Key Takeaways
- Foreigners can own 100% of a Japanese company with no nationality restrictions on founders
- The Business Manager visa now requires ¥30 million capital (increased from ¥5 million in October 2025), plus mandatory staff hiring and management experience
- Two main company types: Kabushiki Kaisha (KK) costs around ¥250,000 to register; Godo Kaisha (GK) costs around ¥100,000
- The Startup Visa (expanded nationwide in 2025) offers up to 2 years to prepare your business before meeting full requirements
- You do not need to live in Japan to incorporate a company, though banking and visa requirements often make local presence practical
Who this guide is for: This article is written primarily for foreign founders who plan to set up a Japanese entity themselves and personally relocate to Japan to manage the business. If you represent an established foreign company expanding into Japan, the incorporation steps below still apply, but the visa section likely will not. See the “Two Paths” section below for which parts of this guide are relevant to your situation.
Japan represents one of the world’s largest economies and a gateway to the broader Asian market. For foreign entrepreneurs considering Tokyo or other Japanese cities as their business base, understanding the incorporation process, visa requirements, and company structures is essential for a successful market entry.
Japan is the world’s third-largest economy by nominal GDP and home to more than 125 million consumers, making it one of Asia’s largest and most stable business environments for long-term business growth.
This guide walks through every step of setting up a business in Japan, from choosing the right company type to navigating the significantly updated 2025 visa regulations that affect foreign business owners.
Yes, foreigners can own 100% of a Japanese company. There are no nationality restrictions under Japan’s Companies Act, and both individuals and foreign corporations may act as shareholders or founders. In 2026, Registering a company in Japan typically requires choosing between a Kabushiki Kaisha (KK) or Godo Kaisha (GK), registering with the Legal Affairs Bureau, and, if residing in Japan, meeting the updated Business Manager visa requirements, including ¥30 million in capital and mandatory employee hiring.
Table of Contents
- Can Foreigners Start a Business in Japan?
- Understanding the Four Company Types in Japan
- Two Paths to Setting Up in Japan: Self-Directed vs Professionally Managed
- Visa Options for Foreign Business Owners
- Step-by-Step Guide to Registering (Incorporating) a Company in Japan
- Costs and Timelines
- Ongoing Operational Costs
- Office Space Requirements
- Professional Support for Market Entry
- Common Mistakes to Avoid
Can Foreigners Start a Business in Japan?
Yes, foreign nationals can establish and fully own a company in Japan. There are no nationality restrictions on company founders or shareholders under Japanese law. Both individuals and foreign corporations can hold 100% ownership of a Japanese business entity.
Since regulatory reforms in 2015, the Japanese government removed the legal requirement of having a local resident as a representative director. This means a company can technically be established in Japan remotely, without the founder being physically present, though practical considerations around banking and visas often require some form of local presence.
If you are a non-resident establishing a company in Japan, you will need to submit a Foreign Exchange Act notification through the Bank of Japan. This is a procedural requirement rather than a barrier to entry.
Understanding the Four Company Types in Japan
Japan’s Companies Act defines four types of business entities. While all four are legally available, the vast majority of foreign entrepreneurs choose between the two most common structures: Kabushiki Kaisha and Godo Kaisha.
Kabushiki Kaisha (KK) — Joint Stock Company
The Kabushiki Kaisha is Japan’s most recognized corporate structure, equivalent to a corporation or joint stock company in Western legal systems. It has existed since 1873 and carries significant prestige in Japanese business culture. When you see “株式会社” or “Co., Ltd.” after a company name in Japan, that indicates a KK.
In a KK, shareholders invest capital in exchange for shares, with liability limited to their investment amount. The company must have at least one representative director, though there is no residency requirement for this position. For companies planning to raise outside investment, issue stock options, or potentially pursue an eventual public listing, the KK structure is essential.
The KK requires more formal governance than other structures, including annual shareholder meetings to approve financial statements. Companies with larger capitalization may need to appoint statutory auditors or establish a board of directors.
Godo Kaisha (GK) — Limited Liability Company
The Godo Kaisha was introduced in 2006, modeled after the American LLC structure. It offers limited liability protection similar to a KK but with simpler governance requirements and lower setup costs. In Japanese, you will see “合同会社” or “LLC” after these company names.
