Company Formation in Japan [Updated 2022 Guide]
The paperwork and procedures for company formation in Japan can take 2 to 3 weeks—but much longer if you make mistakes on various applications and need to file do-overs.
Meticulous preparation is critical in minimizing errors and ensuring you come through with your sanity intact.
Here are 4 decisions to make pre-paperwork, 9 steps to complete your journey, and 5 common mistakes to avoid, and a round-up of frequently asked questions regarding company registration in Japan.
Decisions to make pre-paperwork
Before starting any paperwork, you must make the following decisions regarding your company. These decisions will come up during the paperwork process, so prepare yourself and your partners.
Decision 1. Decide on company type.
If you are bringing your company to Japan, you have a few options. You could open a branch office or establish a subsidiary company—a stock company, Kabushiki-Kaisha (KK), or a limited liability company, Godo-Kaisha (GK).
Branch office. Branch offices allow you to buy and sell goods under the company's head office's governance. Because branch offices have limited decision-making power, they are not required to have corporate status and thus are easy to set up.
Kabushiki-Kaisha (KK). A KK is a corporation with stock options, allowing you to raise capital as needed and investors to receive dividends. A KK is the most well-established company type in Japan but has the highest number of starting procedures.
Godo-Kaisha (GK). A newly developed limited liability company type with fewer requirements than a KK, GKs are an option for those who wish to operate on a smaller scale and aren't interested in selling company stocks.
Decision 2. Decide on your company name.
When filing paperwork for your company, you will need to list your company's name. Regulations surrounding your company's name include the following:
You cannot choose a name already in use. There is an online portal (Japanese) where you can search for trade names.
You must not include any special characters, such as (?) or (;).
English alphabet letters and all Japanese alphabets and kanji are OK to use.
Be aware that restrictions surround the terms "Bank" and "Securities," as these come under the jurisdiction of other laws.
Decision 3. Determine the location of your office.
Choose your head office's location before registering for company incorporation in Japan. Your head office location will determine the correct Legal Affairs Bureau (also called a Registry Office) and notary public office to which you will submit your incorporation documents.
For instance, if you live in Tokyo, you must file company incorporation paperwork with the Tokyo Legal Affairs Bureau. Also, the notary who notarizes your incorporation documents must reside within the same city as your head office. Here is a list (Japanese) of all Legal Affairs Bureau's and their jurisdictions.
💡 Did you know? You can use a virtual office address on your articles of incorporation! MailMate’s virtual office address service is a bilingual option for entrepreneurs wanting to stay light on their feet.
Decision 4. Determine whether you will have a board of directors.
Establishing a board of directors is unnecessary if you are a company's sole investor. You can establish a company with one director, and there is no further need to appoint other company roles. However, if there are many shareholders in your company, you may wish to appoint a governing board of directors, although it is not mandatory.
If you decide on a board, appoint no less than 3 directors and an auditor, who will report to shareholders on the board's financial and operational decisions (the auditor is often external to the company).
A step-by-step guide to company formation in Japan
Here are the actions and forms you will be required to enact and submit as you incorporate your company and set up shop in Japan.
Step 1. Decide on office location.
You’ll need an office address for (a) listing in your paperwork and (b) to determine the Legal Affairs Bureau that has jurisdiction over where you will be filing your paperwork. So, first up, sign a lease for an office. Or use us, MailMate, for a virtual office address.
Step 2. Make a company seal.
A company seal is necessary for preparing documents for incorporation. So it is best to make a corporate seal before starting the paperwork.
The cost for creating a company seal is typically ¥10,000 for a machine-carved seal or ¥20,000 for a hand-carved seal. Once you have had this created, register it with the Legal Affairs Bureau to receive a seal certificate.
Aside from a company seal, you must create personal seals and registered seal certificates for each of your directors. These, too, are required and necessary throughout the company incorporation process.
Step 3. Create Articles of Incorporation.
The crucial step is creating the "Articles of Incorporation" document. The document must include the following information:
Company name (trade name)
Head office location
Purpose (business objectives)
The amount of capital invested for company establishment
Names and addresses of founders/incorporators (individuals or corporations)
The number of authorized shares of stocks
Date of incorporation
This document may also include points on shareholders, shareholder meetings, directors, supplementary provisions, etc. Templates and examples of descriptions (Japanese) are available on the Legal Affairs Bureau's official site.
After creating the Articles of Incorporation document, affix the founders’ seals and make three copies.
Step 4. Get notarized.
After creating your company's Articles of Incorporation, you must get them notarized (teikan no ninsho) by a notary office affiliated with the Legal Affairs Bureau in charge of the region where the company is to be registered. Search here for a list of notary offices (Japanese).
Get in touch with the appropriate office, decide on a date, and make an appointment with a notary public for this procedure. Prepare the following items for your appointment:
3 copies of the Articles of Incorporation
Seal registration certificates of all the incorporators
Revenue stamp ¥40,000
Registered seal of the incorporators or a personal stamp and an authorization letter for representatives
Payment of ¥50,000 for the notary public
Issuance fee of ¥250 per copy for Articles of Incorporation
If your company has more than one founder/incorporator, they must all go to the notary office on the appointed day. Or make sure to bring an authorization letter for the individual going in their place.
