How to Start a Business in Japan

Poste date: Friday, October 21, 2022

For those who already have an established company abroad and would like to expand their business to Japan, there are 3 types of operations you can choose from to incorporate your business. You can either establish a Representative Office, a Branch Office, or a Subsidiary Company. In Japan, a Representative Office, is not allowed to act in sales activities (refer to the link above for details).

For those looking to start a new business within Japan, you will need to establish a company and obtain a specific VISA. Since the use of a new type of Visa called "Start-Up Visa" became available in several regions of Japan, it has been a little easier for non-Japanese entrepreneurs to come to Japan and start their own business.

The following article will provide some information about the types of Visa available (4-Months Business Manager Visa and Start-Up Visa), the things that need to be done in order to register a corporation (business), the types of business structures used in Japan, and where one can register a business.

What's required to register a corporation (business) in Japan

1. Register your office address

This address cannot be the address of a temporary office or a virtual office. You also cannot use your residential address as an office in most cases but there may be some exceptions. If needed, you are able to use JETRO's fully-furnished office rooms for free (for the first 50 days).

2. Meet one of the following conditions

[a] Have capital or overall investment capital of 5,000,000 yen
You are required to show that the total amount of 5,000,000 yen is in your corporate bank account and you will also need to provide your financial report and other required documents.

[b] Have at least 2 full time employees (other than yourself)
The employees must be a Japanese permanent residents as well as some other conditions. Please consult the Immigration Bureau for more details.

[c] Have capital of 2,500,000 yen and 1 employee

For further information and details please consult with:
・Immigration Bureau
・Japanese Embassies in The World

Japanese visa for starting a new business

In order to start a new business in Japan as a foreign national, it is necessary to obtain a specific type of visa. If you do not have a visa yet, you will need to obtain a 4-Months Business Manager Visa or a Start-Up Visa which is provided in some municipalities (Tokyo, Fukuoka and other cities) in Japan.

If you already have a Japanese visa, it is important to make sure that you are legally able to start a new business with the same visa or if it is necessary to apply for a new one.

For a short-term stay, with the 90-days Visa you are allowed to do these activities as long as they don't include remunerative activities: tourism, business, visiting friends or relatives. Read here for further details about VISAs on the Ministry of Foreign Affairs of Japan website.

4-Month Business Manager Visa and Start-Up Visa

1. How to obtain a "4-Month Business Manager Visa"

The 4-Month Business Manager Visa was first offered in 2015. If you are able to prove that you are in the process of starting a company (business) in Japan and if the application is successful, you will be able to obtain the visa and begin setting up your business as soon as you arrive in Japan.

This visa will be provided to you before your arrival in Japan, so you have to submit all necessary documents to the immigration bureau in Japan ahead of time.

The 4-month Business Manager Visa is valid for 4 months. Within those 4 months you are able to do the following:

・Obtain a residence card (naturally you need to have a residential address)

・Open a bank account

・Register your business

During these 4 months, you will have time to prepare and set up your business in Japan. You are also able to apply for an extension of stay (for 1 year) with a Business Manager Visa.

2. How to obtain a "Start-Up Visa"

This visa is part of a special system that was established to increase the numbers of foreign entrepreneurs in Japan and to make the procedures easier. The Start-Up visa is valid for 6 months.

The Japanese government is able to provide this type of visa in Tokyo, Hiroshima Prefecture, Aichi Prefecture, Sendai City, Niigata City, Fukuoka City and more. (as of October 2022).

To obtain this visa you will need to apply to the local government (you see above) with the necessary documents including your business plan (all documents have to be filled in Japanese). Once you have received the recommendation letter from the local government office, you can use the letter to apply to the at the immigration bureau.

As part of this system, you are able to receive a 6-Month Visa by submitting your business plan. This will allow you to have more time (2 months longer compared to the 4-Months Business Manager Visa) to prepare your business. Once the first 6 months passed, you are allowed to apply for extending your VISA for another 6 months.

The following is a quote from the Tokyo Metropolitan Government's website.

Foreign nationals wishing to start up business in Japan need to obtain a “Business Manager” Visa.

To receive this status of residence, in addition to opening an office, the applicant must employ at least two people full-time, or invest at least 5 million yen in Japan. This presents a high hurdle to prospective foreign entrepreneurs.

In this program to increase foreign entrepreneurs, applicants can receive status of residence (business manager) for half a year even if these conditions are not met, if business plans and other necessary information are submitted to the Tokyo Metropolitan Government and the Tokyo Metropolitan Government confirming that the applicant has prospects for fulfilling the conditions within that half year.

The Business Development Center TOKYO
will provide individual support so that the foreign entrepreneur will be able to fulfill the conditions by the end of the six months, and renew his/her status of residence.