A GK unifies ownership and management, meaning members (the equivalent of shareholders) typically manage the business directly. There are no requirements for annual shareholder meetings, statutory auditors, or public disclosure of financial statements. This makes the GK attractive for small to medium-sized businesses, sole proprietors, and companies without plans for external investment.
Notably, several major American technology companies operate their Japanese subsidiaries as Godo Kaisha, including Apple Japan, Amazon Japan, and Google Japan. For U.S. parent companies, the GK structure can offer tax advantages because it may be treated as a pass-through entity under American tax law.
One practical advantage for foreign founders: a GK does not require capital to be deposited into a bank account before incorporation. The representative member can simply issue a receipt for the investment funds. This simplifies the process for non-residents who may face challenges opening a Japanese bank account before their company exists.
Gomei Kaisha — General Partnership
A Gomei Kaisha is a general partnership where all partners have unlimited liability for company debts. This means personal assets can be seized if the business cannot pay its obligations. Due to this high risk, the Gomei Kaisha is rarely chosen by modern businesses or foreign investors.
Goshi Kaisha — Limited Partnership
The Goshi Kaisha combines general partners (with unlimited liability) and limited partners (whose liability is capped at their capital contribution). While this structure offers some flexibility, the unlimited liability exposure for general partners makes it unpopular. Before the 2006 Companies Act eliminated minimum capital requirements for KK and GK structures, the Goshi Kaisha had some appeal for entrepreneurs with limited funds, but that advantage no longer exists.
| Feature | Kabushiki Kaisha (KK) | Godo Kaisha (GK) | Gomei / Goshi Kaisha |
|---|---|---|---|
| Liability | Limited to investment | Limited to investment | Unlimited (some or all partners) |
| Registration Tax | ¥150,000 minimum | ¥60,000 minimum | ¥60,000 |
| Notarization Required | Yes (¥30,000–50,000) | No | No |
| Setup Cost (taxes and public service fees only) | ~¥250,000+ | ~¥100,000+ | ~¥100,000 |
| Can Issue Shares | Yes | No | No |
| Annual Meeting Required | Yes | No | No |
| Bank Account for Capital | Required | Not required | Not required |
| Foreign Ownership | 100% allowed | 100% allowed | 100% allowed |
| Usage Frequency | Very common | Common | Rare |
These figures cover government fees and require notarization only. Professional fees for bilingual incorporation support typically add ¥100,000–¥600,000 for a KK and ¥30,000–¥300,000 for a GK, and most foreign-headquartered companies will incur these costs.
Which Structure Should You Choose?
For most foreign entrepreneurs, the decision comes down to KK versus GK Choose a KK if you plan to raise outside investment, need maximum credibility with Japanese banks and corporate clients, or might eventually want to sell the company or go public. Choose a GK if you prioritize lower costs, simpler operations, and have no plans for external fundraising.
Both structures are equally valid for obtaining a Business Manager visa, and both receive identical tax treatment under Japanese corporate tax law.
Two Paths to Setting Up in Japan: Self-Directed vs Professionally Managed
Before getting into the visa rules and step-by-step process, it helps to recognise that foreign-owned companies typically take one of two paths into Japan. The right path for you shapes everything that follows: how much you pay in professional fees, whether you need a visa at all, and how involved you will be in day-to-day operations.
This guide is written primarily with the first path in mind, where the founder takes a hands-on, cost-conscious approach. If your situation matches the second path, the incorporation steps still apply, but the visa section and some operational sections will not be relevant to you in the same way.
Path One: The Self-Directed Founder
This is the path for individual entrepreneurs and small business owners who want to set up a Japanese company themselves and personally run it from Japan. The goal is usually to keep professional fees as low as possible, learn the system first-hand, and build the business with the founder on the ground.
People on this path typically handle much of the documentation themselves, work with a single administrative scrivener for the parts that legally require one, and apply for a Business Manager visa so they can live in Japan and manage the company. The cost savings are real, but the time investment is significant, and the founder needs to meet the updated visa requirements personally, including the ¥30 million capital threshold and the staff hiring rule introduced in October 2025.