Alternatively, you could use a service like Maru-Notary.com to get your Articles of Incorporation notarized online. (See page 14 of this English-language PDF, published by the Japan National Notary Association. Or check here for more information in Japanese.) If you notarize online, the ¥40,000 revenue stamp fee will be waived.
Step 5. Deposit capital.
Deposit capital into a designated bank account. Preserve the following:
a copy/scan of the cover of the bank book
the backside of the front cover with personal information, such as name and address
a copy of the inside, showing the bank balance
You will need these copies to prove the capital deposit when you register/submit your Articles of Incorporation to the Legal Affairs Bureau.
Step 6. Register Articles of Incorporation.
After completing all the previous steps, you are ready to gather the documents needed to register the company with the Legal Affairs Bureau. The following is a complete list of each form that must be created and submitted at this stage:
☐ Application for Authority to Do Business
登記申請書 = touki shinseisho
This document notifies the Legal Affairs Bureau of the establishment of a company. Necessary entries vary by company type, so check example entries (available on the Legal Affairs Bureau).
☐ Registration License Tax Payment Slip
登録免許税納付台紙 = tourokumenkyozei noufuyoudaishi
The registration license tax payment slip is a piece of paper pasted with the revenue stamp worth the registration license tax. For stock companies (kabushiki kaisha), the stamp is ¥150,000. For limited liability companies (godo kaisha), the stamp is ¥60,000.
☐ Articles of Incorporation
定款 = teikan
Prepare a copy of the Articles of Incorporation. See Step #2.
☐ Founders' Written Decision
発起人決定書 = hokkinin ketteisho
Include the founders' written decision in cases where the Articles of Incorporation do not include the head office's full address.
☐ Letter of Acceptance of Appointment from the Director
就任承諾書 = shuninn shoudakusho
This document will prove the elected individual accepted the appointment as a representative director.
☐ Letter of Acceptance of Appointment from the Auditor
就任承諾書 = shuninn shoudakusho
This document is necessary if your company has appointed an auditor.
☐ Director's Seal Registration Certificate
取締役全員の印鑑証明書 = torishimariyaku no inkanshoumeisho
If there are multiple directors, get seal registration certificates for each director. (The representative director's certificate will suffice if you have installed a board of directors.)
☐ Seal Notification Form
印鑑届出書 = inkan todokedesho
The Seal Notification form is the required document for registering the corporate seal created in Step #1.
☐ Documents proving capital deposit
Create a document proving the capital deposit. See Step #4.
Once you have double-checked all the documents, submit them to the Legal Affairs Bureau’s application desk presiding over your jurisdiction. The registry process generally takes around 7 to 10 days, during which the bureau vets your application. If the office finds a mistake in your application, they will contact you by phone, and you will need to visit the Legal Affairs Bureau to correct the error.
If you haven't heard back from the city office after 10 working days, it is generally safe to assume all is well. And you can proceed with the following post-incorporation procedures (Steps #7 to #9).
Step 7. Notify/file at the tax office.
Submit the following documents to the tax office after incorporation:
☐ Notification of Incorporation
法人設立届出書 = houjin setsuritsu todokedesho
☐ Notification on the Establishment of a Salary-Paying Office
給与支払事務所等の開設届出書 = kyuuyoshiharai jimushyotou no kaisetsu todokedesho
☐ Application for Filing the Blue Return
青色申告の承認申請書 = aoiroshinkoku no shouninnshinseisho
☐ Application for Special Approval Concerning Payment Date of Income Tax Withheld at the Source
源泉所得税の納期の特例の承認に関する申請書 = gensenshotokuzei no nouki no tokurei no shyouninn ni kansuru shinseisho
Step 8. Notify/file at a Labor Standards Inspection Office.
File labor insurance forms and employment rules at a Labor Standards Inspection Office. [This step is unnecessary if you do not have employees.]
☐ Notice of Establishment of Labor Insurance Affiliation
労働保険関係成立届 = roudouhokenkankei seritsutodoke
☐ Tax Return for Estimated Insurance Premium for Labor Insurance
労働保険概算保険料申告 = roudouhoken gaisan hokenryou shinkoku
Step 9. Notify/file at a Japan Pension Service Office.
☐ Notification of New Application for Health Insurance and Employee's Pension
健康保険・厚生年金保険新規適用届 = kenkohoken, kouseinenkin hoken shinki tekiyoutodoke
☐ Notification of the Acquisition of Eligibility for Health Insurance and Employee's Pension
健康保険・厚生年金保険被保険者資格取得届 = kenkohoken, kouseinenkinhoken hihokensha shikakushutokutodoke
☐ Notification of Dependents Eligible for Health Insurance
健康保険被扶養者届 = kenkohoken hifuyoushatodoke
Step 10. Notify/file at a Public Employment Security Office.
File employment insurance forms at a Public Employment Security Office. [This step is unnecessary if you do not have employees.]
