Starting a business in Japan can be an excellent opportunity for entrepreneurs looking to expand their ventures into one of the most innovative and stable markets in the world. The country offers advanced infrastructure, incentives for foreigners, and a favorable business environment, but it also has strict regulations and a bureaucratic process that requires careful planning.
In this comprehensive guide, you will learn how to open a business in Japan, what the legal requirements are, the types of businesses allowed for foreigners, and the costs involved in the process.
Table of Contents
Advantages of Starting a Business in Japan
Japan is the third-largest economy in the world, with a dynamic business environment and a highly skilled consumer market. Some of the advantages of starting a business in the country include:
- Access to a sophisticated market and consumers with high purchasing power.
- Incentives for startups and foreign investors, especially in sectors such as technology, innovation, and manufacturing.
- Advanced infrastructure and logistics, facilitating the import, export, and distribution of products.
- Low crime rate and economic stability, ensuring safety for long-term investments.
If you want to start a business in Japan, it is essential to understand the legal structures available for foreigners.
Types of Businesses in Japan
In Japan, there are various business structures, but the most common for foreigners are:
1. Kabushiki Kaisha (KK) – Corporation
A Kabushiki Kaisha (KK) is the most formal and prestigious structure for companies in Japan, equivalent to a Corporation (Inc.). It is ideal for medium to large businesses and provides credibility in the market.
- Advantages: Greater reliability in the market and the ability to attract investments.
- Disadvantages: Greater bureaucracy and higher initial costs.
- Recommended minimum capital: ¥1,000,000 ($6.700).
2. Godo Kaisha (GK) – Limited Liability Company
A Godo Kaisha (GK) is a more flexible and accessible alternative, similar to a Limited Liability Company (Ltda.). It is recommended for small and medium-sized enterprises.
- Advantages: Simpler and less bureaucratic opening process.
- Disadvantages: Less prestige in the market compared to KK.
- Minimum capital: There is no legal requirement, but it is recommended to have ¥500,000 ($3.300) to avoid issues when opening a bank account.
3. Representation Office and Branch
If you already have a business outside of Japan and wish to operate in the country without opening a new company, you can opt for a representative office or branch.
- Representation Office: Cannot engage in direct commercial activities, only market research and administrative support.
- Filial: It operates as an extension of the parent company, allowing it to operate in Japan without the need to register as a new company.
Each type of company has its advantages, and the choice depends on your business model and goals in Japan.
Step by Step to Open a Company in Japan
1. Choose the Type of Business and Structure Your Enterprise
Before starting the registration process, define the type of company that best meets your needs and create a detailed business plan. Having a solid plan helps with the acquisition of a visa and investments.
2. Choose a Business Address in Japan
Every company in Japan must have a registered physical address. You can rent an office, use a coworking business center, or even hire virtual office services for smaller companies.
3. Define an Adequate Social Capital
Although there is no mandatory minimum capital to open a KK or GK, having at least ¥500,000 to ¥1,000,000 (approximately $3,300 to $6,700) makes it easier to open the bank account and the registration process.
4. Open a Business Bank Account
To register the company, you will need a Japanese business bank account. Initially, it may be necessary to open a personal account and transfer the initial capital before creating the corporate account. Banks like MUFG, SMBC, and Mizuho are some of the most commonly used options.
5. Prepare and Register the Company Documents
The registration process involves the submission of documents to the Commercial Register of Japan (法務局 - Homukyoku). The main documents required are:
- Company Bylaws (for KK and GK).
- Company name and address.
- List of directors and partners.
- Proof of deposit of social capital.
- Official company stamp (Hanko/Inkan).
The registration process can take 2 to 4 weeks, depending on the complexity of the business.
6. Obtain an Investor Visa or Work Visa
If you do not have permanent residency in Japan, you will need an Investor/Business Manager Visa to operate legally in the country. The requirements include:
- Solid and detailed business plan.
- Proof of initial investment of at least ¥5,000,000 ($33.000).
- Registered business address and bank account.
- Ability to create jobs for residents in Japan.
If your company is small and does not meet the criteria for an investor visa, it is possible to hire a Japanese partner to serve as the company's director.
7. Register for Tax Payment
Every company in Japan needs to register to pay taxes, such as:
- Corporate tax: Between 15% and 23,2%, depending on revenue.
- Consumption tax (equivalent to VAT): 10% about sales.
- Income tax: If you hire employees.
The tax registration must be done with the National Tax Agency of Japan.
How Much Does It Cost to Start a Business in Japan?
The costs vary depending on the type of company, but the approximate values include:
- Registration fee: ¥150,000 to ¥200,000 ($1.000-$1.350) for KK and ¥60,000 ($400) for GK.
- Company stamp (hanko): ¥5,000 to ¥20,000 ($35-$135).
- Business address: ¥10,000 to ¥50,000 ($70-$350) per month.
- Fees for accountants and lawyers (optional): ¥100,000 to ¥300,000 ($670-$2.000).
The minimum initial investment to open a business in Japan, including the recommended share capital, is usually around ¥1,000,000 ($6.700).
Conclusion
Starting a business in Japan can be challenging, but with proper planning and knowledge of the process, it is possible to establish a successful venture in the country. Japan offers a favorable environment for entrepreneurs, especially in areas such as technology, export, e-commerce, and services.
If you want to expand your business to Japan or start a new venture, follow the steps in this guide to ensure a smooth and legally secure transition. With proper planning, your business can thrive in this innovative and dynamic market.