Path Two: The Established Foreign Company Expanding to Japan
This is the path for businesses that already operate elsewhere and want to open a Japanese subsidiary or branch without sending a founder to live in Tokyo. Speed, simplicity, and reducing the burden on headquarters tend to matter more than saving on professional fees.
Companies on this path usually hire a bilingual incorporation firm to manage the entire process from end to end. They appoint a locally-based representative director, often a hired Japanese executive or, in the early stages, a nominee director provided by their service partner. Because the person managing the entity in Japan is already authorized to work there, the Business Manager visa rules do not apply. Headquarters can run the Japanese operation remotely, supported by a local accounting and tax firm that handles compliance and reports back in English.
Since 2015, Japanese law has allowed companies to be incorporated without any Japan-resident director, which made this path far more practical. In practice, however, banks, landlords, and many Japanese clients still expect to see a Japan-resident representative, so most foreign companies appoint one even though it is no longer legally required.
An example of one such business is Komoto Sato Legal & Tax Partners.
Comparing the Two Paths
| Factor | Self-Directed Founder | Established Company Expansion |
|---|---|---|
| Who does the setup work | Founder, with limited professional help | Bilingual incorporation firm handles end-to-end |
| Who manages the entity in Japan | Founder, on a Business Manager visa | Locally-hired manager or appointed representative director |
| Business Manager visa needed | Yes | Usually no |
| ¥30 million capital rule applies | Yes | Only if a foreign national needs the visa |
| Professional fees | Lower (¥30,000–¥300,000 for GK, more for KK) | Higher (firms typically charge a fixed setup package) |
| Founder time investment | High | Low |
| Typical user | Solo founder, small business owner | Mid-size to large foreign company opening a subsidiary |
Which Path Fits You
If you are a single founder planning to relocate to Tokyo and run the business yourself, the self-directed path described in the rest of this guide is built for you. If you represent a company that is hiring local management or appointing a representative director already living in Japan, you can skip the visa section entirely and focus on the company structure choice, the registration steps, and the ongoing operational support discussion. In that case, your most important early decision is choosing the right bilingual partner, because they will effectively run the Japan-side of your business until you are ready to hire your own local team.
Visa Options for Foreign Business Owners
If your Japan entity will be run by locally hired management or by a representative director who already has work authorization in Japan, none of the visa requirements below apply to you. The visa rules apply specifically to foreign nationals who intend to personally reside in Japan to manage the business.
While you can incorporate a company in Japan without living there, operating and managing that business typically requires appropriate residence status. The visa landscape for foreign entrepreneurs changed significantly in late 2025.
October 2025 Visa Reform: Japan revised and significantly increased Business Manager visa requirements effective October 16, 2025. The capital requirement increased sixfold, and new conditions around hiring, experience, and business plan verification now apply.
Business Manager Visa (経営・管理)
The Business Manager visa is the primary residence status for foreign nationals who intend to establish and operate a business in Japan.
While it is possible to incorporate a company without living in Japan, actively managing that business from within the country requires this visa status. In October 2025, the Immigration Services Agency of Japan (出入国在留管理庁) introduced significant reforms that increased financial thresholds and formalized eligibility standards for new applicants.
Current Requirements (Post-October 2025)
Under the revised framework, applicants must now demonstrate a substantially larger business scale than under the previous system.
Financial and Staffing Requirements
The minimum capital requirement is ¥30 million in paid-in capital or equivalent investment. For corporations such as a Kabushiki Kaisha (KK) or Godo Kaisha (GK), this typically means ¥30 million recorded in the company registry. For sole proprietors, immigration authorities assess the total financial scale of the business, including documented investment in premises, equipment, payroll, and operating costs. In practice, the business must reflect an investment level comparable to the corporate benchmark.
In addition to capital, the company must employ at least one full-time staff member. The employee must hold a residence status that permits unrestricted work in Japan, such as Japanese national, permanent resident, spouse of a Japanese national or permanent resident, or long-term resident. Capital alone is no longer sufficient; both financial scale and staffing requirements must be satisfied.
Professional and Operational Requirements
Applicants must also demonstrate professional capacity to manage a business. This is fulfilled by either:
- At least three years of business management experience, or
- A master’s degree or higher in a relevant field.
