Japan is one of Asia’s most attractive destinations for launching a company, but setting up a business here requires navigating detailed legal and administrative procedures. From drafting Articles of Incorporation to registering for taxes and opening a bank account, each stage must be followed carefully. This guide lays out the process in a clear step-by-step format, complete with costs and compliance requirements.
Step 1: Choose Your Business Entity
Foreign entrepreneurs typically choose among:
- Kabushiki Kaisha (KK, 株式会社) – Japan’s joint-stock company, highly credible, suitable for larger projects and raising investment.
- Godo Kaisha (GK, 合同会社) – Similar to an LLC, easier and cheaper to establish, popular for startups.
- Branch Office or Representative Office – Allows presence without forming a separate Japanese entity.
While you can technically incorporate with as little as ¥1 in capital, in practice most businesses start with ¥500,000–¥1,000,000 to build credibility with banks and partners. Visa requirements add another layer. The current Business/Management Visa requires ¥5 million in capital or hiring staff. In 2025, Japan is considering raising this threshold to ¥30 million plus at least one full-time employee.
Step 2: Secure an Office Address
Every company must have a registered office address in Japan. This address is used on all official documents and is required for registration with the Legal Affairs Bureau. If you plan to apply for a Business/Management Visa, a virtual or shared office is not sufficient, and you will not be approved. Renting a full-time physical office demonstrates credibility, stability, and dedication.
Step 3: Draft the Articles of Incorporation
The Articles of Incorporation (定款, teikan) set out the company’s name, purpose, structure, and capital. For a Kabushiki Kaisha, the Articles must be notarized by a notary public, usually costing around ¥50,000. For a Godo Kaisha, notarization is not required, which reduces setup costs. Other documents such as proof of capital deposit, director consent forms, and company seals (hanko/inkan) are also necessary for incorporation.
Step 4: Register the Company
Once the Articles and supporting documents are prepared, the company must be registered with the Legal Affairs Bureau. The application includes the Articles of Incorporation, proof of capital deposit, director identification, and seal certificates. The registration tax is ¥150,000 or 0.7% of capital, whichever is higher, for a Kabushiki Kaisha. For a Godo Kaisha, the minimum registration tax is ¥60,000. After approval, the company is issued a Certificate of Registered Matters (登記事項証明書), confirming its legal existence.
Step 5: Register for Taxes
Within two months of incorporation, companies must file notifications with the local tax office. Corporate tax applies to profits, and as of 2025, rates have increased due to a new 4% defense surtax. Consumption tax is charged at a standard 10%, and registration is required once taxable sales exceed ¥10 million in a base period. Companies must also handle withholding tax for employees and contractors, and local taxes such as corporate inhabitant tax and enterprise tax. Because tax filings in Japan can be complex, most companies engage a certified tax accountant (zeirishi).
Step 6: Open a Corporate Bank Account
After registration, a company can open a corporate bank account in its official name. Banks in Japan are often cautious with newly established foreign-owned companies, so applicants are typically asked to provide the registration certificate, seal certificate, business plan, and proof of identity. In some cases, banks prefer that at least one director be a Japanese resident, which helps speed up the process.
Step 7: Obtain Licenses and Permits
Depending on the industry, additional permits may be required. Restaurants must apply for food safety licenses, real estate businesses need regulatory approval, financial services are monitored by the Financial Services Agency, and import/export companies may require customs permits. Operating without these approvals can lead to penalties or suspension.
Step 8: Hire Employees and Register Social Insurance
Once employees are hired, companies must enroll in Japan’s social insurance system, which covers health and pension, as well as employment insurance. Payroll systems must also be set up to withhold income tax and social insurance contributions correctly. Even sole founders must enroll in the appropriate scheme, which is a legal requirement.
Step 9: Stay Compliant with Ongoing Obligations
Compliance does not end with incorporation. Companies are required to file annual tax returns, submit consumption tax filings if applicable, and pay local taxes. Shareholder or board meetings must be held and documented, and any changes to directors, address, or capital must be reported to the Legal Affairs Bureau. Financial records must also be retained for at least seven years.
Cost Breakdown of Starting a Business in Japan (2025 Estimate)
| Item | KK (Kabushiki Kaisha) | GK (Godo Kaisha) | Notes |
|---|---|---|---|
| Notarization of Articles | ¥50,000 | Not required | Required for KK only |
| Registration Tax | Min. ¥150,000 or 0.7% of capital | Min. ¥60,000 | Paid to Legal Affairs Bureau |
| Legal/Professional Fees | ¥100,000–¥300,000 | ¥100,000–¥300,000 | For lawyers, scriveners, accountants |
| Capital Investment | Often ¥500,000–¥1,000,000+ | Often ¥500,000–¥1,000,000+ | Legally ¥1 is possible, but impractical |
| Office Lease/Address | Varies widely | Varies widely | Essential for registration |
| Bank Account Setup | Free | Free | Requires supporting documents |
| Ongoing Accounting/Tax | ¥200,000–¥600,000/year | ¥200,000–¥600,000/year | Depends on company size |
Starting a business in Japan requires dedication and careful attention to detail, but the reward is access to one of the world’s largest and most stable markets. With the right preparation, expert support, and enough capital, entrepreneurs can successfully navigate the bureaucracy and establish a long-term presence in Japan.
