Setting up a business in Japan may appear as an overly complicated thing to do, especially if you haven’t done it before. Fortunately, Japan has done a lot in the past decade to streamline this process and structurize it. With a bit of help, you can set up a business in the land of the rising sun without breaking a sweat.
There are myriads of sources online. Juggling them to extract all the crucial pieces of information is time-consuming, if not confusing. Missing out just one important step can render your efforts futile. This is why we are here. Here is the ultimate guide on setting up a business in Japan.
Step 1: Get a Visa to Start Setting Up a Business in Japan
Foreign nationals are not allowed to start setting up a business in Japan just like that. To start a business in Japan, you will have to obtain one of the required visas.
The procedure of getting a visa is quite simple. For business purposes, you will need to obtain either a 4-Months Business Manager Visa or Start-up VIsa. Or you can consider an Investor visa.
Obtaining the 4-Month Business Manager Visa
Japan introduced the 4-Month Business Manager Visa 4 years ago. To get the visa, you will have to prove that you are in the process of starting a company in Japan. Once Japan grants you the visa, you can begin setting up your business the moment you arrive in Japan.
Make sure to submit all necessary documents in advance so that you can get your 4-Month Manager Visa in time. This visa puts you in a position to obtain a residence card, open a bank account in Japan, and register your business.
Once you set up your business in Japan, you can apply for an extension of stay, which is 1 year.
Obtaining the Start-up Visa
A Start-up visa is a remarkable initiative of Japan’s government to bring in foreign entrepreneurs in Japan. This visa is valid for half a year. Note that it is not available in all the cities. Currently, it is available in Tokyo, Hiroshima and Aichi Prefectures, Sendai City, Fukuoka City, Imabari City, and Niigata City.
The list of required documents for applying for a Start-up Visa is not long. Note that you will have to submit your business plan in Japanese to get a recommendation letter from the local government office.
Once you get all the documents ready, you can apply at the immigration bureau. A start-up visa can be extended for another 6 months. This visa allows you to do the same things as 4-Month Business Manager Visa does: obtain a residence card, open a bank account in Japan, and register your business.
Obtaining an Investor Visa
The investor visa is another option for foreign investors looking for opportunities to start a business in Japan. Investor visas can be granted for 1, 3, or 5 years. The duration of the granted period and whether you are able to prolong it depend on the profitability of your business and other relevant business performance metrics.
You don’t have to be in Japan to apply for an investor visa. As long as you have the required documents, you can apply from the country you reside in. The procedure is quite simple:
Step 1 – Establish your company
Step 2 – Apply for an investor visa Certificate of Eligibility (COE) at the immigration office. If you live outside of Japan, you can put things in motion with the help of a certified immigrant official. This process takes approximately 2 to 3 months.
Step 3 – Once the Certificate of Eligibility is ready, you will have to pick it up from the immigration office. Now you can exchange it for an investor status or residence (SOR) at the Embassy or Consulate of Japan. It will take you an additional 2 weeks to get the SOR.
If you don’t have the means or opportunity to collaborate and get help from certified professionals in Japan, you will have to do all this by yourself. This is why many investors go with a 4-month visa and then submit the application for an investor visa once they have settled all their business affairs.
The document requirements for an investor visa vary depending on the type of company you are planning to run and your financial situation. Here is the list of the documents you might need to qualify for the investor visa:
- Investment information
- Elaborate business plan
- Company registration documents
- Relevant business licenses
- Office rental agreements
- Proof of your professional background
- Relevant employee documents
Opening a bank account
Since we mentioned opening a bank account in Japan, let’s quickly look at the banking opportunities you have in this country.
Choosing a bank and opening an account can appear challenging to foreigners due to the language barrier and complex bureaucratic procedures, especially to those planning to start a business. Fortunately, there are foreigner-friendly banks in Japan that are easy to register accounts with.
These banks streamline account registration process and make it convenient for foreigners:
Sumitomo Mitsui Banking Corporation
This bank was founded in 1876, making it one of the oldest banks in Japan. It has a great front desk for foreigners. SMBC offers plenty of banking services specifically tailored to meet the needs of foreign investors and entrepreneurs. Most importantly, all these services are provided in English.
Shinsei Bank
Shinsei Bank is the go-to place for many foreign investors planning to start a business in Japan. SB did an excellent job when it comes to online banking.
The bank provides services in English and all the services are available online. This is very convenient since you don’t have to visit the bank at any point to open the account. You can do everything from the convenience of your home.
The cash card you will receive doesn’t work on the ATMs. On the other hand, SB has a very wide network. You will be able to withdraw your money by visiting any of the following banks Seven Bank, ENet, JR East Japan Railway, and other.