Japanese language ability is now formally incorporated into the assessment process. Either the applicant or the full-time employee must demonstrate Japanese proficiency broadly equivalent to JLPT N2 level or higher. This reflects the expectation that the business will be able to operate effectively within Japan’s regulatory and commercial environment.
A dedicated physical office is required. Home offices are generally no longer acceptable under the current framework. The premises must be commercially appropriate and supported by a formal lease agreement. Co-working spaces may be permitted where they provide genuine operational capacity rather than a virtual address only.
Finally, the business plan must be reviewed by a qualified professional such as a certified public accountant, licensed tax accountant, or registered consultant to confirm the viability and legitimacy of the proposed business activity.
Transition Period for Existing Visa Holders
Applicants who obtained a Business Manager visa before October 16, 2025 are subject to a transitional review period extending until October 16, 2028. Renewal applications during this period are evaluated based on actual business performance, compliance history, and progress toward meeting the updated standards.
However, all new applications filed after October 16, 2025 must comply fully with the revised requirements. Applications for Permanent Residency or Highly Skilled Professional status are also assessed under the current rules regardless of when the original Business Manager visa was issued.
If approved, the Business Manager visa is typically granted for one, three, or five years and is renewable provided the business continues to meet operational and compliance standards.
Because immigration practice evolves through administrative guidance and case-by-case assessment, applicants should confirm current criteria directly with the Immigration Services Agency of Japan or a licensed administrative scrivener before submitting an application.
Startup Visa (起業準備活動)
Japan expanded its Startup Visa program nationwide in January 2025, creating a more accessible pathway for entrepreneurs who are not yet ready to meet the full Business Manager visa requirements. This visa allows foreign founders to reside in Japan for up to two years while preparing their business.
The Startup Visa does not require you to immediately have ¥30 million in capital, a physical office, or employees. Instead, you submit a business plan to an approved municipal organization, which evaluates your proposal and provides support during the preparation phase.
Crucially, time spent under the Startup Visa now counts toward the three-year management experience requirement for the Business Manager visa. This makes the Startup Visa a practical stepping stone for entrepreneurs who need time to build their business foundations, secure funding, and establish local networks.
Applications are processed through certified Foreign Entrepreneurship Support Organizations designated by local governments throughout Japan. Tokyo, Fukuoka, Kobe, and dozens of other municipalities offer this program, each with their own support systems and industry focuses.
Highly Skilled Professional Visa
The Highly Skilled Professional (HSP) visa uses a points-based system considering education, professional experience, and income. For business managers, this visa can offer advantages including a faster path to permanent residency, ability to engage in multiple business activities, and permission for domestic workers and parents to accompany the visa holder.
Under the HSP points system, accumulating 80 points allows permanent residency application after just one year in Japan, while 70 points enables application after three years. However, applicants must still meet the standard Business Manager requirements at the time of examination.
| Requirement | Business Manager (Pre-Oct 2025) | Business Manager (Current) | Startup Visa |
|---|---|---|---|
| Minimum Capital | ¥5 million OR 2 employees | ¥30 million AND 1+ employee | No minimum |
| Staff Hiring | Optional (alternative to capital) | Mandatory (1+ full-time) | Not required initially |
| Management Experience | Not required | 3 years OR master’s degree | Not required |
| Japanese Ability | Not required | Required (N2 level) | Not required |
| Physical Office | Required (home office possible) | Required (dedicated space) | Co-working acceptable |
| Business Plan Review | Immigration review | Professional certification required | Municipal organization review |
| Maximum Duration | 5 years (renewable) | 5 years (renewable) | 2 years |
For remote workers and freelancers not planning to establish a formal business entity, Japan’s Digital Nomad Visa offers an alternative pathway to live and work in the country for up to six months while earning: learn more in our guide to Japan’s Digital Nomad Visa
Step-by-Step Guide to Registering (Incorporating) a Company in Japan
The incorporation process in Japan follows a structured sequence regardless of whether you are forming a KK or GK. The steps below apply whether you are filing yourself or working through a local bilingual firm, the difference is who handles each step, not what the steps are.
