Explanation of visas, documents, and preparations required for foreigners to start a business in Japan!
We understand that there are various circumstances for foreigners who are considering working in Japan, those who have lived in Japan and like Japan, and those who are considering starting a business in Japan in order to seize business opportunities from the beginning. Many of you may be employed by a company, but how can you make use of your skills to start your own business?
In this issue, we will focus on the basic process for a foreigner to start a business in Japan. We will explain in detail the information you need to know, such as how to obtain the necessary visa for starting a business, preparation of documents to be submitted, and types of Japanese companies. The contents are practical and useful for foreign nationals who wish to start a business, so please refer to them.
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Types of Japanese Companies
To start a business in Japan, you need to know how Japanese companies work. First, we will explain the basics of "Types of Japanese Companies".
There are four types of company classifications in Japan. Here is a brief introduction to the differences between them in a table.
Incidentally, we now have (1) in thisCorporation(1) and (2)limited companyaccounts for about 90% of the total. These two options are also expected to be the case for foreigners starting their own businesses.
| (i) | Corporation | It is the only one of the four that can be listed on a stock exchange and has a higher credit rating than the other forms of companies. |
| (2) | Limited Liability Company (LLC) | All members are limited partners. The distribution of profits can be freely set at the time of the company's incorporation. |
| (iii) | unlimited partnership | It consists only of unlimited liability employees (employees who are liable if the company incurs a loss). |
| 4) | limited partnership | Including limited partners (partners who are liable only for the amount they have invested) in a limited liability company. |
Starting a Business in Japan: The Process of Establishing a Company
There are several important steps involved in establishing a company in Japan. For non-Japanese nationals, obtaining a visa is especially important. You must choose the visa that is right for you and apply for it with the necessary documents.
In addition, a procedure called corporate registration is essential for the establishment of a company. Necessary documents such as an application for registration and articles of incorporation must be prepared and submitted to the competent Legal Affairs Bureau. In addition, post-establishment procedures such as notification to the tax office and payment of various taxes must not be forgotten.
The general process of incorporating a company is as follows.
- Obtaining a Visa
- corporate registration
- Notification to the Tax Office
Let's take a closer look at each step.
Obtaining a visa to start a business in Japan
Obtaining a "business management visa" is essential for a foreign national to start a business in Japan. However, the hurdles to obtaining a business management visa are high, and it is difficult to meet the requirements in the early stages of establishing a business.
Therefore, the Cabinet Office has established a "Start-up Visa" program for some local governments. The start-up visa is positioned as a preliminary step to the business management visa, and the process is to first obtain a start-up visa and then switch to a business management visa.
The main differences between a start-up visa and a business administration visa are as follows
| Visa Type | startup visa | Business Management Visa |
|---|---|---|
| Subject of application | Foreigners living abroad | Living abroad is a foreigner living in Japan |
| habitat | Local governments as defined by the Cabinet Office | throughout Japan |
| period of stay | Renewal to one-year business administration visa after six months | 5 years, 3 years, 1 year, 4 months, 3 months *Depends on the result of immigration inspection. |
| application permission | Check with local government | immigration office |
| Examination period | Approx. 2 to 3 months | Approx. 3-6 months |
| Necessary items to be done before acquisition | Creation of a business plan | ・Prepare a business plan, capitalize at least 5 million, establish a company, secure office space, secure staff, and purchase equipment. |
In particular, there are requirements for obtaining a business management visa that are difficult to prepare in the early stages of business establishment, such as the preparation of a business plan and capital of at least 5 million yen. It is advisable to first aim to obtain a start-up visa and then move on to a business management visa as the business progresses.
Please note that requirements for obtaining a start-up visa and the application procedure differ from municipality to municipality. It is important to consult with the local government office in charge and gather necessary information in advance. In addition, it takes about 2 to 3 months from application to acquisition, so you are required to manage your schedule well in advance.
Obtaining a visa is the first hurdle in starting a business in Japan. Choose the visa that is right for you and make all the necessary preparations.
Reference: What is a start-up visa?
・Public Notice on the Promotion of Entrepreneurial Activities by Foreign Nationals (METI/Ministry of Economy, Trade and Industry)
・Aimed at! Startup Visa and Business Management Visa for the Special National Strategic Zone
Reference: What is a Business Management Visa?
・What is a business/management visa - Tokyo Immigration/Naturalization Support Office (Shinjuku, etc.)
Basic Flow of Corporate Registration
Corporate registration is the registration of a company's profile with the Legal Affairs Bureau at the time of incorporation so that it can be disclosed to the public. This allows the company to maintain its credibility and conduct business transactions with peace of mind. All companies are required to register as a corporation.
1. prepare an application for registration and necessary documents
【 Required Documents 】
- Application for registration of incorporation
- articles of incorporation
- Registration and license tax payment slip
- Founder's Decision Form
- Letter of Acceptance of Assumption of Office of Representative Director, etc.
