Starting A Business In Japan As A Foreigner
Have you lately thought about starting a business in Japan? A potential entrepreneurial idea is not enough. You need to get through all the legal requirements and procedures first. Let us give you a hand in this location guide.
1. Starting a business in Japan: General Requirements
1.1. Japanese VISA
So starting a business in Japan as a foreigner, it is important to acquire a particular kind of visa. Provided that you already acquire a Visa, please check whether it legally allows you to open a business or you must apply for a new one. In case you haven’t had any visa yet, you can get a 4-Months Business Manager Visa or a Start-Up Visa. And this Start-Up Visa is given in certain regions (Tokyo, Fukuoka, and different urban areas) in Japan.
4-Month Business Manager Visa
It is first introduced in 2015. You need to submit your application including all required documents to the immigration bureau in Japan. As long as, you can show that you are currently working on your startup in Japan, and the application goes well, you can acquire this Visa easily before your departure.
The requirements are:
- employ at least two people full-time
- invest at least 5 million yen in Japan (through a bank account or financial report)
Please note that the visa is only legitimate for a 4-month period. During this period, you are allowed to:
・Obtain a residence card (naturally you need to have a residential address)
・Open a bank account
・Register your business
You may worry that 4 months is too short but it is enough for your planning and setting up a business in Japan. Afterward, you can apply to extend your visa to 1-year Business Manager Visa.
With the aim to attract more foreign entrepreneurs in Japan, the government has created this specialized visa, with an uncomplicated process and 6-month validity. Up to now, Start-up Visa is limited to businesses in some cities including Tokyo, Fukuoka, Hiroshima, Niigata, Aichi, Sendai and Imabari.
The problem is you should already be in Japan to apply for this visa since a few documents need to be sent to the local authorities, for example, a business plan. Then, the local authority will provide you with a recommendation letter for further application at the immigration bureau. There is no need for advanced investment or employees like Business Manager Visa. With just the confirmation of the local government, for instance, Tokyo Metropolitan Government, a prospective entrepreneur can earn his or her Start-up visa valid for 6 months (2 months longer than the 4-month Business Manager Visa). However, when 6 months have passed, to broaden your stay to another 6 months, you must follow the same application for a Business Manager Visa.
Contact one of the offices below for further information about obtaining a Start-Up Visa
If you already have a different type of Japanese Visa
In the event that you now possess a Japanese Visa and already a resident, you can directly register your business during your visa’s valid time. Then, you still have to transform your visa to a business visa. The process will be up to your present visa type. For more details, please visit immigration bureau website.
In order for you to be eligible for starting a business in Japan long-term, the Business Manager Visa along with employment are inevitable. So the legislature in Japan will expect you to get protect the rights of your laborers, however will likewise support you doing that.
Labor law in Japan regulates the lowest pay permitted along with working condition standards, which all employers regardless of nationality must follow.
Corporations in Japan need to join 4 types of insurance, as following:
- Worker’s Accident Compensation Insurance
- Employment Insurance
- Health Insurance and Nursing Care Insurance
- Employee’s Pension Insurance
However, if you and your employees are foreigners and have acquired the same insurance in your home country, there is a chance that you can be excluded from this compulsory social security. Japan government has signed this agreement with Germany, the U.K., South Korea, the U.S., Belgium, Italy, India, France, Canada (except Quebec), Australia, the Netherlands, the Czech Republic, Spain, Ireland, Brazil, Switzerland, and Hungary. So citizens from these nations can notify the Pension Office or other legal agencies.
2. Types of corporations and specific requirements
Among these structures, KK is definitely the most widely used thanks to credibility in Japan. This helps you gain trust, partner, or work with large Japanese firms. However, the setting up expense is also more costly, approximately 500.000 yen (4700$). So choose KK if:
- Your budget is sufficient
- You want to do regular business with Japanese inc
- You will sell shares to other investors in the future
Otherwise, you can pick the Godo-Kaisha option if:
- Your main clients are also abroad
- There are no other investors or directors
- You want the process to be easiest and quickest
3. Procedure & expense
This procedure will somehow depend on the type of business you run. Since K.K and G.K are the most popular for foreigners in Japan, I gonna depict their related process here.
- Get an office
- Preparation of the Articles of Incorporation
This is called teikan in Japanese, an essential document that shows how the company is managed. They may be detailed or not, according to the demands of shareholders/investors.
After finishing writing it, you must get it certified by a notary office (Koshonin yakuba). This certification process will cost you about 50,000 yen (479 USD) and 3 business days waiting. Then, a 40,000 yen (383 USD) revenue stamp is also required when submitting the Articles of Incorporation.
Note: If you open a GK company, you just need to write your Articles of Incorporation with revenue stampt and no need for notarization.