1. Plan and Prepare Documents
Begin by determining your company name, registered address, business purpose, fiscal year, and capital amount. The company name must be unique within the same jurisdiction and cannot duplicate existing registered trade names at the same address.
You will need to draft Articles of Incorporation (定款) in Japanese. This foundational document outlines the company’s rules, structure, and operating principles. For a KK, the articles must be notarized; for a GK, notarization is not required.
Commission a set of company seals (inkan), which are essential for virtually all business transactions in Japan. A typical corporate seal set includes three stamps: the representative director seal for official documents, a bank seal for financial transactions, and a square seal for general correspondence. Budget approximately ¥10,000 to ¥30,000 for a quality seal set.
Additional Requirements for Non-Residents
For foreigners living outside Japan, the documentation requirements differ significantly from domestic cases. Japanese residents can register their personal seal (hanko) at their local municipal government, but non-residents cannot. Instead, you must obtain signature certificates from a notary office in your home country, along with apostilles to authenticate these documents for use in Japan.
All foreign-language documents require certified Japanese translation. You will need to hire a judicial scrivener experienced in handling foreign notarial documents, apostilles, and translations. This additional complexity means the preparation phase takes considerably longer than for domestic founders, often several weeks rather than days.
This preparation phase typically takes one to three days with professional assistance for Japan-based founders, but several weeks for non-residents due to international document requirements.
2. Notarize Articles of Incorporation (KK Only)
For a Kabushiki Kaisha, the Articles of Incorporation must be certified by a notary public. Fees range from ¥30,000 to ¥50,000 depending on capital amount. The fee was reduced in 2022, with companies having less than ¥1 million in capital paying approximately ¥30,000.
Godo Kaisha formations skip this step entirely, which contributes to their lower cost and faster timeline.
3. Deposit Capital
For a KK, Japanese law requires capital to be deposited into a bank account before registration. This typically means depositing funds into a personal account (often the founding director’s) and obtaining a certificate of deposit or bank statement showing the transfer.
For foreign founders, this can present challenges since opening a Japanese bank account often requires residence status. Some service providers offer Resident Representative Services, where a Japanese representative temporarily holds the capital funds as proof of domestic deposit.
A GK does not legally require a bank deposit. The representative member can issue a receipt for the investment funds, making this structure more practical for remote incorporation by non-residents.
4. Register at the Legal Affairs Bureau
Submit all incorporation documents to the Legal Affairs Bureau (法務局) that has jurisdiction over your company’s registered address. Required documents include the Articles of Incorporation, capital deposit certificate, information about representative directors or members, and the company seal registration.
The registration tax is paid at this time: ¥150,000 minimum for a KK (or 0.7% of capital if higher) and ¥60,000 minimum for a GK Electronic filing can save the ¥40,000 stamp duty that applies to paper submissions.
Processing typically takes about three business days if all documents are correct. You will receive the Certificate of Incorporation (登記事項証明書) and corporate seal registration certificate upon completion.
5. Post-Registration Notifications
Within two months of establishment, submit the Corporate Establishment Notification (法人設立届出書) to the local tax office. If your company will pay salaries, also file the Payroll Office Opening Notification.
Your company will automatically receive a 13-digit Corporate Number (法人番号) upon registration, which serves as your tax identification number for all official filings.
Register with the local pension office for health insurance and pension enrollment within five days of beginning operations. All Japanese corporations must enroll in social insurance systems, even single-person companies where the founder draws a salary.
6. Open a Corporate Bank Account
After registration, open a corporate bank account for business transactions. This step often proves challenging for newly established foreign-owned companies.
Japan’s major banks, including Mizuho, MUFG (Bank of Tokyo-Mitsubishi UFJ), and SMBC (Sumitomo Mitsui Banking Corporation), are known for their thorough due diligence on new corporate accounts. Having a Japanese resident with Japanese nationality as a director or officer significantly improves your chances of approval. Banks prefer representatives they can easily access and communicate with due to anti-money laundering regulations.
Larger banks offer more convenient services for business operations, including online banking, automatic withdrawals, and integration with accounting software. If major banks prove difficult, consider net banks such as Rakuten Bank or PayPay Bank, or regional banks such as Resona Bank or Shinsei Bank, which can be easier to be approved as a newly incorporated or foreign-owned entities.
