Setting up a company for the first time can be daunting. Incorporation choices, paperwork, and even getting your hands on company seals (or hanko) are confusing enough for newcomers. Add to that the whole process being in unfamiliar Japanese, and you might be ready to throw in the towel already. However, Japan has a relatively simple process for company creation and registration. A few key steps followed and the right paperwork in your hands will have you set up and ready in no time.
An overview of the process
Incorporating a company in Japan is done through filing for business registration with the Articles of Incorporation (known as teikan – 定款), the paperwork that creates and registers your company in Japan. You won’t need much to do this, apart from some company officials and a business address. Once those are secured, filing for registration doesn’t take very long – usually around 2 to 4 weeks. When you eventually receive your articles and have your business registered, you can explore opening a bank account, registering for licenses, and beginning your venture.
How do I get started?
Before filing your Articles of Incorporation, you’ll need to decide what kind of company you’re interested in setting up (Part 1.1.3.) In most circumstances, you’ll want to set up either a Kabushiki Kaisha (株式会社 or KK hereafter) or a Godo Kaisha (合同会社 or GK). The former corresponds to an American Joint Stock Corporation, with most companies in Japan being KKs as standard. A GK is akin to a Limited Liability Company, which may be the better option for wholly owned subsidiaries or companies not planning on issuing new shares. A GK can be converted to a KK at any point through the appropriate process.
The prices for setting up these types of companies vary:
|¥50,000 + ¥40,000
This is before any further fees incurred through using an agent, acquiring office space, or paying staff wages. A GK is clearly the slightly cheaper option on the face of things, but the decision ultimately comes down to your needs. One final thing to note – KKs are sometimes considered to have a better ‘image’ in public opinion, so think this one through!
Office Space and Directors
Now that you’ve decided on a company type, companies in Japan require an office address as part of the “absolute matters” of their Articles of Incorporation. This can be a long or short term rented office space, or even a virtual office space – but foreign founders should be aware that using a virtual office may cause problems in acquiring a visa. This office space will be your point of contact for the government – tax notices, summons, or audits will be sent there. You can change this location in the future but depending on where you move to you can expect to pay ¥30,000 to ¥60,000 to update the registry with your new address.
You also will need a Representative Company Director. Until recently, they would have needed to be a Japanese resident, but that requirement has been abolished. Multiple Representative Company Directors can be appointed, and the role carries significant responsibilities. The biggest one to keep in mind?
Representative Directors cannot step down or resign without naming a replacement.
In the incorporation process, since founders will be unable to open a business account until after Articles of Incorporation are notarized, the Representative Director’s account is where the initial capital will be deposited. You can incorporate in Japan with as little as ¥1 in capital (paid-in capital) if this amount is deposited before registration.
We should note that even though it isn’t a requirement for your Representative Director to be a Japanese resident, things are generally much smoother if they are. Banks are unlikely to allow non-residents to create accounts, making the deposit of initial capital much more difficult. In addition, your director will need to register their personal hanko with their local Ward Office, which might be difficult to do from outside Japan!
Another thing you’ll need as part of your incorporation are company hanko (which are also called Inkan) – company seals. You may already have a personal seal for things like signing for packages, which we’ve covered before. A Company Director is required by law to obtain and register a unique personal seal called a Jitsu-In. Likewise, the company must obtain a Kaisha Jitsu-In, which is the business’s version of the Jitsu-In. These will both be registered with the government to allow for the issuance of seal certificates, which will be required for major business decisions. There are also seals related to banking, known as Ginko-In, that you may wish to obtain for financial transactions, but these are not required by law.
Articles of incorporation and filing for business registration
With all of that prepared, you can move onto finally preparing your articles of incorporation and filing for business registration. The articles of incorporation will generally lay out the structure and management of the company along with details about the assets of the company. Once completed, KK’s must notarize their articles of incorporation (for ¥50,000), as well as pay Stamp Tax in revenue stamps (for ¥40,000.) A GK is only required to pay for the revenue stamps and will only pay ¥40,000 to complete their articles of incorporation as opposed to the KK’s bill of ¥90,000.
After that, you’ll need to prepare the periphery documentation and procedures for business registration. This will include registering your company seals at your local branch of the Legal Affairs Bureau, depositing the initial capital into the Representative Director’s account, and signed statements from the Representative Directors agreeing to hold their appointed positions. This must all then be filed at the Legal Affairs Bureau (or Hōmukyoku) with the corresponding registration fee – a minimum of ¥150,000 for KKs, and ¥60,000 for GKs, although it may be more based on your company’s assets. If successful, you will receive a notarized letter of registration or tokibotohon (登記簿謄本), and your business is ready to start trading!
Need some help?
This might seem like a lot to handle, especially if the business jargon is that much harder in Japanese. While your first thought might be to retain a lawyer, it may be worth considering a significantly cheaper bilingual Administrative Scrivener (行政書士 or gyoseishoshi), a procedural specialist who will be able to guide you through the process efficiently. They may also be able to help with any licenses you may need to operate if running a business that requires them, as well as help you get your corporate banking off the ground. Finally, corporate tax and sales tax are likely to become pressing concerns in the future, so beyond setting up tax notifications with your District Tax office, consulting with a tax specialist may save you financial headaches down the line.
And that’s about it for setting up a business in Japan. It may seem nearly too easy on paper, but the requirements for registering a business are relatively light in Japan. So despite all the perplexing bureaucracy, you’ll likely find yourself with a company set to go in no time flat – 2 to 4 weeks is the average time from start to finish!