- Corporate Seals
These include a seal of the representative of the corporation (required), a seal of the corporation for using a bank account (required), a square seal of the corporation. It takes approximately 3 business days to get these done.
- Deposit of primary capital
Before company registration completion, your company can’t open a bank acount yet. So a representative, usually the Director, must create a personal account and transfer investment money to that. Or else, an investor’s existing personal account in Japan can also be used to deposit the money.
- Preparing and sealing documents for the company’s registration
You need to prepare plenty of documents in advance of the registration, ranging from the notification of the company’s seal (inkan) which you have done in step 3, to the agreement from the directors regarding their office. It takes approximately 1 to 3 business days.
- Application for registration of incorporation
Fill the form at the Registry Office (Homukyoku) with the minimum fee of 150,000 yen (1437 USD) for KK 60,000 yen (575 USD) for GK. It takes 1 business day.
- Registration Confirmation
Once the company registration is completed, you should expect to receive a registry certificate along with the company’s seal certificate in the next 7 business days from submission. These certificates will help you open a company bank account, sign employment, and business contracts in the corporate’s name.
Now, there are a few business procedures needed to be done. One is the visa application and status of residence for foreign directors and workers, another is the business license (optional). You also deal with tax and social insurance. These processes normally take 2 to 4 weeks.
For more details on documents required for opening a business in Japan, visit: https://www.juridique.jp/business/incorporation_documents.php
+ How much does it cost to start a business in Japan?
So I will list the most common expense involved before your incorporation really starts:
- Minimum capital: According to the Companies Act of Japan, 1 yen is possible to establish a company. However, for a non-Japanese businessman to maintain his company long-term here, he needs to invest 5,000,000 yen to get a “Business Manager” visa.
- Lawyer to write the Articles of Incorporation (optional): no less than 10,000
- Notarization of the Articles of Incorporation: 50,000
- Revenue stamps: 40,000
- Company seal (inkan) used to sign contract: 10,000 – 100,000/ each
- Company tax, depending on your starting capital but no less than 150,000
+ Is Japan a good place to start a business?
Yes, Japan is an attractive nation for business in general as 49% of corporations here agree that it is good as a test maker and 40.5% believe it supports business expansion well. There is a bunch of evidence for this like:
- Loyal and industrious employees: Japanese take pride in what they do and feel a strong responsibility for their company’s success. So you can easily build a stable and hardworking workforce here, which results in lower turnover costs and higher performance.
- Supply chain development: Apart from the wide network, Japan deliveries are quite flexible which means you can easily negotiate your terms. It is also reliable, so you can spend time focusing on other matters excluding supply chain management.
- Appealing market: Here, you find clients willing to pay for qualified or niche products.
- Transparent laws and regulations: Japan’s government is quite foreign business-friendly. So there is no priority or any kind of difference the law applies to Japanese or non-Japanese corporations. Besides, to encourage investment in Japan, corporation tax is having a downward trend and labor laws have been loosened.
+ How can I start my own business in Japan?
Well, like elsewhere, you need a practical idea and do whatever possible to deliver it successfully. But legally, to start a business you need:
- An address of your store/ company: your residence will not be accepted, you need to rent or buy a different place. And expect the Immigration Bureau of Japan to come by and check this place to decide it is suitable for its purpose.
- Business plan: it is a required document and actually a part of any business. A decent plan should have a profit and loss statement. This plan will also help to get the Articles of Association (teikan). Besides, your personal experience in the field you intend to startup is a plus point during corporation application. Otherwise, no experience founder, illegal business, or unrealistic one that is likely to be operated will be declined.
- Investment: for a long term business, you must have a 5,000,000 yen investment in Japan. For instance, you can invest in your own business here or buy land, building. Please note that your corporation’s financial report affects the assessment as well. For instance, provided that the balance sheet indicated a deficit, which means the debts outweigh the assets, the authority will consider it as a financial problem.
+ What is the best business to start in Japan?
According to Kigyojapan.com (Entrepreneur Japan), some of the top common business for foreigners in Japan are:
- Exportation and Importation: Japan is long known as a shopping paradise and the Japanese love inventing kinds of stuffs. Indeed, these inventions are convenient and special than anywhere else in the world. The possible products range from clothing, food, furniture, cars to machinery.
- Restaurant: Why not bring international cuisine to Japan where a lot of foreigners are living and people love good food.
- Travel Agencies: This is quite obvious cause Japan is a hot spot for travelers from Europe, America, or even Asia. The clients want a terrific package tour in Japan or a cheap flight back home around the year. You can be the provider.
- Technology: An independent software engineer will live well in Japan since there are a lot of job opportunities. But if you want to start something your own with your expertise, you will find Japan a market to explore.