Starting a Business in Japan: Your Definitive Guide

If you’re considering starting a business in Japan, you’re making a wise choice. Japan has a stable economy, strong legal protections, excellent infrastructure, and a reputation for quality. But it’s also a market where regulation, culture, and procedure matter. Getting it right from the beginning saves time, money, and headaches.

Below is a detailed, step-by-step roadmap for business registration in Japan: how to start, what “company structure” works best, what you’ll pay, and how corporate tax and foreign investment regulations come into play.

Table of Contents

Types of Company Structure in Japan

Before you register, decide which legal form your business will take. The structure determines liability, tax treatment, management requirements, and setup complexity.

Here are the main ones:

Structure	Japanese Term	Key Traits
Kabushiki Kaisha (KK)	株式会社	The traditional “joint-stock company” — similar to a corporation. It allows issuing shares, high credibility, ideal for raising investment. Requires more formal process (articles, notarization, etc.).
Gōdō Kaisha (GK)	合同会社	Similar to a limited liability company (LLC). Easier to set up, less formal, fewer ceremonial requirements. Often preferred by smaller businesses or startups.
Branch Office / Representative Office	支店 (Branch) / 駐在員事務所	If you’re an overseas company establishing a presence without creating a separate entity. A branch office can carry out business (but may be taxed differently); a representative office cannot engage in profit-making activities.

In most cases for foreign SMEs planning full operations, issuing contracts, hiring staff, etc., setting up a KK or GK is preferred over merely using a branch or representative office.

Foreign Investment Regulations & Visa Requirements

Foreigners can own 100% of most types of companies in Japan. There are, however, some regulatory and visa-related requirements to keep in mind.

Foreign Investment Reporting & Screening: Japan has rules under the Foreign Exchange and Foreign Trade Act. In certain sectors (especially those sensitive for national security, infrastructure, etc.), foreign investment thresholds may trigger screening.
Business Manager Visa: If you or someone overseas will run the business in Japan, the Business Manager Visa (or equivalent) is often required. Outcomes depend on paid-in capital, a viable business plan, having an office, sometimes employing staff.

This means while technically you can register a company with very little capital, if you want to live and work in Japan on such a visa, your capital and setup must meet stricter thresholds.

Timeline: Step-By-Step Company Registration in Japan

Here’s what to expect when you proceed from scratch. If you follow this sequence properly, the company registration timeline is usually 2-4 weeks, though complications (visa, real estate, licensing) can extend it.

Step	What You Do	Who’s Involved / Documents Needed
Step 1: Decide on structure & name	Choose KK or GK (or branch). Pick company name (in Japanese and/or English), define purpose, head office location.	Founders / shareholders. You may need consulting or legal support.
Step 2: Prepare Articles of Incorporation (定款, Teikan)	This includes business objectives, address, capital amount, shareholder & director info, share allocations. If KK, these often require notarization. GK is simpler.	Judicial scrivener or notary public. Documents largely in Japanese.
Step 3: Create your company seal (Inkan or Hanko)	A legally required corporate stamp, plus seal registration. Many documents in Japan require corporate seal.	Paid seal maker + legal affairs bureau registration.
Step 4: Deposit initial capital	You open a bank account, deposit the capital under the name of the representative. Even if legal minimum is very low, visa rules may set higher requirements.
Step 5: Submit registration to Legal Affairs Bureau (Homukyoku)	Include notarized Articles (for KK), proof of capital deposit, seal registration form, director appointment documents, address proof, etc.	Legal Affairs Bureau of the prefecture where your head office is located.
Step 6: Register for taxes / social insurance	Once your company is legally registered, you must notify the local tax office about corporate income tax, consumption tax (if revenue threshold exceeded), payroll tax, and register with social insurance if hiring employees.
Step 7: Open corporate bank account	With your registration certificate, seal certificate, etc. Some banks require additional background details, business plan, or proof of visa status.	Bank of your choice (domestic or branch of foreign bank).
Step 8: Obtain required licenses / permits	Depending on your industry (food & beverage, pharmaceuticals, finance, construction, import/export), you may need special licenses. Start early.	Local regulatory bodies, ministries relevant to your industry.