Be aware that a bank rejection is typically logged in the bank’s internal system, making future applications to that institution extremely difficult regardless of how circumstances change. This makes it essential to have all documentation complete and credible before submitting your first application.
Once your Articles of Incorporation are registered with the Legal Affairs Bureau and any required licenses are obtained, your company is legally authorized to begin operations in Japan.
Many foreign founders and companies choose to engage a bilingual professional firm to handle some or all of the steps above. This is the standard approach for established companies expanding into Japan, and it is also a sensible choice for solo founders who would rather focus on their business than navigate Japanese bureaucracy. Firms such as Komoto Sato Legal & Tax Partners provide this kind of end-to-end support for market entry.
Costs and Timelines
Understanding the full financial picture helps you budget appropriately for your Japan market entry.
Registration Costs
| Cost Category | Kabushiki Kaisha (KK) | Godo Kaisha (GK) |
|---|---|---|
| Registration Tax | ¥150,000 (or 0.7% of capital if more) | ¥60,000 |
| Notarization Fee | ¥30,000–50,000 | ¥0 |
| Stamp Duty (Paper Filing) | ¥40,000 (waived if electronic) | ¥40,000 (waived if electronic) |
| Company Seal Set | ¥10,000–30,000 | ¥10,000–30,000 |
| Documentation Fees | ~¥1,000–2,000 | ~¥1,000–2,000 |
| Professional Services (foreigners abroad) | ¥100,000–600,000 | ¥30,000–300,000 |
| Estimated Total | ¥250,000–750,000+ | ¥100,000–450,000+ |
These figures exclude capital investment itself. While there is no legal minimum capital requirement (even ¥1 is technically possible), practical considerations around banking, visa applications, and business credibility make ¥1 million a reasonable floor for most operations. For Business Manager visa applicants, ¥30 million is now the required threshold as a foreigner.
A Note on Cost Expectations
The registration costs above represent one-time fees to create your legal entity. For foreign entrepreneurs evaluating Japan market entry, these figures are often less important than ongoing operational costs and whether the business can realistically break even.
Before committing to incorporation, work with a bilingual professional to estimate your true monthly operating costs, including staff, office space, accounting and compliance services, and any industry-specific expenses. A qualified local partner can help you build realistic revenue projections based on actual market conditions rather than assumptions made from overseas.
Typical Timelines
A straightforward GK incorporation with professional assistance typically completes in two to four weeks from start to finish. The KK process takes approximately three to five weeks due to the additional notarization step. In peak filing seasons, processing may take longer.
Administrative scrivener services can expedite the process by handling steps in parallel, with some providers advertising GK formation in as little as seven business days. Japan’s government one-stop online service also allows electronic document certification and filing, potentially reducing delays further.
Ongoing Operational Costs
After incorporation, the real ongoing expense for foreign-owned companies is bilingual professional support. Simply creating a legal entity on paper does not mean you have started a functioning business in Japan. You need a local bilingual professional who can continuously support your operations from a strategic standpoint. For companies on the expansion path that are not sending a founder to live in Japan, this partner takes on an even larger role, effectively serving as the company’s eyes, ears, and operational presence on the ground until local staff are hired.
The most significant recurring cost is business reporting, where someone in Japan must maintain monthly accounting under Japanese laws and accounting standards, then create profit and loss reports in a format your headquarters can use. The challenge is doing local work in Japanese while reporting in English, Chinese, or another language. This requires a firm with genuine bilingual capability, not just translation services.
Budget ¥50,000 to ¥200,000 monthly for a qualified accounting firm that can maintain Japanese-compliant books while providing financial reports in your company’s working language. This varies based on transaction volume, reporting complexity, and the level of strategic advisory support you require.
Before incorporating, work with your local partner to develop realistic revenue and cost estimates. Foreign entrepreneurs are often more interested in whether they can break even than in the mechanics of registration. A good bilingual accountant or lawyer can help you model these figures accurately, factoring in costs that may not be obvious from outside Japan.
Additional ongoing expenses include corporate tax filing, social insurance contributions, and any required business licenses. Companies must also pay minimum local taxes regardless of profitability, with amounts varying by municipality and capital level.
