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Set up company in Japan

Foreign nationals can establish a company in Japan under one of four legal structures, with Kabushiki Kaisha (KK) and Godo Kaisha (GK) being the most common. The incorporation process involves company name approval, notarization of the articles of incorporation, capital remittance, registration, and tax filing.

To operate the business locally, a Business Manager Visa is required, typically necessitating JPY 5 million in capital or the employment of two Japanese nationals. Post-incorporation, companies must comply with Japan’s tax regulations.

Partnering with InterArea ensures a streamlined setup, regulatory compliance, and a smooth entry into the Japanese market.

I.What Types of Companies Exist in Japan?

Under the Companies Act of Japan, companies are classified into four main types: Kabushiki Kaisha (Joint-Stock Company), Godo Kaisha (Limited Liability Company), Gomei Kaisha (General Partnership Company), and Goshi Kaisha (Limited Partnership Company).

In practice, foreign investors generally prefer Kabushiki Kaisha (KK) and Godo Kaisha (GK) due to their simpler incorporation procedures and more flexible management systems.

Kabushiki Kaisha: A Kabushiki Kaisha (Joint-Stock Company) raises capital by issuing shares to investors (shareholders) and is characterized by the separation of ownership and management. Shareholders contribute capital with limited liability, while the company is managed by directors and an executive team. Profits are distributed to shareholders in proportion to their shareholdings.
Although the legal framework separates the roles of ownership and management, in practice—especially among small and medium-sized enterprises—it is common and legally permissible for a single individual to serve as both shareholder and director, combining investment and management functions.

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: A Godo Kaisha (Limited Liability Company) is a corporate structure that integrates the roles of investor and manager. The investors, known as “members” (shain), are also directly involved in management. Unlike a Kabushiki Kaisha, there is no requirement to appoint directors through a shareholders’ meeting. Members themselves serve as the management body and have significant authority over operations.
Each member has an equal voting right in management decisions, and for important resolutions to be approved, all members must be present and reach unanimous consent at a members’ meeting

The establishment cost of a Godo Kaisha is generally lower than that of a Kabushiki Kaisha (Joint-Stock Company). One key advantage is that notarization of the articles of incorporation is not required, making the setup process more straightforward..

However, Godo Kaisha is generally perceived as having lower external credibility compared to a Kabushiki Kaisha, which may result in greater challenges in areas such as bank financing and business negotiations.

The following is a comparison table between a Kabushiki Kaisha and a Godo Kaisha:

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.What documents are required to establish a company in Japan?

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 key considerations when establishing a company in Japan is determining the appropriate amount of stated capital. While the legal minimum capital requirement is merely 1 yen, the full amount must be actually paid in, and it serves as a public indicator of the company’s financial credibility and business substance.
For startups, the level of capital is often scrutinized by potential business partners and financial institutions as part of their trust and risk assessment. It is therefore recommended to set a capital amount that aligns with the company’s operational scale, industry expectations, and projected growth strategy.
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.

Business objectives
When establishing a company in Japan, the business objectives must be clearly stated in the articles of incorporation. The company is legally permitted to operate only within the scope of the activities explicitly listed in these objectives.

Even if a business line has not yet commenced, it should be included if there is a possibility of future engagement. To ensure operational flexibility, it is common practice to include a general clause at the end such as: “Any and all businesses incidental or related to the above.” This allows for coverage of potential future expansions.

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.
Under Japan’s Companies Act, a company is required to appoint a statutory auditor only if it establishes a Board of Directors.

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
OWhen establishing a company in Japan, the capital must be remitted into a bank account opened by the founder. Individuals may use a personal bank account, while legal entities are required to open an account under the company’s name.
However, non-residents and short-term residents often face difficulties opening bank accounts in Japan. To address this, current regulations allow for three flexible capital remittance methods:
(1).Transfer the capital into a Japanese bank account held by a director or representative director.
(2).If all directors reside overseas, a third party may be designated to receive funds into their personal account in Japan.
(3).Use a branch of a foreign bank located in Japan, or a branch of a Japanese bank located overseas.
These flexible arrangements help foreign entrepreneurs overcome initial capital remittance obstacles during the company formation process.

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

When a foreign national establishes a company in Japan and assumes a management or executive position, residency status becomes a critical consideration. In such cases, applying for a Business Manager Visa allows the individual to legally engage in business operations and corporate management in Japan.

To obtain this visa, the applicant must meet the following requirements:

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.What Types of Companies Exist in Japan?

II.What documents are required to establish a company in Japan?

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.What Types of Companies Exist in Japan?

II.What documents are required to establish a company in Japan?

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