Japan represents a major economy worldwide, having the second largest economy by nominal GDP. This is the reason why many entrepreneurs are interested in setting up a company in Japan
. In this article, we present you with the average business start-up costs in Japan
Starting a business in Japan implies several steps, however, there are also the business start-up costs which need to be considered when undergoing such a procedure.
You can rely on our company formation specialists in Japan
if you want to open a business
here and need assistance. We will guide you through the entire process and also advise on the cost of each procedure.
The main steps of starting a business in Japan
The start-up costs of a company in Japan
imply the costs associated with the registration of the business, the licensing costs
and the other costs which can imply, renting a space for the office
and acquiring various machinery and equipment.
Most of the times, foreign investors opening companies in Japan are first interested in company registration costs. For this purpose, our company registration agents in Japan explain the steps related to opening a business in this country which consist of:
- the reservation of a trade name, based on the submission of several names for approval with the Trade Register;
- the preparation of the incorporation documents which imply the drafting and notarization of the Articles of Association;
- the translation of various documents, if the shareholders are foreign citizens or companies (where applicable);
- the opening of the bank account and deposit of the share capital which are also subject to various fees;
- registering with the Japanese tax authorities for tax, social security and employment purposes;
- obtaining various licenses and permits in accordance with the activities to be undertaken.
Costs involving registering a company in Japan
Some of the most important costs to take into account when opening a company in Japan are those related to the actual incorporation of the new company and the ones that are required for tax registrations or tax notices. The list below includes the main costs required to form a Kabushiki Kaisha company. Other, simpler business forms that are not subject to the same requirements will have lower costs.
registering the company: 2,380 JPY for a Kabushiki Kaisha subsidiary company (included here are the costs for the registration and license tax, the stamp tax and others);
the name seal: 290 JPY, a price that includes a set of four company seals which are used for different purposes;
others: the stock acquisition report from the Bank of Japan can cost 480 JPY and the tax and social insurance notices 1,900 PJY;
searching and reserving the company's trade name with the Legal Affairs Bureau: no charge;
submitting the notification of the firm incorporation and the opening of a payroll office and applying for the blue tax return approval at the District Tax Office: no charge;
submitting the notification of the beginning of doing business at the tax office of the municipal or prefectural government: no charge;
submitting all the necessary labor insurance notifications and employment regulations at the Labor Standards Inspection Office: no charge;
submitting the health insurance and public welfare pension applications with the Japanese Pension Service: no charge;
submitting the firm application for employment insurance at the Public Employment Security Office: no charge.
The fees exemplified herein were in force at the time this article was written, as stipulated by the Japan External Trade Organization. For updated information, as well as additional costs (these will differ when incorporating a subsidiary compared to a branch, for example), you can reach out to one of our specialists.
In addition to the registration costs, other notable ones have to do with the paid-in capital for the chosen company. While it is possible to incorporate a company with the capital
of 1 yen (according to the Companies Act), in practice this does not always take place and investors need to take into account the paid-in capital for the Kabushiki Kaisha. Other business forms, like the branch, will not have this particular cost.
The costs for the paid-in capital apply in case of foreign nationals who acquire the visa status for a business manager. For more information on the acceptance of foreign entrepreneurs, please do not hesitate to reach out to our team. We are able to provide complete information, as well as solutions, for the short-term stay visa (which is sufficient for most investors who wish to start a business) or the other types of visas.
With a vast experience and knowledge in company incorporation in Japan
, our local agents can register various types of business forms on behalf of foreign clients whilst offering them personalized services at very affordable prices
. Part of the costs for company incorporation in Japan also include the situation in which a proxy handles a certain step. For example, a certificate of eligibility for an investor’s long-term visa can also be requested through a proxy, and the same applies in case of the stock acquisition report or the tax and social insurance notices. Our team can act on your behalf if you wish to incorporate a company in Japan and cannot be present in the country for long-term purposes or, in any situation, during the entire incorporation process.
