If you’re looking to start a business with unmatched potential for growth and innovation, Japan is one of the global hubs of opportunities for entrepreneurs. Most businessmen consider Japan due to its stable economy, strong consumer demand, and reputation for quality. However, starting a business in another country can be challenging. But you’re not alone. This guide will help you learn how to start a business in Japan so that you can set it up easily and legally.
Why Should We Consider Setting Up a Business in Japan?
Several advantages that Japan offers to ambitious entrepreneurs and businessmen. Here are the key ones.
- Japan has the world’s fourth-largest economy with a GDP surpassing $4.38 trillion and approximately 123 million consumers holding high purchasing power and quality expectations.
- It has great trade relationships with other regions, offering a strategic gateway to the broader Asian market.
- Japan has advanced infrastructure, technology, robotics, and artificial intelligence supporting progressive manufacturing and digital services.
- Evolving demands across sectors, including e-commerce, health and wellness, sustainable products, and tourism.
- Having better opportunities for the ageing population, such as healthcare, elder care, and senior services.
- With strong intellectual property protections and rule of law.
- It has a stable political and economic system offering predictable market conditions.
Choosing the Right Company Structure in Japan
Before you learn how to start a business in Japan, it is important to choose the right company structure for registration. Let’s get started then
Sole Proprietorship (Kojin Jigyo)
In this business structure, the individual operates and manages the business alone. It offers a simplified registration process, low running costs, and fewer taxes, making it highly suitable for consultants and small businesses.
Joint Stock Company (Kabushiki Kaisha)
This business structure is suitable for those businesses that seek credibility and the ability to raise capital through share issuance while providing limited liability and protecting business assets.
Limited Liability Company (Godo Kaisha)
Introduced in 2006, offering limited liability to its members, features a simple business process, reasonable registration costs, and high flexibility in internal management. This is the best option for those looking for how to start a business in Japan.
Partnerships (Gomei Kaisha and Goshi Kaisha)
Under the Companies Act, an Unlimited partnership (Gomei Kaisha) and a limited partnership (Goshi Kaisha) are rarely used for new incorporations due to greater liability or complexity than joint stock companies and limited liability companies.
Branch Offices for foreign firms
A foreign company can establish a branch office in Japan to operate commercial activities. However, branch offices are not a separate legal entity from their foreign head office, which means the parent company will bear full liability for their operations in Japan.
How to Start a Business in Japan: 5 Things to Consider
Follow these simple steps to learn how to start a business in Japan and successfully set up your company.
1.Define Your Business and Structure
Firstly, choose the type of business and company you want to start, and draft a precise business plan which includes the name of the company and details of your operations.
This will serve as a foundation to successfully execute the plan, from your visa application to your company registration, helping you set up a business in Japan.
2.Prepare and Notarise Articles of Incorporation
Now, you’ve to draft your articles of incorporation.
If you choose a Joint Stock Company (Kabushiki Kaisha), it is mandatory to have the articles notarised at the notary’s office.
Why is this important?
It makes your company legally recognisable.
You also need to buy revenue stamps and ensure all required documents are accurate, so there should be no room for mistakes.
3.Secure a Business Address
The next step in how to start a business in Japan is securing a business address.
Obviously, you need a physical office in Japan; for that, you’ve signed a lease agreement before you even complete the registration process for your company.
Why a physical office? Virtual offices are not typically accepted for visa purposes.
4.Open a Bank Account
This is one of the challenging steps that people often underestimate.
To open a bank account, you require –
- A registered company
- A local address
- A representative director who is a resident in Japan
If you do not fulfill any of the above requirements, you may have difficulty in opening a corporate bank account.
What foreigners usually do is they initially open a personal account or rely on their partner to open an account.
5.Register the Company
At last, you complete the business registration process at the Legal Affairs Bureau, but that doesn’t mean the process ends after registration and you’re done learning how to start a business in Japan.
Additionally, you’ve to submit some necessary documents, including notarised Articles of Incorporation, company details, and director information.
Once these documents are approved, your company will legally exist. You also need to create a company seal and obtain a seal certificate, which is used in contracts, banking, and official filings.
Once all this is done, your company will be officially established in Japan.
What Documents Are Required for Business Registration?
You cannot ignore the most important thing when understanding how to start a business in Japan: the documents required for successful registration. You will need to prepare a few essential documents.
- Articles of Incorporation (Teikan)
- Founder/Director Identification
- Proof Capital
- Office Lease Agreement
- Company Seal (Hanko)
- Other Supporting Documents
Also read: Best Startup Ideas In India to Start with Low Investment
Launch Your Business
When you think of starting a business in Japan, it’s obvious that you’ve to deal with so many difficulties, but once it’s done, you can run your business at ease without worrying about any legal problems.
After learning how to start a business in Japan, you can move forward with launching a business and bring your entrepreneurial vision to life. Partner with lawyers, accountants, and administrative scriveners to ensure compliance and streamline setup to launch your business efficiently.
Frequently Asked Questions
1.Can I start a business without living in Japan?
You can register and own a business in Japan without living there. However, you must obtain a business manager visa or a startup visa to operate your business.
2.How do I wind up my business in Japan?
It’s a two-step legal process: dissolution (Kaisan) and Liquidation (Seisan).
3.Is Japanese proficiency required to start a business?
You do not need to speak Japanese to start a business in Japan. However, to secure a Business Manager Visa, you or a full-time employee must demonstrate considerable proficiency (typically B2/JLPT N2 level).
4.Which business type is most popular in Japan?
The most popular businesses in Japan include high-demand tech sectors, niche inbound tourism, and the booming secondhand market.
