How to set up a business in Japan
Setting up a business in your own country can seem daunting and so establishing an operation overseas may feel extremely challenging. But starting a business in Japan isn’t too complicated and the process has been streamlined in recent years to ensure that it is much easier to navigate. There are several steps to follow, and care must be taken when undertaking each aspect of the process. However, setting up a business in Japan should not present any obstacles that you cannot overcome, and professional help is available should you need it.
Here's how to set up a business in Japan. The precise order in which you will need to tackle each step will vary according to which visa you apply for and which type of company you intend to establish.
1. Apply for a visa
Foreign nationals are required to obtain a visa if they wish to establish a business in Japan. You will need either a 4-Month Business Manager Visa, a Start-Up Visa, or a Business Investor Visa.
4-Month Business Manager Visa
A relatively new type of visa, the 4-Month Business Manager Visa was introduced to enable foreign business owners to start a company in Japan with greater ease. To obtain the visa you will require office space and funding capital. The visa gives you residency status and enables you to register your business and open a bank account. It can later be extended by 1 year.
Start-Up Visa
Established to attract foreign entrepreneurs to Japan, this visa is currently only available in Tokyo, Hiroshima and Aichi Prefectures, Sendai City, Fukuoka City, Imabari City, and Niigata City. You will need to submit the required documents (passport, photograph, certificate of eligibility and application form together with a business plan in Japanese and a recommendation letter from the local government office. Office space and a capital investment of 5 million yen are also required. The visa enables you to obtain a residence card, open a bank account and register your business. It can be extended by 6 months.
Business Investor Visa
This visa allows foreign entrepreneurs to enter and stay in Japan for the purpose of managing their own business operations or investing in an existing business. To be eligible, you will require significant capital to invest. No minimum amount is specified but it is likely that you would need at least 5 million Yen. You will also need to have incorporated your business. A detailed business plan must be submitted together with evidence of the companies’ existence such as a website. Applicants should be able to demonstrate relevant skills and experience. Of course, the necessary documents including your passport, certificate of eligibility and relevant licences must also be submitted with the application. Visas can be granted for 1, 3 or 5 years.
2. Decide which type of company you wish to establish
You can choose to form a stock company, Kabushiki-Kaisha (KK), or a limited liability company, Godo-Kaisha (GK). Please read our article dedicated to this subject as it provides the detailed information you need to make the right choice.
The type of business you choose will impact the complexity of establishing that business in Japan.
3. Choose your company’s name
When filing documents for your business you will need to include your company’s name. Please note that:
Your company name must not already be in use.
The name may not include any special characters such as (!) or (?).
English alphabet letters and all Japanese characters may be used.
There are restrictions regarding the use of the terms “bank” and “Securities”.
4. Make a company seal and personal seals
Seals known as Hanko act as business and personal identifiers in place of signatures in Japan. You will require multiple seals to complete the formation of your business and then to operate it moving forward. You will also need multiple personal seals as will any co-directors of the business. Seals must be registered, and seal certificates obtained.
You may not have encountered Hanko before. For further information, please read our detailed guide.
5. Find and secure office space
It is possible to obtain short and long term rental agreements. Short term rentals are extremely popular as they provide flexible lease terms and give you low start-up costs. The premises tend to be serviced and will usually feature furniture, IT infrastructure and office equipment. Ask a legal professional to check the terms of any lease before agreeing to it.
Short term rentals are usually generic spaces while long term rentals enable you to set up your space to reflect your company’s brand and culture. Premises should be easy to find but you can engage the serves of a real estate agent to identify the right property. Always seek expert guidance regarding lease terms and rental practices in Japan before signing any agreement.
6. Articles of incorporation
Here’s where things get a little complicated! Known as Teikan in Japan, articles of incorporation are required for kabushiki kaisha companies and must be notarised. Teikan are fundamental rules for the organizational activities of the legal entity. The specific requirements for Teikan and the procedure for the establishment of Kabushiki Kaisha companies can be found on the Ministry of Justice website together with useful templates for Teikan.
7. Deposit initial capital
As you cannot open a business bank account until your business is registered, you will need to open and a personal bank account into which you can pay your initial capital. If you are opening a subsidiary business in Japan, the deposit can be made into the Representative Director’s personal bank account.
8. File an application for registration of the business
Gather all the documents you require for registration. These include:
Application to Do Business (Touki Shinseisho),
Letter of Acceptance of Appointment from the Director (Shuninn Shoudakusho),
Registration License Tax Payment Form (Tourokumenkyozei Noufuyoudaishi),
Director's Seal Registration Certificate (Torishimariyaku No Inkanshoumeisho),
Proof of capital deposit from the bank
Seal Notification Form (Inkan Todokedesho).
Founders Written decision (Hokkinin Ketteisho), if your Teikan doesn’t include the address of the head office.
Letter of Confirmation of Appointment from the Auditor (Shuninn Shoudakusho), if you have appointed an auditor.
You can then file your application for business registration at the Registry Office or Homukyoku. Once the business has been registered, you should obtain the registration certificate and corporate number.
9. Open a bank account
Thanks to the language barrier and bureaucracy, opening a bank account in Japan can feel challenging. But there are Japanese banks which are amenable to foreign investors and where the process of registering an account is easier. These include Sumitomo Mitsui Banking Corporation, Shinsei Bank (provides services in English) and Seven Bank (also provides services in English).
The documents you will require vary from bank to bank but will likely include proof of residency and proof of residency rights. You will also require an initial deposit.
10. Notify the tax office
You will need the following documents:
Incorporation Notification (Houjin Setsuritsu Todokedesho).
Application Form for Approval of Payment for Withholding Income Tax (Gensenshotokuzei No Nouki No Tokurei No Shyouninn Ni Kansuru Shinseisho).
Application for Blue Tax Returns (Aoiroshinkoku No Shouninnshinseisho).
Notification of the Opening of a Payroll Office (Kyuuyoshiharai Jimushyotou No Kaisetsu Todokedesho).
11. Notify the Labor Standards Inspection and Public Employment Security Offices
If you are employing staff, you will need to notify the relevant authorities of your labour insurance and rules. You will require a Labor Insurance Affiliation Report (Roudouhokenkankei Seritsutodoke), and a Labor Insurance Estimated Premium Declaration (Roudouhoken Gaisan Hokenryou Shinkoku).
You must also notify the Public Employment Security Office of your workplace insurance if you have or will have employees. You will require an Employment Insurance Office Establishment Notification (Koyouhoken Tekiyou Jimusho Secchitodoke), and Employment Insurance Qualification Notification (Koyouhoken Hihokensha Shikakushutokutodoke).
12. Notify the Japanese Public Pension Office
It is necessary to provide proof that the pensions and health insurance of everyone working at the business are covered. This will include the pensions and health insurance of both the employees and the directors. You will need to provide:
Notification of Acquisition of Health Insurance/Welfare Pension Insurance Eligibility (Kenkōhoken kōsei nenkin hoken hihokenja shikaku shutoku-todoke),
Notification of Application for Health Insurance and Welfare Pension Insurance (Kenkohoken, Kouseinenkin Hoken Shinki Tekiyoutodoke)
Notification of Healthcare Dependents (Kenkohoken Hifuyoushatodoke).
There are numerous steps you must take and a few hoops to jump through if you wish to set up a business in Japan as there would be in any country. But many entrepreneurs have navigated the process successfully and are already achieving great things. You too could be big in Japan.
