) refers to a company that refers to investors at the time of establishment and capital increase as “shareholders” and delivers “shares” corresponding to the amount of investment to such shareholders to raise capital (working capital) .
A characteristic of a corporation is the “separation of investors and operators.” Shareholders raise funds under limited liability, and operators entrusted by shareholders conduct business operations and distribute benefits to shareholders. Of course, there is no legal problem with the investor-cum-operator of the company.
Therefore, in Japanese small and medium-sized enterprises, there are many cases where the “shareholders” as investors and the “directors” as managers are the same person. The disadvantage of a limited company is that the establishment cost is higher than that of a contract club, and the company’s articles of association need to be certified. The advantage of a limited company is that it has higher external credit than a contract club, and it is easier to negotiate with banks for financing or negotiate with customers than a contract club.

Godo Kaisha: The investors of a contract company are the “members”, which means both “investors” and “operators”. At this time, there is no need to go through the process of “selecting directors through a general meeting of shareholders” like a company does, and “investor = company manager.” This is the biggest difference from Co., Ltd. Basically “all members have equal voting rights in management”, so there is no concept of the number of voting rights mentioned by the company. Therefore, in the “Members’ Meeting” where important management matters are decided in a contract club, the resolution cannot be decided without the attendance and approval of all members.

Minimum capital

Number of funders

Tenure of directors

Contribution share transfer

Issue stock

Is it possible to switch between joint-stock companies and limited liability companies?

Profit and loss distribution

Pros

Cons

Joint-stock Company

At least 1 Japanese Yen

1 person or more

2 years in principle, up to 10 years

Free in principle

Allow

Allow Issue stock

Allow

Allow switch companies

Allocate according to the capital contribution

High trust Wide range of tax-saving options

Higher social insurance premiums

Limited Liability Company

At least 1 Japanese Yen

1 person or more

Indefinitely

Consent of all funders is required

Allow

Allow Issue stock

Forbid

Forbid change company

Stipulated in the bylaws

Low cost to set up

Not well known in Japan

II.Documents should be prepared for company establishment

The basics of setting up a company need to confirm the following information:

Confirm company type
Confirm the type to be registered, such as joint-stock companies or limited liability companies.

Club name (company name/trade name)
Basically, you are free to decide the name. However, it is necessary to confirm in advance that there is no similar business name with the Legal Affairs Bureau under the jurisdiction of the company’s location. When deciding on a “business name”, don’t just check the “Company Law”. Attention should also be paid to the Anti-Unfair Competition Law.
(1).Japanese characters (hiragana, katakana, kanji)
(2).English letters (uppercase or lowercase A~Z)
(3).Arabic numerals (0123456789)

Determine the amount of capital
One of the main points to worry about when setting up a company is how much capital is required? In Japan, the capital needs to be actually in place, and the capital is regarded as “the company’s reputation” to the outside world. A company with a large amount of capital is considered a financially strong company. A newly established company is not well known in the outside world. In this case, the amount of capital has a direct role as a criterion for judgment.
1. If a business management visa is required, capital of more than 5 million yen is required.
2. Business contents that require approval may require capital, so please confirm in advance.

Management items
A company cannot do anything that is not documented in the company’s articles of association. That is to say, even if it is a business that has not yet been executed when it is first established if it is possible to do it later, it needs to be explained in advance. At the end of the business purpose of the articles of association, “all businesses related to or incidental to the preceding paragraph” may be added.

Number of shareholders, directors, and auditors at the time of establishment (directors and shareholders)
1. Sponsor (shareholder): 1.
The shareholder’s identity document, such as passport or residence card, if it is a legal person shareholder document, must be authenticated by the local embassy.
2. Directors: 2.
One of them is the representative director, and it is recommended to have at least one local director to facilitate the opening of a bank account in the future.
3. Supervisor (supervision): None.

Articles of Association
The company’s articles of association need to be written to stipulate the company’s operating methods, business scope, board of directors operations and other details.

Investor, director information, tenure, etc.
Identity documents such as passports or residence cards are required for directors and shareholders.

Company location
If you are renting, please check the lease agreement to see if there is any “Company do not” statement. The registered address on the articles of association must include a minimum administrative division.

III.Japanese company setup procedure

In Japan, foreign capital can establish a company independently, but when a foreigner becomes a sole proprietor, he must meet the same conditions as when the company was established and obtain a business management visa.

The amount of funds must be 5 million yen or more.
In addition to the operator, there are at least two Japanese employees.

When a foreigner sets up a company in Japan, the general procedure is as follows:

1.Confirm the investment information for the establishment of the company.

2.Preparation and Certification of Articles of Incorporation
After the company’s articles of association are established, the company’s articles of association need to be certified, and the seal or signature certification must be certified by a notary unit.

3.Remittance of capital
Once the articles of incorporation have been approved, the funds must be transferred to the bank account established by the founders. The registered funds need to be transferred through the bank account established by the sponsor. If the originator is an individual, transfer it to a personal bank account. If it is a company, transfer it to the account in the name of the company.
A recurring problem is that it is difficult for overseas residents and short-term residents to open a personal account. However, thanks to a legal change in 2017, even overseas residents can use the capital. You can pay by the following three methods.
(1).Transfer to the Japanese account of the director/representative director at the time of establishment.
(2).If the founder or director is not a Japanese resident, it is also possible to transfer to the bank account of a third-party individual.
(3).An account at an overseas bank branch in Japan or at a Japanese bank branch overseas.

