“How much do I need?”

“Can I do it by myself?”

It is not so easy for everyone to start a business from scratch. When you start your own business in a foreign country, you should have a lot of things you do not know.

This entry is for readers who are starting a business in Japan with explaining the procedures to start your business in Japan.

 (First of all)

In order for foreign people to run business in Japan, basically, you need to obtain the status of residence called “Operation or Management of business”.

It is understood that this status should be difficult for individual business owner to obtain, so this entry will explain the way to obtain the status by means of incorporation of a company.

When you have already resided in Japan

In the case that you have already lived in Japan with some status of residence such as work permit or student, you can basically go ahead with the procedures of incorporation of your company almost in the same way as Japanese people.

The procedures of incorporation of a company in Japan is, generally speaking, the following;

Determinate of essential terms (*) of the company and create the articles of the corporation

Receive authentication for the articles of the corporation by a notary

Deposit capital money of the corporation to a bank account in Japan

Apply for registration of the incorporation at the legal affairs bureau

* Company name, address, purpose, business year, the amount of the capital, the number of stock issued and so on

That is it for the incorporation. It is easy, isn’t it?

For your information, the articles of the corporation is the document which basic rules of the company such as the essential terms above, director’s term or transfer restriction of shares are determined in.

Also, authentication of the articles of the corporation is a required procedure for the articles to become effective.

As for expenses, the authentication costs 50,000 yen for notary service and 40,000 yen for revenue stamp (however, the revenue stamp is not required when the articles of the corporation is in electronic format). Also, the registration of the incorporation costs at least 150,000 yen as registration tax (if the amount of 0.7% of the capital is more than 150,000 yen, you have to pay the amount instead of 150,000 yen as registration tax).

Moreover, you need to make the company’s seals after determination of the company name, and it generally costs about 20,000 to 30,000 yen. Furthermore, with taking another document’s issue cost and traffic expense into account, incorporation of company in Japan should totally cost about 250,000 to 300,000 yen.

After the registration, in the case of incorporation by Japanese person, you submit a report of the incorporation to the tax office before starting the business, but in the case of foreign person, you should conduct one more thing below.

It is that you should apply for the permit to change your status of residence from the current status to “Operation or Management of business”.

(By the way, if you stay in Japan with the status of “Spouse or Child of Japanese Nationals”, you can start your own business without changing your status because there is no restriction of activity in Japan when you have the status.”)

There are two requirements to change the status to “Operation or Management of business”.

The one is the requirement of size of the business. In order to obtain the status, you should meet the following requirement;

① There are two or more full-time employees who reside in Japan excluding the applicant; or

② The amount of the capital is 5,000,000 yen or more

It should be depend on the business type and content, but it is supposed to be difficult to hire two full-time employees at the same time as starting your business. In that case, you need to pay 5,000,000 yen or more as capital to the bank account in the incorporation.

The other requirement is the existence of the office. Japanese business owner (or foreign person with the status of “Spouse or Child of Japanese Nationals”) can use his/her home as the office and start the business in his/her home, but foreign business owner who needs to obtain the status of “Operation or Management of business” is required to have an office independently separated from home.

Please note that this office will be required to obtain the status. It means that it is possible for foreign people to incorporate your company in Japan with your home as company address. However, you need to change the registration of the company address from home to your office you rent or purchase before applying for permit to change the status of residence.

This registration of the company address change costs 30,000 yen when the transfer is within the same jurisdiction of a legal affairs bureau, and 60,000 yen when the company transfers to another bureau’s jurisdiction, so if it is possible, you should rent an office before registration to save money.

When you have not resided in Japan yet

That is all of the explanation for foreign business owner who lives in Japan to incorporate a company and start the business.

However, some foreign business owner who has not resided in Japan yet might also have a mind to start his/her business in Japan.

We would like to look at the way to incorporate a company and start the business in Japan for foreign business owner who have not resided in Japan yet.

You cannot do it by yourself

I am so sorry for telling you the conclusion suddenly…, but in this case, basically you cannot incorporate a company by yourself, so you need to find a cooperator in Japan.

We are on the assumption that it is impossible to obtain the status of “Operation or Management of business” without incorporation of a company, and in order to incorporate a company you need a bank account in Japan to pay its capital.

However, it is impossible for temporary visitors from foreign country to open his/her bank account in Japan, so basically you cannot incorporate your company in Japan.

(If you had been in Japan and still keep your bank account in Japan, you could use it and incorporate a company in Japan…, but I know it is very unusual case.)

Occasionally some foreign person would like to open his/her shop account in Rakuten and start the online trading business in Japan, but they usually give it up because they need a bank account in Japan to open their online shop. In order to open a bank account they need their own company but they need a bank account for incorporation of a company.

This is the reason why you should find a cooperator who have a bank account in Japan. In other words, you can incorporate a company with paying the capital to the cooperator’s bank account and with transferring the shares from him/her to you after the incorporation. After the incorporation, you can open the company’s bank account in Japan, so the capital amount will be transferred from cooperator to your company while the shares transfer.

This is the way to incorporate a company in Japan when you have not resided in Japan yet. In this case, of course, you also need to meet the two requirements above (i.e. the size of the business and the existence of the office).

Summary

We have looked through the outline for foreign person to start the business in Japan including the way to incorporate a company and to obtain the status of “Operation or Management of business”.

In fact, as for any business, it should be more difficult to keep and continue it than to start it.

In obtaining the status of “Operation or Management of business”, in order to explain the stability and the continuity of the business, you need to hand in the business plan to the immigration office. Also, after starting the business, if it runs and keeps into the red and faces insolvency, it will be difficult to obtain the permit of updating the status.

In order to avoid such a case, I would like you to start your business in Japan with deliberate preparation.

Also, in incorporating a company and obtaining the status, please go ahead with the procedures with advice of specialists such as Certified Administrative Procedures Legal Specialists (or Gyosei-shoshi).

I wish you the best of luck with your business in Japan.

Thank you very much for reading through to the end.