- Certificate of seal impression of director
- seal registration form
- Certificate of payment of investment
2. apply for registration at the Legal Affairs Bureau
The application is filed at the Legal Affairs Bureau with jurisdiction over the location of the head office. If there are no problems with the documents, the application for registration will be completed in 7 to 10 days. To proceed with the establishment of a company promptly, make sure to prepare as many incomplete documents as possible.
There are three methods of application, and you can apply in any way that is convenient for you. Each method is described in detail on the pages of the Legal Affairs Bureau and the Ministry of Justice.
| Direct submission to the Legal Affairs Bureau Mailing address | Reference:Legal Affairs Bureau, "Jurisdiction Information". |
| Online | Reference:Ministry of Justice, "Online Application for Commercial and Corporate Registration." |
Documents to be submitted to the tax office
Once you start a business in Japan, you need to go through the procedures at the tax office.
Although the contents differ between sole proprietorships and corporations, we would like to introduce the procedures to be taken at the tax office when establishing a corporation.
| Notification Documents | (submission) deadline |
| Notification of Incorporation | Within 2 months after incorporation |
| Notification of establishment, relocation, or discontinuance of payroll payment office, etc. | Within 1 month after establishment of payroll office, etc. |
| Application for approval of blue tax return | By the earlier of three months after incorporation or the end of the first fiscal year |
| Notification of classification as a newly established corporation for consumption tax purposes | Submitted promptly *Not required if the notification of incorporation states that the corporation is a newly established corporation for consumption tax purposes. |
Taxes related to the company
When a company is established, it is subject to various taxes. Since this is an obligation as a corporation, it must be well understood and tax payments must be carried out without error. Here is an overview of the types of taxes involved.
1. corporate tax
Generally, if you are paid a salary or are doing business as a sole proprietorincome taxThe corporation pays thecorporation taxThe company will deliver the
Corporate tax is a tax on a company's earnings. Tax rate classifications are quite detailed, so consult a tax accountant or refer to the National Tax Agency's website for the correct calculation.
Reference:Corporate tax rates｜National Tax Agency
2. corporate inhabitant tax
Corporate inhabitant tax is a tax to be paid to the municipality in which the business office is located. It is paid in accordance with the regulations of the municipality in whose jurisdiction the corporation was established.
3. consumption tax
Consumption tax, which is a part of our daily lives, is also closely related to corporations. When you provide goods or services to customers, you will receive consumption tax. You are obligated to pay the difference between the consumption tax on purchases and the consumption tax on sales to the government.
4. withholding income tax
Withholding income tax is a tax calculated by deducting social insurance premiums from the wages of employed employees. To calculate this tax, you must check the National Tax Agency's website and use the withholding tax table to calculate the correct amount to be withheld.
Reference:Withholding Tax Table for 2023｜National Tax Agency
Institutions to consult when establishing a company
Today, any information can be found on the Internet, but to start a business, you must choose the right information. For this purpose, there are institutions in Japan that can be consulted, which we will introduce here.
The Foreign Resident Exchange Support Center (FRESC) in Tokyo is a collection of organizations that provide consultation services for large and small companies, as well as for those who are starting a business as a foreigner. Consultation is available on various start-up issues, taxation, and legal requirements.
【 Foreign Resident Support Center (FRESC) 】
- Residence Support Division, Immigration and Residence Management Agency, Disclosure Request Desk
- Tokyo Immigration Bureau
- Tokyo Legal Affairs Bureau, Human Rights Protection Department
- Japan Legal Support Center (Houterasu)
- Special Consultation and Support Office for Foreign Nationals, Tokyo Labor Bureau
- Tokyo Employment Service Center for Foreigners
- Ministry of Foreign Affairs Visa Information
- Japan External Trade Organization (JETRO)
Reference:Support Center for Foreign Residents ,Plaza Homes, "How for Foreigners to Establish or Start a Company in Japan"
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- Individual Japanese language lessons
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summary
How was it? In this article, we have focused on the information necessary for foreigners to start a business in Japan.
To establish a company in Japan, the first step is to obtain the right visa for you. Consider your options, such as a start-up visa or business administration visa, and apply for it with the necessary documents.
Next, proceed with the corporate registration procedures. Prepare an application for registration and the necessary documents, and submit them to the Legal Affairs Bureau with jurisdiction. It is also advisable to consult a specialist for technical matters such as the preparation of articles of incorporation.
After establishing a company, various procedures await you, such as notification to the tax office and payment of various taxes. The necessary procedures differ depending on the type of company, such as a joint stock company or a limited liability company. It is important to gather information and make preparations well in advance.
In addition, those interested in learning more about investment visas, which can be obtained by making an investment of 5 million yen or more, should check out the following article for more information.
▶︎ How can I get an investment visa? The conditions for obtaining an "investment visa" and how to apply for it are explained!
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