4.Apply for company registration after making documents
Prepare documents for registration. The types of documents to be created will vary depending on the type of company, such as application for registration, seal, articles of association, letter of decision, consent to employment, identity verification, proof of capital contribution…etc.

5.Notification and declaration from the tax bureau
After completing the registration procedures at the Legal Affairs Bureau, report to the tax authority where the company is located. Due to the various taxes and fees levied on the company, it is the most important procedure after the establishment of the company.

6.Notify the prefecture tax office/municipal office
After the notification to the tax bureau is completed, the prefecture tax bureau and the municipal office must be notified at the end.

Note:
To obtain an Entrepreneur/Management Visa, the following conditions must be met:
The required capital amount is 5 million Japanese yen or more.
In addition to the operator, there must be at least two Japanese employees.

IV.Basic corporate tax in Japan

Taxes that corporations must declare include corporation tax, corporation inhabitant tax (prefectural tax/city tax), corporation business tax, consumption tax, etc. Generally, a company’s final tax return must be filed within two months of the end of the business year. The following are the main taxes for Japanese companies:

Corporate tax

Corporate tax is a national tax equivalent to income tax for corporations, using a progressive tax rate. All income sources are subject to taxation.

Local Corporation Tax

This is an additional tax levied based on the corporate tax amount, classified as a local tax.

One of the new national taxes

GST

The tax rate increased from 8% to 10% in 2019. Consumption tax applies to nearly all goods and services.

Enterprise Tax

This is a local tax levied to support prefectural public services, with rates varying by region.

Prefecture Public Services

Inhabitant Tax

This is a local tax levied by municipal governments, including a corporate tax rate component and an equal portion based on company size.

The main all the various tax rates in Japan.

The tax rate increased from 8% to 10% in 2019. Consumption tax applies to nearly all goods and services. Exemption Conditions:Startups are exempt during the first two years if capital is below 10 million yen and the previous fiscal year's sales are under 10 million yen. Exceptions:
• (1).Taxable sales in the first half of the year exceed 10 million yen.
• (2).Total wages paid in the first half exceed 10 million yen.
Note: Consumption tax is collected from consumers, and companies must remit it even if operating at a loss.

V.Obtain a business management visa

Residence status becomes an important issue when a foreigner establishes a company in Japan and joins the management. Foreigners can carry out business and management activities by obtaining a business management visa. To obtain a business management visa, the following conditions must be met.

Must have a business office in Japan (cannot be combined with a home).
Employ 2 or more people who are permanently residing in Japan, or who pay 5 million yen or more per year in Japan.
The capital is more than 5 million yen.
Can demonstrate business stability and continuity.

Basically, it is difficult to obtain a business management visa without meeting these conditions.

-Notices-

When a foreigner establishes a company in Japan and participates in its management, he or she must have the status of residence in Japan.

You cannot start a business on a work visa or student visa. Therefore, it is necessary to obtain a business management visa.

It is difficult to obtain a business management visa without a sizable business plan.

It is recommended to find an experienced agency company to assist in providing the latest regulations and information on Japanese registered companies and provide relevant guidelines.

Inter Area is a professional business service company, it has professionals who are familiar with business planning, registration, practical operation cases, related precautions and the latest information, providing customers with the most complete, fast and secure services.

Japan company set up Q&A

Q1. How long does it take to set up a Japan company?

The time required to set up a company in Japan usually depends on the type of company and the completeness of document preparation. Generally, the process of setting up a company (KK) takes about 1-2 months, and opening a bank account requires an additional few weeks to complete.

Q2. Do you need a physical office address to set up your company?

When setting up a company in Japan, you need to provide a registered address. This address does not have to be a physical office; a virtual office address can also be used as a registered company address, but must comply with local regulations.

Japan company set up Q&A

Q1. How long does it take to set up a Japan company?

A:The time required to set up a company in Japan usually depends on the type of company and the completeness of document preparation. Generally, the process of setting up a company (KK) takes about 1-2 months, and opening a bank account requires an additional few weeks to complete.

Q2. Do you need a physical office address to set up your company?

A:When setting up a company in Japan, you need to provide a registered address. This address does not have to be a physical office; a virtual office address can also be used as a registered company address, but must comply with local regulations.

Contact

Set up company in Japan

I.Japanese company type

II.Documents should be prepared for company establishment

III.Japanese company setup procedure

IV.Basic corporate tax in Japan

V.Obtain a business management visa

Japan company set up Q&A

Q1. How long does it take to set up a Japan company?

Q2. Do you need a physical office address to set up your company?

Japan company set up Q&A

Related topics

在這裡聯繫我們 Inter Area

探索 Inter Area

We work with a passion of taking challenges and creating new ones in business sector.

在這裡聯繫我們 Inter Area

探索 Inter Area

We work with a passion of taking challenges and creating new ones in business sector.

Contact

Set up company in Japan

I.Japanese company type

II.Documents should be prepared for company establishment

III.Japanese company setup procedure

IV.Basic corporate tax in Japan

V.Obtain a business management visa

Japan company set up Q&A

Q1. How long does it take to set up a Japan company?

Q2. Do you need a physical office address to set up your company?

Japan company set up Q&A

Related topics

在這裡聯繫我們 Inter Area​

探索 Inter Area

We work with a passion of taking challenges and creating new ones in business sector.

在這裡聯繫我們 Inter Area

探索 Inter Area

We work with a passion of taking challenges and creating new ones in business sector.

在這裡聯繫我們 Inter Area