FAQ, 10 Tips for Company Formation in Japan

Here are some of the most common questionsIget asked by clients who come to my office for advice on how to start a business.

Q1. I want to establish a Godo-Kaisya (LLC).

A1. Many of my clients choose a Godo-Kaisya (LLC) from the start because of the many advantages of a Godo-Kaisya, such as lower initial costs, shorter establishment time, faster decision-making because the investors and management are the same, and the ability to freely decide on profit sharing. However, there are some disadvantages, so I try to ask my clients to make a final decision after consultation with me.

Q2. How much capital should I start with?

A2. Currently in Japan, by law, a company can be established with a minimum capital of one yen. Please prepare the capital necessary for the size of the business and the operation of the company. Even if the company is in the red, the corporate inhabitant tax is at least about 70,000 JPY a year. There is also a registration fee for the establishment of the company. The tax rate can also increase based on a capital of 10 million yen to 100 million yen.

There may be also capital restrictions if you are looking to obtain a management and administration visa.

Q3. Can we use a virtual office for the head office?

A3. If the company running the virtual office is in a location where it can be registered, it can be registered, however, if you would like to create a corporate account, it would be difficult to create without an entity.

Q4. Business purposes

A4. (1) There are certain purposes for which permits and approvals are required after the establishment of the company, and they would need to be acquired.

I can introduce administrative scriveners who are members of One-stop Business Startup Kawasaki and they work with you to obtain the license and approval on your behalf.

(2) Prior notification under the Foreign Exchange Act may be required.
Depending on the purpose of your business, your business may fall under the category of an industry that needs to be notified in advance by the Foreign Exchange Law, in which case we will assist you in notifying the competent authorities through the Bank of Japan prior to registration of your business.

Q5. Do the directors have to be domiciled in Japan?

A5. A Godo Kaisha (LLC) or a Kabushiki Kaisha (joint stock company) can be established even if the directors don’t have domicile in Japan.

Q6. How to invest in the company?

A6. Basically, you need to invest in your personal account, and open a corporate account after the company is established.

Q7. What is the minimum number of directors?

A7. A Godo-kaisha or a Kabushiki-kaisha basically requires at least one person.

A Kabushiki-kaisha, if it has a board of directors, requires three directors and one auditor, however, if it does not settle a board of directors, it can be established with only one director.

Q8. When should the fiscal year be?

A8. There is no statutory starting month for a fiscal year, so you can start your fiscal year at any time.

Privately held companies usually have one fiscal year as their fiscal year.

You have to take inventory to close the accounts, so you can set it at a time when your inventory is low. Please contact us because each company has a different situation.

Q9. I’d like you to make a seal for me.

A9. I can order a reasonable corporate stamp for your company on your behalf. Please contact us for more information.

Q10. How long does it take to set up a company?

A10. It takes normally about a week to 10 days to complete the registration after you sign your articles of incorporation and other documents. After the registration, we will obtain a certified copy of the company’s corporate seal and a corporate seal certificate.

Basic Flow

Document preparation/sealing → capital contribution → (Articles of Incorporation authentication only Kabushiki-kaisha) → Company representative’s seal made → application for registration → registration completed

Setting Up Your Company from Home

~Start Your Online Application from March 17, 2020~

Due to the impact of the coronavirus, people are being discouraged from going outside unless the situation is urgent. In other words, people are expected to practice social distancing in Japan.

This is good news for those who want to start a business in Japan. Per the decision of the Future Investment Strategy 2018 in accordance with the policy of the Japanese government, from March 17, 2020, the registration to incorporate a company can now be completed within 24 hours upon receipt of your online application.

If the following conditions apply to you, this way is the fastest way to set up a company from the comfort of your own home.

Companies which meet the following conditions are applicable:

Kabushiki-Kaisha (Stock company) or Good-Kaisha (LLC) 
No more than 5 officers (members)
At the time of online application, the application and the attached PDF documents must be transmitted online (with the electronic signature of the founder)
Registration license tax paid electronically
No missing application forms and attachments, all legal requirements met, and no spelling errors, etc.

What are some of the challenges?

・ All online applications must be done in Japanese.
・ Digital signatures are required for all application documents.
・ In Japan, one must report the seal of a corporation, which must be mailed or brought in writing. Registration will not be completed unless the seal notification is sent to the registry office, and even registration will not necessarily be completed within 24 hours of application.
・ If in rushing to complete the process a mistake is made, the registration would need to be done all over again.
・ Although foreigners who do not have an address in Japan can register as a corporation, it is necessary to prepare the necessary documents in their home country or Japan in advance. The handling procedures differ depending on the country

If you do not meet the above conditions, you can still incorporate yourself.

However, you need to choose the correct and up-to-date information suited to your individual situation.

We, Kawasaki One-stop Business Startup Center, can support you online.

We will create the documents for your company’s incorporation in accordance with the laws and regulations, provide advice, register the establishment of the company, and obtain a certified copy of the registration. In addition, we can also provide services such as tax reporting, labor procedures, visa support, business planning, legal advice by qualified attorneys as well as full support to guide you through the necessary procedures after incorporation. Leave it to our experts.

I look forward to receiving your inquiry.