Seven Bank
Seven Bank is another great bank for entrepreneurs with business plans in Japan. It also offers services in English. Seven Bank is similar to Shinsei Bank in terms of online banking.
You will find their website particularly useful, as it features all the guides on the bank account registration process in English. With the SB’s cash card, you will be able to withdraw money from ATMs in 7-Eleven stores, shopping centers, and airports.
Japan Post Bank
While Japan Post bank is predominantly a postal service, the company also provides bank services. This is a good option because you can withdraw money across Japan.
There is no withdrawal limit with Japan Post Bank and no international fees. Once you register an account at JPB, you will receive a cash card and passbook.
You will have to get the required documents to register an account in any of the Japanese banks. The requirements may vary from bank to bank, but these are the most common ones:
- Proof of your residency rights (4-month business manager visa, start-up visa, or investor visa)
- Proof of residency (you can get this one from the government office in the area of your residence)
- Contact information (phone number and address)
- Japanese residence card
- The initial deposit amount (there are no minimum requirements here, but the most common initial deposit amounts to a few thousand yen on average)
If you plan on sending money to your home country, you should look for banks that offer a remittance function. With this service, you will be able to send money outside of Japan even if you are a foreigner.
To use this service you are required to present:
- Your address in Japan
- Your name (the name has to be in Japanese katakana script)
- Your Hanko seal (most banks will allow you to use your signature if you still don’t have your Hanko)
- Your birth date
- Your bank account PIN
- Your gender
Step 2: Secure an Office or Shared Space
The first step of setting a business in Japan procedure is finding an office or shared space. After all, you need a space to work, and depending on your business model, generate revenue from. You have two options – rent an office in Japan for the short term or for the long term.
Short-Term Office Rentals
Renting an office in Japan for the short term is a very popular option these days. The commercial retail industry in Japan answered the demand continuously growing business enterprises created.
There are a lot of opportunities for you to explore. In Japan, short term office spaces are often used as a synonym for serviced offices. They offer a lot more benefits than other office rental options:
- Flexible lease terms
- A business address in the town center
- Excellent management options
- Low start-up costs
- Access to furniture, IT and telecommunications infrastructure, and office equipment
Before signing a lease, you have to understand the basic lease terminology. We have an in-depth guide about it which you can find here.
Long-term Office Rentals
While services offices offer great benefits to entrepreneurs coming to Japan, a long-term rental is sometimes a more convenient option. Going with a long-term rental allows entrepreneurs to set up their offices to reflect their brand image and company culture.
Finding a long-term rental space is not hard, and you can do it yourself by browsing the websites specialized in advertising office spaces or going through ads in the newspapers. If you find this overwhelming, you can always hire a real estate agent to handle the renting process for you.
Learn about the common lease terms and practices in Japan before signing a long-term rental lease.
Step 3: Get Your Articles of Incorporation Ready
Articles of Incorporation or teikan (定款) are the bread and butter of setting up a business in Japan. These documents determine how the company is going to be managed, and they are different for every type of business structure.
To make it convenient for you, we have put them in two categories, Articles of Incorporation for a Foreign Individual and for a Foreign Company. You will need both sets if you are a foreign individual expanding your business in Japan.
Articles of Incorporation for a Foreign Individual
Here is a list of required documents needed for a foreign individual:
Seal certificate or Inkan Shomeisho of investor and director – If you register as a resident in Japan, you can get a seal certificate at a local city hall. The only document that can replace it is a signature attestation (notarized signature). This document has to be certified by the Embassy of Japan in your own country.
Company seal – To be valid, you have to register a company seal at the registry office.
Investor’s personal bank account and its passbook or tsuuchou (通帳) – You also need a bank statement to prove the deposit of capital. You can use an existing account or open a new one.
All Articles of Incorporation and other documents should be signed or sealed by each investor and director.
Articles of Incorporation for a Foreign Company
If you are trying to set up a daughter-company type of business in Japan, you will need the following:
Registry certificate of the parent company – The certificate has to be issued within 3 months.
Notarized Signature attestation of the parent company’s representative.
Seal certificate of each director – The certificate has to be issued within 3 months.
The Representative Director’s personal bank account and bank statement – This is a must to prove the deposit of capital.
Company seal – The seal has to be registered at the registry office.
All Articles of Incorporation and other documents must be signed or sealed by the parent’s company and each director.
Additionally, you might need a field-specific license to register and run your company. Here is everything you need to know about business licenses in Japan.
Trademark Registration Process
Japan is not much different than any other country in terms of trademark laws. To claim the absolute ownership of your company, you have to register a trademark.
Registering a trademark means that the authorities of Japan will officially recognize it and see you as the person of control and proprietorship over your company. In other words, a trademark is not yours until the authorities officially recognize it.
