Starting A Business In Japan
Businesses are no longer exclusive to domestic markets in the era of globalization. One aspect of development in a contemporary company is the establishment of overseas branches and subsidiaries.
Asia has become one of the world’s most dynamic and competitive markets, prompting many companies to establish branches on the continent. Situated in the heart of Asia, Japan plays a key role in the continent’s economic development since the late 20th Century. Securing a business base in Japan can prove to be an excellent entry point into the Asian market.
We Tokyo Consulting Group have the experience and expertise to provide the services required for incorporation in Japan. We support your startup processes by dispatching our staff for accounting, labor, and tax-related tasks.
Overview
Before starting a business in Japan, the company has to be registered as a legal entity. The business will be recognized as such after the complete registration of its branch office or subsidiary company.
Registration is necessary for daily operations in the country. For instance, when opening a bank account, a newly established business in Japan will be required to show a certificate of registration as a legal entity.
Accounting rules and processes differ between entities. It is essential that the method of incorporation matches your strategy, and this is also an area we can offer support.
Incorporation Strategies
There are several possible strategies for setting up a company in Japan. Due to the enactment of Japanese Corporate Law in 2006, some restrictions on business startup were lifted. Since then, business incorporation has become simpler for foreign companies, allowing easier access into the Japanese market.
Below are the most common methods of business incorporation in Japan: Subsidiary Company(Kabushiki-Kaisha or Godo-Kaisha), Branch, Representative Office, and Representative Service.
Subsidiary Company (Kabushiki-Kaisha and Godo-Kaisha)
The Kabushiki-Kaisha (KK) is similar to joint stock corporation in the United States, and is the predominant method for starting up a business in Japan. Large scale corporations always choose KK, because a variety of methods are available to gather funds (e.g: stock options and convertible bonds).
The Godo-Kaisha(GK) is similar to the limited liability company, and is especially effective for smaller businesses. The fee for establishment is less than that of KK, and they have greater freedom of self-governance. Moreover, the GK does not require annual approval and publishing of their financial statements.
When starting up a business in Japan as a KK or GK, the main factors to take into consideration are:
-Office location: Must be in Japan
-Capital: JPY 1 or more
-Business purpose: The subsidiary company is required to register specific business purposes in Japan, regardless of what the parent company is legally allowed in its own country.
Officers: At least one director is required for the startup of a KK or a GK.