Office Space Requirements
All Japanese companies require a registered business address. For founders applying for a Business Manager visa under the new rules, a dedicated physical office space is mandatory since home offices are no longer permitted. For established foreign companies that are not sponsoring a Business Manager visa, the office requirements are more flexible. A virtual office or co-working address is generally accepted by the Legal Affairs Bureau for company registration, and many foreign-owned subsidiaries operate this way until they hire local staff. Be aware that banks often scrutinize virtual addresses more closely during account opening, and regulated industries such as food service, beauty, manufacturing, and financial services require a dedicated physical space.
Options range from virtual office services (starting around ¥15,000 to ¥45,000 monthly) for non-visa purposes, to co-working spaces (¥40,000 to ¥90,000 per person monthly), to traditional office leases in Tokyo business districts with varying monthly costs depending on location and size (¥100,000-¥500,000 for small up to 5 people offices to upwards of ¥10,000,000 for large offices)
For companies planning to apply for business licenses or sponsor visa applications, the office address should be in a commercial building supported by a proper lease agreement. Residential addresses generally do not satisfy requirements for regulated activities.
Investing in Tokyo Real Estate
Establishing a business in Japan often begins with securing the right address. Housing Japan advises foreign entrepreneurs and investors on purchasing entire office buildings, investment properties, and luxury residences in central Tokyo. If you are relocating or investing alongside your company formation, speak with our team for strategic property guidance.
Professional Support for Market Entry
Japan’s incorporation process involves Japanese-language documentation, specific procedural requirements, and interaction with multiple government agencies. While technically possible to complete independently, most foreign entrepreneurs benefit from professional assistance, both for initial setup and ongoing operations.
For incorporation, administrative scriveners (行政書士) handle visa applications and business licensing, while judicial scriveners (司法書士) manage company registration with the Legal Affairs Bureau. These professionals typically charge one-time fees for specific filings.
However, the more important decision is choosing a bilingual firm for ongoing operational support. This partner handles your monthly accounting, tax compliance, regulatory filings, and financial reporting to your overseas headquarters. They become your eyes and ears on the ground, helping you navigate issues as they arise and ensuring your business remains compliant with Japanese requirements.
When selecting an ongoing partner, look for firms that offer accounting and bookkeeping under Japanese standards, tax filing and compliance monitoring, bilingual reporting in your headquarters’ working language, and strategic advisory support for business decisions. The right firm will help you understand your true operating costs before you incorporate, not just process paperwork afterward.
For comprehensive market entry support covering company establishment, visa acquisition, accounting, and ongoing compliance, firms such as Komoto Sato Legal & Tax Partners provide one-stop services with English-speaking lawyers, tax accountants, and administrative specialists. Their team supports foreign-affiliated companies from initial incorporation through ongoing operations, including the bilingual accounting and reporting that foreign headquarters require.
Common Mistakes to Avoid
Several pitfalls frequently catch foreign entrepreneurs during the incorporation process.
Underestimating capital requirements for banking: While legal minimum capital is technically ¥1, banks view companies with stated capital below ¥1 million as high-risk. This can result in bank account rejection regardless of how legitimate your business is.
Assuming business registration equals licensing: Having your Articles of Incorporation accepted by the Legal Affairs Bureau does not automatically authorize you to conduct all listed business activities. Certain industries, including food service, real estate, financial services, alcohol sales, and import/export of regulated goods, require separate government licenses. Companies may exist legally on paper while being unable to operate until proper permits are obtained.
Submitting incomplete bank applications: Bank rejection is typically permanent for that institution. Ensure all documentation is complete, your representative is credible and accessible, and your business activities align with any stated objectives before applying.
Neglecting post-incorporation obligations: Missing tax notification deadlines, failing to enroll in social insurance, or not properly maintaining corporate records can create compliance problems that affect visa renewals and banking relationships.
Frequently Asked Questions
Can I start a business in Japan without living there?
Yes. Since 2015, no director needs to be a Japanese resident to incorporate a KK or GK. You will need to file a Foreign Exchange Act notification through the Bank of Japan. A GK is easier to set up remotely than a KK, since it does not require capital to be deposited in a Japanese bank account before registration.