Costs related to drafting the documents for company formation in Japan
One of the first and most important business start-up costs in Japan is related to the preparation of the documents to be filed with the Trade Register. No matter if the business owner is a foreign or a Japanese citizen, the costs will usually be the same and will imply drafting and notarizing the Articles of Association in the case of a limited liability company.
If you are interested in starting a business in Japan
as a partnership, the members will only need to have the partnership deed drafted and notarized, which is usually cheaper compared to the documents of an LLC in Japan
Foreign investors, no matter if natural persons or companies registering branches or subsidiaries in Japan
, will also need to have various documents translated. Among these, the personal documents of the founder (incorporation documents of the corporate shareholder) and the personal documents of the directors, if these are foreign citizens.
Our company formation advisors in Japan can help with the preparation of these documents in the shortest time possible, in order for the company to be up and running as soon as possible.
Making a company seal in Japan
One of the first costs related to starting a business in Japan
is associated with the creation of a company seal
. It is quite cheap to make a company seal, the standard fee ranging between 10,000 and 20,000 JPY. It takes approximately 3 days to have a company seal made, and business owners should note that it must be submitted with the rest of the incorporation documents with the Japanese Trade Register
It is important to notice that those who do not want to rent office space in Japan can obtain a virtual office which is cheaper compared to renting or even buying real estate for such purposes. Our company registration advisors in Japan are at your disposal with virtual office services at very competitive rates.
Licensing costs in Japan
Once the company is registered, the owner must also consider the licensing fees
related to starting the actual activities of the business. These will depend on the industry in which the Japanese company will operate in and are their costs are imposed by the authorities in the respective fee.
We kindly invite you to discuss with our company registration consultants in Japan on the procedure and costs of obtaining various business licenses.
Costs related to opening an office in Japan
When you open
an office for a
new company in Japan
, the following other costs are involved:
• rent, for a minimum of three months, for a temporary office;
• monthly rent in one of Tokyo’s five major districts;
• security deposit, for around 10 months of rent;
• real estate brokerage fee;
• other costs: our company formation agents in Japan can provide more details on what these other costs consist of and can help investors who are interested in starting a business in Japan begin their business venture as fast as possible.
Other costs for company formation in Japan
It is very common for foreign investors to appoint company registration agents to incorporate a business on their behalf in Japan. In this case, the costs associated with hiring specialists for such services must also be included.
In addition to the costs that will appear when investor request the services of a company incorporation agent, the costs for hiring personnel should also be included. These mostly relate to the costs for the services offered by a recruiting agency, a common manner in which the business owners select their employees for different positions. These costs can be expressed as a percentage of the first year salary and will differ according to the position for which the recruitment is made (they will be larger for a manager position compared to another type of employee and they will also differ according to the sector in which the company activates).
Foreign investors who have obtained a long-term visa and plan on spending time in Japan in order to manage their company will also wish to include those costs that relate solely to their own expenses while in the country. Although these are not related to the company itself, it can be useful to find out more about the housing costs for a foreign national if you intend to relocate to the country.
The costs outlined in this article are expressed for the most common business form, the Kabushiki Kaisha or, alternatively, the costs for opening a branch in Japan are offered as comparison. They are reflective of the situation in which one foreign national acts as the managing director of the company.
Post-incorporation taxes for companies in Japan
The company set up costs are important when starting a business in Japan. However, once the company founders have successfully incorporated the business and have resolved the permanent office and the employment for the new company, they will need to take into account the general taxes applicable for companies.
Once incorporated, the company will start to be subject to the corporate income tax rate which has a value of 30% to 34%, including the local taxes. All companies that have their main office located in Japan are considered residents for tax purposes and are subject to tax on their worldwide income. The effective tax rate is calculated as the national standard corporate tax (23.2%) to which other taxes such as the local inhabitants tax and the local enterprise tax apply (this brings the effective tax rate to approximately 30% for companies which have a paid-in capital of over 100 million JPY).
For more details concerning the costs of starting a business in Japan
, or if you need assistance related to opening a company
in this country, we invite you to get in touch
with our Japan company formation
consultants. We also offer accounting services
for both local and foreign businesses with operations in Japan.