In Japan you can register:
- Letters
- Diagrams
- Symbols
- Pictures
- Colors
- Holograms
- Moving marks
- Position marks
- 3D objects
You need to apply at the Japan Patent Office for trademark registration. If you have a permanent residence or office in Japan, you can do it yourself. Otherwise, you will have to hire a patent attorney or apply under Madrid and Paris Convention Agreement.
The following documents are required for trademark registration:
- Trademark registration request in Japanese
- Information about the trademark including a description, drawings, claims, and an abstract in Japanese
- The representation of a trademark
- Complete list of services and/or products associated with the trademark
The costs associated with registering a trademark include:
- Application fee of ¥12,000 for one trademark in one class, and an extra ¥8,600 for registering the same trademark for an additional class
- Registration fee of ¥28,200
- Renewal fee ¥38,800 every 10 years (you have to renew it within the 6-months period prior to trademark registration expiration date)
Know Your Hanko and Inkan Seals
The most common thing used in business as a personal identifier is a signature. You basically have to put your signature to close the deal or sign a contract.
The banking sector relies heavily on signatures, using them for personality identification. In Japan, companies don’t rely on signatures, but on Hanko stamps, also known as Inkans.
Basically, Hanko is a personal stamp that serves as your personal identifier in Japan. Hanko contains your name in either kanji, katakana alphabet or a Latin version on its stamping surface. There are personal and business Hankos.
Personal Hankos include:
- Mitome-in – the loose translation of Mitome-in is “recognition seal”. In Japan, it’s used to sign basic contracts and put signature on documents in day-to-day procedures.
- Ginko-in – Ginko-in or “bank stamp” is primarily used for banking purposes (bank account management, loan and credit approval). Not all banks require a Ginko-in seal from foreigners. To be on the safe side, make sure to check whether you have to get it with your bank.
- Jitsu-in – Jitsu-in is the “official seal”. Every Jitsu-in Hanko is unique and has to be registered with the government because it is the most important one among the personal Hankos. Since Jitsu-in is required for starting a company, you will have to obtain one yourself.
Business Hankos include:
- Kaku-in – Kaku-in for a company is what Mitome-in is for an individual. It’s used to sign the least significant documents in the name of the company.
- Ginko-in – Ginko-in for businesses is required for financial transactions and the company’s bank account management. It contains two circles.
The outer circle features the name of the company, while the inner one serves as the corporate seal for banking. Once you get Ginko-in, you will have to register it with the bank.
- Kaisha Jitsu-in – While Jitsu-in is the most powerful and important personal Hanko, Kaisha Jitsu-in is the most important business Hanko. You will have to register your Kaish Jitsu-in with the Legal Affairs Bureau, the same one where you registered your company.
Kaisha Jitsu-in is used with Kaku-in. It contains two circles. The outer circle features a company name, while the inner one contains a company representative’s name.
Hanko seals prices vary depending on several factors including the material, diameter, design and pattern, and registration. The price can go from ¥100 to ¥10,000.
Step 4: Get the Articles of Incorporation Notarized
If you are setting up a gōdō gaisha or GK company, you will only have to notarize revenue stamps, which will cost you 40,000 yen. In Japan, GK is a type of business organization Americans call limited liability company (LLC).
On the other hand, if you are setting up a kabushiki kaisha or KK company in Japan, you will need to get all your Articles of Incorporation notarized. KK is a type of business organization Americans call share company, stock company, joint-stock company, or stock corporation.
The notarization of the Articles of Incorporation is handled by the Notary Office or Koshonin Yakuba. The notarization fee for KK companies in Japan is 50,000 yen, on top of notarization fee for Revenue stamps, which is 40,000 yen.
Step 5: Deposit the Initial Capital
You won’t be able to open your company’s bank account in Japan until you’ve completely finished the registration process. You will have to use your personal bank account in Japan to deposit the initial capital.
The process is also simple for those of you setting up a subsidiary company in Japan. All you have to do is make a deposit in the Representative Director’s personal bank account.
Step 6: Get all the Documents Ready
Before finally registering your company in Japan, you will need to get a few more documents aside from the ones in the Articles of Incorporation. These documents include a letter of agreement from the director about to assume your company office and the proof of the company’s seal registration completion.
Step 7: File the Application for Business Registration
Once you have everything sorted out, you can file the application for business registration at Registry Office or Homukyoku. If you are registering a KK type of business registration fee will be a minimum 150,000 yen. For a GK business structure, the registration fee starts at 60,000 yen.
Step 8: Get the Registry Certificate, Seal Certificate, and Corporate Number
After your company is registered, you should acquire the registry certificate, company’s seal certificate, and corporate number. You will need these documents to sign employment and business contracts and to open your official corporate bank account in Japan.