☐ Notice of Establishment of a Workplace Covered by Employment Insurance
雇用保険摘要事務所設置届 = koyouhoken tekiyou jimusho secchitodoke
☐ Notice of Acquisition of Eligibility for Employment Insurance
雇用保険被保険者資格取得届 = koyouhoken hihokensha shikakushutokutodoke
Common pitfalls to avoid with company formation in Japan
A mistake on any of the forms you submit could trigger delays. Here are some common mistakes to avoid.
Mistake 1. Abbreviating addresses.
Addresses on the "Articles of Incorporation" and other applications must not be abbreviated. Use kanji in street addresses. Do not use hyphens to designate street addresses. For example, 「一丁目3番1号」not "1-3-1."
Mistake 2. Forgetting or stamping in the wrong place.
With so much paperwork, it's easy to overlook where you must place your stamp. Double-check and then triple-check.
Mistake 3. Using the incorrect seal for a document.
There are various seals you will be required to have created and use throughout the incorporation process. Each form will require the use of a specific seal. Double-check that you are using the correct seal for each document that requires a seal stamp.
Mistake 4. Forgetting to include "kabushiki kaisha."
The registered company name must appear in its complete form, including the term "Kabushiki Kaisha."
Mistake 5. Not including future business plans.
When writing out your business objectives in the Articles of Incorporation, your work will be limited to the purpose within the business outline. Make sure you carefully think about the future of your business and the immediate services you will be providing.
If the registry office finds some incompleteness, description error, or mistake—they will ask you to update the document. However, if the error is large enough for the entire form to need re-filing, then the whole application will be refused. You must file the paperwork again using a new document.
Frequently asked questions about company formation in Japan
What is the cost of starting a business in Japan?
The following are the main costs involved in establishing a joint-stock company (kabushiki kaisha) in Japan.
¥50,000 for certification of articles of incorporation
Approx. ¥2,000 for a certified copy of the articles of incorporation, etc.
¥40,000 for revenue stamps (not required if the articles of incorporation are certified electronically)
¥150,000 registration and license tax
Total: approx. ¥200,000 to ¥250,000
When setting up a Japanese company, it is possible to do so with a capital of 1 yen under the Companies Act of Japan. However, for foreigners setting up a company in Japan under a Business Manager visa, you must invest 5 million yen or more to obtain the Business Manager visa status. Thus, the recommended capital for foreigners to prepare consists of a ¥5 million investment + ¥250,000 for registration paperwork. (See also “Cost Estimation” by JETRO.)
Additionally, this amount will fluctuate based on your real estate choices, i.e., whether you lease physical office space or select a virtual office address.
Can any foreigner register a business in Japan?
A foreigner can establish a company in Japan if they have the visa status of “Business Manager,” “Startup Visa,” "Spouse or Child of Japanese National," "Long-Term Resident," "Permanent Resident," or "Spouse or Child of Permanent Resident." Foreigners with visa statuses such as "Engineer/Humanities/International Services," "Technical," "Family Resident," or "College Student" must change their visa to register a business in Japan.
Company formation in Japan and acquiring the relevant visa, as described by YouTuber “Economics in Japan.”
How easy is it to start a business in Japan?
Based on the World Bank’s Doing Business 2020 publication, Japan ranked 106th among 190 nations based on how easy it is for individuals to set up a company in Japan. Their lackluster score for company formation likely has to do with the 8 official procedures to complete registration and approximately 11 days to complete the required steps.
Do I need a physical address to register my company in Japan?
When establishing a company in Japan, one must list an address in the registration documents and articles of incorporation. Under Japan’s Commercial Registration Law, there are no initial restrictions on what type of address can be listed. For example, it is acceptable to list one’s home, a rented office space, a virtual office, etc.
However, if your business is among those with conflicting regulations surrounding permits and licenses, your choice of address may narrow. See also “Virtual Offices Japan: How to Use One to Register Your Company [Q&A].”
What tax considerations should I think about before setting up my company?
“Depending on your business model, and where your sales and purchases are coming from, it may be beneficial to file as a consumption tax filer, even if you meet the exemption requirements,” says Ichiro Kawai of Accounting Intelligence. “In the right situation, filing as a consumption tax filer could mean a nice refund on potentially all of your domestic expenses!”
Julia Rivera of Otani Accounting Offices covers other tax considerations in “6 Essential Points Startups Should Know About Japan's Tax Regulations.”
What is Japan’s corporate ID number?
The National Tax Agency designates a 13-digit corporate number (法人番号=houjin bango) for each corporation upon the company’s registration. The NTA will send this corporate ID number to the head office listed on the articles of incorporation. They will also publish the number on NTA’s Corporate Number Publication Site.
The purpose of this system, as stated on the official site, is to improve administrative efficiency, enhance citizen convenience, realize a fair and just society, and create new value.
Some of the steps this article outlined will vary depending on factors particular to your company type. Also, please note that all documents must be in Japanese. There are English-language examples of company incorporation documents online. However, these cannot be used as-is. Your documents must be in Japanese.
Knowing the pre-paperwork decisions and the common pitfalls to avoid regarding company formation in Japan will help pave the way for a smooth application process.
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