Do I need to live in Japan to run my Japanese company?
No. Many foreign companies run their Japanese subsidiaries from headquarters overseas, with day-to-day management handled by a locally-hired representative director. The Business Manager visa rules only apply if a foreign national wants to personally reside in Japan to manage the business. A bilingual accounting firm typically handles ongoing compliance.
Which is better, KK or GK?
Neither is inherently better; the right choice depends on your objectives. A KK offers more prestige, the ability to issue shares and raise equity, and familiarity to Japanese banks and corporate partners. A GK costs less, requires simpler governance, and can be established without a Japanese bank account. Both provide limited liability and receive identical tax treatment. For most small businesses without external investment plans, a GK is practical and sufficient but may be limiting as the business grows.
Can I convert a GK to a KK later?
Yes, Japanese law permits reorganization from GK to KK through a prescribed procedure involving a reorganization plan, unanimous member consent, creditor notifications, and registration of both the dissolved GK and newly established KK The process takes approximately six weeks and involves additional registration fees.
Do I need to speak Japanese to run a business in Japan?
For Business Manager visa applications under the new rules, Japanese language proficiency equivalent to JLPT N2 is required for either the applicant or a full-time employee. For daily business operations, foreign entrepreneurs can operate successfully with limited Japanese, though having Japanese-speaking staff or partners significantly simplifies interactions with government agencies, banks, and local clients.
What taxes will my Japanese company pay?
Japanese corporations face multiple tax layers. National corporate tax is 23.2% of taxable income, with small and medium enterprises benefiting from a reduced 15% rate on income up to ¥8 million. Local corporate tax adds 10.3% of the national tax amount. Prefectural and municipal enterprise taxes vary by location, typically 3-7% of income. The effective combined rate for most companies falls between 30-33%. Consumption tax (VAT) is 10% on goods and services. A new 4% defense special corporate tax surcharge takes effect from April 2026.
How long does the Business Manager visa application take in Japan?
Processing times vary but typically expect one to three months from submission to decision. The Certificate of Eligibility process (for applicants outside Japan) generally takes longer than change of status applications (for those already in Japan on another visa). Under the new rules, applications require more documentation including professionally certified business plans, which may extend preparation time.
What is the Japanese Startup Visa and who should use it?
The Startup Visa allows foreign entrepreneurs to reside in Japan for up to two years while preparing to meet Business Manager visa requirements. It is ideal for founders who need time to develop their business plan, secure funding, build local networks, or accumulate management experience before committing ¥30 million in capital and hiring staff. Time spent under this visa counts toward the three-year management experience requirement.
Next Steps
Starting a business in Japan requires careful planning, particularly given the significantly higher barriers introduced by the October 2025 visa reforms. For entrepreneurs serious about entering the Japanese market, consider the following approach.
First, determine whether you need to live in Japan to run your business. If yes, assess whether you meet the current Business Manager visa requirements or would benefit from starting with a Startup Visa to build your foundation over one to two years.
Second, choose between KK and GK based on your funding plans and long-term objectives. If outside investment is part of your strategy, the KK structure is likely necessary regardless of its higher setup costs.
Third, engage qualified professional support early in the process. The complexity of Japanese bureaucracy, language requirements, and the irreversible nature of certain mistakes (particularly bank account rejections) makes experienced guidance valuable.
Finally, budget realistically. Between capital requirements, registration costs, office space, professional fees, and initial operating expenses, entering Japan as a visa-holding business owner now represents a substantial financial commitment. Understanding these costs upfront allows for proper planning and resource allocation.
About Housing Japan
Housing Japan specializes in buying, selling, and managing residential luxury real estate in central Tokyo. Whether you are relocating for business, seeking investment opportunities, or establishing a new venture in Japan, our team provides comprehensive support for your real estate needs. From finding the right commercial office space to securing luxury residential accommodations, we help foreign professionals and entrepreneurs navigate Tokyo’s property market with confidence.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal, tax, or immigration advice. Requirements reflect policy updates announced by the Immigration Services Agency of Japan as of October 2025. Applicants should confirm current criteria before applying. It is recommended to consult with qualified professionals such as licensed administrative scriveners, tax accountants, or immigration lawyers before making business or visa decisions.
