So you’re ready to free yourself from the shackles of corporate life and become your own boss as a foreign resident of Japan? Welcome to the world of self-employment!
While working for yourself may be the dream, it’s not the easiest or, dare we say, the most stable option. But when the going is good, it’s really good. As a general rule, if you work as a freelancer in Japan, you can charge a much higher rate per hour than you could earn as a salaried employee. However, you will have to be responsible for organizing all that heavy bureaucratic stuff like health insurance, pension, and making sure you work enough to get paid a livable wage!
Disclaimer: This article is intended as an anecdotal guide to becoming self-employed in Japan as a freelancer. Please consult with a lawyer for professional legal advice on immigration, visas and setting up a business in Japan.
Self-employment options in Japan: freelancer vs. business owner
There are two main ways to work for yourself in Japan. The first one (the easiest) is to become a freelancer, also known as a sole proprietor. The second more difficult and financially strenuous route is to start your own business.
To start your own business, you will need to secure the Business Manager visa. This requires a big time and financial investment (at least 5 million yen) and professional help (for example, from a lawyer).
To cover both topics requires at least two articles, so let’s today just start with the freelancer set-up.
Who works as a freelancer in Japan?
Working as a freelancer in Japan is a popular avenue for specialists or experts in a particular field, such as translators and IT workers (e.g. programmers, UX/UI designers). Creative content producers (e.g. photographers, videographers, illustrators) can also fall in that category, although there’s also the Artist visa option for those folks, along with writers, journalists, and designers. Of course, if you work in any other field and are confident that you can secure enough clients, both international and domestic, then there’s no limit to what you can do.
It’s probably good to state that we’re not lawyers, but we have had experience switching from company employee to freelancer in Japan. Also, we’re writing this with a Engineer/Specialist in Humanities/International Services visa background—one of the most common visas out there, and the one that English teachers most often arrive with, so let’s dive in.
Steps to become a freelancer in Japan
The easiest way to become a freelancer in Japan is to already be in Japan with a valid visa.
This article will discuss the transition from employee to self-employed. To arrive in Japan as a self-employed worker without a visa and no plan to set up a Business Manager visa will require a little more legal expertise.
1. Find clients
This point is obvious but probably worth mentioning. In terms of clients, it’s often better to have a group of smaller ones than just one big client, because if anything were to happen and you were to lose that one big client, you’ll be left in a precarious position.
While it always depends on the individual’s standard of living, we’d suggest you’d want to try and make around 350,000 yen to 400,000 yen minimum per month, so you can save and have a financial cushion. How you find clients is up to you, but it’s good to have more Japanese-based clients than international for immigration and paperwork’s sake.
2. Check that your visa matches the work you want to do
Say, for example, you came to Japan with a Humanities visa and wanted to become a performer. You’d have to apply for permission from immigration to do so as these jobs fall into two different fields (humanities versus entertainment). The permission form is called “Application for Permission to Engage in Activity other than that Permitted under the Status of Residence Previously Granted” 資格外活動の許可.
If you plan to continue similar work to what you’d done previously, or your university degree matches the type of work you’re doing in Japan, this step isn’t necessary. For example, I studied Media and Communication and work as a writer. That’s all within the realm of the ‘humanities’, so technically, the visa matches the job. If you’re uncertain whether the new work is close enough, it’s best to check with immigration to prevent future headaches.
3. Organize health insurance
If you’re in Japan and you’ve just left your full-time job to begin the self-employment journey, the first thing you need to organize is health insurance.
Many companies have their workers on company health insurance plans, and once you leave that job, you’re off the plan. Visit your local city hall to enrol in Kokumin Kenko Hoken – 国民健康保険, Japan’s national health care system. Joining means the public health insurance system will cover your medical needs. It’s pretty straightforward. Just be sure to bring your identifying documents, like your residence card (zairyu card – 在留カード) and previous company details.
4. Sole proprietor form
Next, you’ll need to register as a sole proprietorship (kojin jigyo – 個人事業), which in Japan means working as a one-person business.
The following types of people (not including Japanese citizens) can apply as a sole proprietor:
- Individuals married to a Japanese national
- Individuals with a long-term or permanent resident permit
- Holders of a Working Holiday visa (with no restriction until the visa expires)
- Holders of a Dependent visa, Student visa, or Cultural Activities visa (as long as you have permission to engage in other activities granted by the immigration office)
- Specialists and work permit holders who have signed contracts with Japanese companies
- Holders of work visas who do freelance work as a side job
To do so is surprisingly easy! All you have to do is fill out this form (in Japanese) and send it to your local tax office.
Tax time considerations
Once that’s done, there’s really only one other time you have to think about it, and that’s when considering tax. The sole proprietorship has two forms: the white form and the blue form. If your business requires a lot of operational costs (which you need to claim at tax time), then you’ll have to fill out the blue form. However, if you’re working a job like a translator or a writer and perhaps your most significant expenses are a new computer and some overseas travel, then the white form should be fine!
When it comes to tax season, you have two options: go to your local tax office, ask a staff member to help you (don’t leave this to the last minute!), or hire an accountant. Depending on what you require from the accountant, their fee will cost somewhere in the realm of 50,000 yen to 120,000 yen (this number coming solely from experience). Be sure to keep all your receipts (says me, the writer who always forgets) for lunch meetings, electricity, internet, etc., because you can claim it all back.
Either way, Japan’s tax system can be a challenge for freelancers. A new, and added complexity is the Qualified Invoice System launched in October 2023. for an overview, here is an interview with a Japanese accountant on this new system from the Scaling Japan Podcast hosted by Tyson Batino.
Renewing your visa as a self-employed worker
So, all the paperwork has been completed, and you’re busy working as a successful independent entity. But you realize that you only have a few months left on your visa, which means it’s time to start getting everything in order so you can renew it without too much hassle.
Getting one thing clear, you’ll see in online forums and the like people talking about “self-sponsoring” their visa. If you want to get technical, there’s no such thing as a self-sponsored visa. The self-sponsored method is essentially asking one of your part-time employers to sponsor your visa while using a “Permission to Engage in Activities” form to fill in your other jobs.
It’s best to ask your highest-paying Japan-based client to be your main sponsor. For the company, this visa renewal doesn’t cost anything, but they must fill out detailed info about the company, including things like capital. It’s very highly recommended you hire an immigration lawyer to walk you through the process—that way you’ll have more luck in securing a renewal.
Financial KPIs for the visa
You need to show immigration that you can make an annual salary of 3,000,000 yen (250,000 yen per month) to qualify. Some say less, but that is the safest minimum amount. And if you can show more—via the way of contracts from your clients—by all means do!
Items you need to bring
The immigration office has a list on their site that you can check, but as an overview, be sure the following items are ready:
- A passport photo (4 cm × 3 cm)
- Zairyu card and your passport
- Tax returns from the last two tax years
- Proof of your work and incomes (contracts from clients, invoices too to be safe)
- Potentially you’ll need Certificate of Employment (zaishoku shomeisho – 在職証明書)
- A Tax Withholding Slip (gensen choshu hyo – 源泉徴収票) from your local ward office
If you’ve quit a company in Japan since the last time you went through this immigration process, you’ll need proof of retirement (taishoku shomeisho – 退職証明書) from those previous companies.
Finally, be prepared, but not pessimistic
Everyone’s situation can be different. There may be other requirements that the immigration staff ask of you. Just because you’ve followed all the steps above doesn’t 100% guarantee a renewed visa. Of course, having a lawyer and being prepared helps a lot, but case by case, things can change.