The 6-month Start-Up Visa is valid for 6 months and allows you to do the following:

・Obtain a residence card (naturally you need to have a residential address)

・Open a bank account

・Register your business

Contact one of the offices below for further information about obtaining a Start-Up Visa

・Tokyo
・Aichi Prefecture
・Hiroshima Prefecture
・Sendai City
・Niigata City
・Fukuoka City
・And More (Hokkaido, Osaka etc.)

If you already have a different type of Japanese Visa

If you already have a Japanese Visa and are a resident, you can register your corporation while your visa period is still valid. After completing your corporate (business) registration, you will need to change your visa status. The procedures required to change your visa to a business visa will vary depending on your current visa type. For more information regarding the necessary procedures for changing your visa to a business visa please contact a immigration bureau or specialists.

Types of business structures used in Japan

There are 4 types of business structures used in Japan:a Corporation (Kabushiki Gaisha),LLC (Goudou Gaisha), General Partnership (Goumei Gaisha), and Limited Partnership (Goushi Gaisha). The first two types of business structures are the most commonly used among Japanese companies. You are also able to register a branch office.

Corporation (Kabushiki Gaisha - 株式会社)

Kabushiki Gaisha, commonly abbreviated as K.K and often translated as a Stock Company, is a company whose stocks can be publicly traded on the open market. This is the most well known and common form of business structure used by Japanese companies and it is viewed as more trustworthy than other business structures within Japanese society.

Limited Liability Companies (Goudou Gaisha - 合同会社)

An LLC is the replacement of former business structure known as Yugen Gaisha. The liability is limited and the registration cost is more reasonable than that of a corporation (K.K). The stock of the company is not publicly traded on the open market. An LLC is still a new form of business structure for Japan and not very well-known in society, therefore many people tend to establish their company as a corporation (K.K).

For further information and details, refer to JETRO's websites below.

・Representative Office, Branch Office and Subsidiary Company

・Comparison on of Types of Business Operation

Restrictions

You will need to have a permission and registration in order to setup certain types of businesses.
E.g. Food Business, Travel Agency, Temporary Staffing, Hotels, Selling of Liquor, Financial Services, Sale of Pharmaceuticals ect.

Where to go to register your business and file your tax statement in Tokyo

Tokyo One-Stop Business Establishment Center

The Tokyo One-Stop Business Establishment Center offers support for foreign companies and start-ups to complete an establishment of their business. They also provide several services free of charge.

You can do all the following things in one-stop.

・Certification of Articles of Incorporation
・Company Registration Tax (National Tax)
・Tax (Metropolitan Tax)
・Immigration
・Employment Insurance
・Labor Insurance
・Health Insurance / Pension Insurance

Tokyo One-Stop Business Establishment Center locations

You can find the contact details here.

・Marunouchi Satellite Office

JP Tower（KITTE）B1, 2-7-2 Marunouchi, Chiyoda-ku, Tokyo
TEL: 81-(0)3-6269-9981

・Akasaka Support Desk

JETRO headquarters 7F ARK Mori Building, 12-32 Akasaka, 1-chome, Minato-ku, Tokyo
TEL: 81-(0)3-3582-8353

Foreign Residents Support Center (FRESC)
FRESC is also a one-stop center where you can ask for professional advice. These following 8 organizations are on the same floor.
1) Immigration services agency of japan
2) JETRO
3) Tokyo Regional Immigration Services Bureau
4) MOFA Visa Information
5) Tokyo Legal Affairs Bureau Human Rights Department
6) Japan Legal Support Center (Houterasu)
7) Tokyo Employment service center for foreigners
8) Tokyo labour bureau consultation and support office for foreigners

FRESC

Address: Yotsuya Tour 13F, 1-6-1 Yotsuya, Shinjuku-ku, Tokyo
Access: 1 min. walk from Yotsuya Station
TEL: 0580-011000 / 03-5363-3013
http://www.moj.go.jp/isa/content/930005927.pdf

Investing in property under your name or using a corporate structure

If you own a business (including outside Japan) and are planning to invest in property in Japan, it is important to know the difference between registrating your investment property under your own name or as a corporate structure. You can learn the advantages and disadvantages of both options in the article below.

・Individual vs Corporate Investment Property Ownership

Useful links related to setting up a business in Japan

・How to Set Up Business in Japan by JETRO
Laws and regulations for setting up business in Japan

・JETRO Office Space for Free
Jetro offers office space free of charge for the first 50 days. All spaces are fully-furnished. The space has office rooms, reception areas, copy rooms, and meeting rooms.

・Tokyo Employment Consultant
Attorneys with knowledge of labor-related laws give advice free of charge.