Registration Costs and Minimum Capital

Understanding costs is crucial. There are two kinds: legal/administrative fees and ongoing costs for setup, visa, and operations.

Item	Typical Cost / Amount
Registration fees (Legal Affairs Bureau)	KK: approx ¥150,000 minimum, or 0.7% of capital (whichever is higher). GK: approx ¥60,000 minimum.
Notarization (KK only)	Usually around ¥50,000 for Articles of Incorporation notarization. GK doesn’t require this.
Seal (Inkan/Hanko) costs	Machine-carved seals might cost ¥5,000-¥20,000, depending on style and quality.
Minimum capital	Legally, you can start with very low capital (even ¥1), but in practice, especially for visa/business purposes, ¥5,000,000 is a benchmark.
Additional setup costs	Office rent, professional service fees (legal, accounting, translation), visa application fees, etc. In Tokyo, securing office space can be costly.

Corporate Taxation in Japan

Knowing how Japan taxes companies is essential when doing financial planning. The actual rates depend on your company’s capital, taxable income, location, and whether you are domestic or foreign-owned.

Standard corporate tax rate: ~ 23.2% for companies with taxable income exceeding ¥8 million.
Reduced rate for SMEs on income up to ~¥8 million: around 15%.
Local taxes: Inhabitants tax, enterprise tax, special local taxes. These can push your effective combined rate into the 30-35% range depending on size, capital, and location (Tokyo tends to be higher).
Tax on foreign companies: If a foreign company has a “permanent establishment” (PE) in Japan, it generally pays corporate tax only on Japan-source income attributable to that PE. If it registers a subsidiary in Japan, that entity is taxed similarly to domestic corporations.

Register a Branch vs a Subsidiary

If you’re a foreign business, one big decision is whether to open a branch (or representative office) or set up a subsidiary (KK or GK). Each has pros and cons.

Option	Pros	Cons
Branch Office	Less paperwork to start, fewer entity obligations. Useful for limited operations or testing the market. Reduced setup costs.	Liabilities not separated in many respects; tax treatment might be less favorable; less credibility with local partners; harder to get certain permits; visa/business manager status may be harder.
Subsidiary (KK/GK)	Full legal entity, liability protection, share issuance, credibility, clearer structure with relation to taxation, easier to hire staff, better for long-term operations.	More setup cost, procedural steps (notarization for KK), higher regulatory paperwork, stricter visa/capital requirements.

Costs & Timeline to Incorporate a Company in Japan

Putting it all together: here’s what you typically spend and how long it takes.

Timeline: If documents are in order, company registration (KK or GK) takes 2-4 weeks. Sometimes longer if translation, visa, or licenses are involved.
Cost breakdown: For a foreign entrepreneur setting up a KK with visa needs in Tokyo:
- Registration & license tax: ~ ¥150,000 (or 0.7% of capital if higher)
- Notarization (for KK): ~ ¥50,000
- Seal cost (Hanko): ¥5,000-¥20,000 depending on quality
- Capital (if you are applying for Business Manager visa): ideally ¥5,000,000 (may be raised to ¥30,000,000 for visa/immigration changes)
- Other costs: professional fees (legal, accounting, translation), office deposit/rent, bank account setup, licensing if needed. These vary wildly depending on city, industry, and ambitions.

Foreign Investment & Regulatory Trends

Japan is pushing to attract more foreign investment. At the same time, regulations are tightening in certain areas.

The government has increased its foreign direct investment (FDI) targets, seeking more overseas business to invest in Japan.
Certain sectors will face stricter FDI screening under national security considerations.
Visa policy changes: As of late 2025, the capital requirement for the Business Manager Visa will increase from ¥5 million to ¥30 million yen, along with possibly stricter proof of business viability and operations.

Corporate Tax Japan: Effective Rates & Implications

Understanding not just nominal rates but the effective corporate tax burden is key for planning.

For small and medium-sized enterprises (SMEs) with taxable income up to about ¥8 million, the effective tax rate (national corporate tax + local + enterprise + inhabitant taxes) can be in the low-20s% range (~22-25%).
For larger companies with higher income, capital over certain thresholds, or multiple offices/factories across prefectures, the effective statutory rate (including all local taxes) can approach 30-36% in many jurisdictions like Tokyo.

This means when modeling profitability, include not just the corporate tax but also local taxes, enterprise tax, inhabitant tax, and any special taxes (defence, etc.).

Practical Tips: Smoothing the Process

Work with bilingual professionals: legal, accounting, translation help will save time and reduce errors.
Use a registered address & physical office: required for many visas and credibility. Virtual offices may help initially, but many regulations expect a legitimate space.
Plan for culture & compliance: Business norms, local licenses, and documentation (company seal, translations, etc.) often require more lead time than foreign entrepreneurs expect.
Budget extra for unexpected costs: translation, delays, bank account opening hurdles, compliance, licensing.

Conclusion

Starting a business in Japan is entirely possible for foreigners, but success depends on understanding the legal structures, meeting capital and visa requirements, choosing the right company type, navigating foreign investment regulations, and planning for tax burden and setup costs realistically. With the right preparation, a strong local partner or consultant, and respect for local norms, you can incorporate, register, and begin operations in a matter of weeks, not months or years.

Ready to turn your business idea into reality? Get in touch with our Japan market experts today and start your journey to successful company registration in Japan.

FAQ

Below are frequently asked questions you’ll want answers to.

How do I start a company in Japan as a foreigner?

Yes, foreigners can start companies fully in Japan. You’ll need to pick a company structure (KK, GK, or branch), prepare required documents (Articles of Incorporation, company seal, capital deposit), register with the Legal Affairs Bureau, register for taxes, open a bank account, and if needed, obtain visas such as the Business Manager Visa.

What are the registration costs for company registration in Japan?

For a KK, expect around ¥150,000 registration + license tax (or 0.7% of capital if higher), plus ~¥50,000 for notarization. For a GK, around ¥60,000 registration tax. Additional costs include seal creation (¥5,000-¥20,000), legal/consulting fees, office setup, etc.

What is the minimum capital required to start a business in Japan?

Legally, the minimum capital can be very low (even ¥1), but for visa purposes (Business Manager Visa), and for credible operations, ¥5,000,000 is commonly used. Pending regulatory updates, this is likely increasing to ¥30,000,000 yen in many visa/immigration requirements.

How long does it take to incorporate a company in Japan?

If all paperwork is ready, company registration takes 2-4 weeks. Additional time may be needed for visas, permits, translations, or industry-specific licensing.

What are the corporate tax rates in Japan?

For SMEs with taxable income up to ~¥8 million, the rate is around 15% on national corporate tax. Above that, the rate increases (23.2% for large companies), and when you add local taxes (enterprise tax, inhabitant tax etc.), the effective tax rate can be 30-35% depending on region and income. Foreign-owned companies or ones with a permanent establishment are taxed similarly on Japan-sourced income.

Should I register a branch or a subsidiary?

Subsidiary (KK/GK) is preferable for full operations — gives you separate legal identity, liability protection, better credibility, and cleaner tax treatment. A branch or representative office may suffice for limited activity, market testing, or sales representation. But branches often face constraints (licenses, tax, operations).

Are there special industry licenses or permits?

Yes — depending on what you plan to operate. Examples: food service, import/export, pharmaceutical products, finance, alcohol, customs. Always check regulatory requirements for your sector before you register.

How do foreign investment regulations affect my business?

If you are investing in sensitive sectors or acquiring large stakes in Japanese companies, you may need to submit to government screening and notification under the Foreign Exchange and Foreign Trade Act. Also, for visas like Business Manager, rising capital thresholds are now a factor. Stay current with regulations.

What are ongoing costs after registration?

Accounting and audit (if required), tax filings (corporate income tax, local enterprise/income tax, consumption tax if above threshold), social and labor insurance (if you hire employees), office rent / utilities, legal and compliance costs. Also, renewing permits or licenses if needed.

Quick Links

Others Insight

Article