How to Incorporate a Company in Japan

Types of Japanese for-Profit Corporations

There are 2 types of for-profit legal corporate entities in Japan:

Goto-gaisha (GK)

Goto-gaisha (GK) is not organized by shares but rather by membership interests. Because of its legal structure, it must be converted to a Kabushiki-gaisha (KK) in order to raise funds from investors.

Standard incorporation costs is cheaper, compared to Kabushiki-gaisha (KK). A Goto-gaisha (GK) can be setup for around ¥70,000 - if you can speak and read Japanese. Do note that these costs do not include other items/fees such as corporate seals, and accounting/tax filing services.

Many Japanese accountants and incorporation like to say that the Godo-kaisha is modelled after the American Limited Liabilit Company (LLC). However, I'd like to point out the great difference is the Japanese tax authority does not recognize the Godo-Kaisha (GK) as a tax-passthrough entity.

Kabushiki-gaisha (KK)

A Kabushiki-gaisha (KK) is a legal for-profit entity organized by shares and the stock can be distributed to individual or corporate shareholders. This is the entity you should be considering given its preferred recognization and status to do business and enter into contracts with clients and vendors in Japan.

The minimum standard incorporation costs is around ¥210,000 - if you can speak and read Japanese. If you need English-language support to help you with the incorporation process, charges can be anywhere from ¥300,000 to ¥1,000,000 (by expensive lawyers) - just for incorporation.

Cost of incorporation:

Incorporation of a Kabushiki-gaisha (KK): ¥210,000 (if you can deal with the service provider in Japanese)
Incorporation of a Kabushiki-gaisha (KK): ¥300,000 to ¥1,000,000 (for English-language services)

Corporate Seal: ¥10,000 to ¥30,000 (depending if you prefer the wooden or metal type)

Accounting Services: usually ¥10,000 to ¥20,000 per month (for a small company)
Tax-filing Services: usually around ¥120,000 (for a small company)

Minimum Tax: ¥70,000 (annual, even if you company did not make any profit)

Why is it cheaper if you can speak, read and write Japanese?

It is very simple to understand. The mass-target audience is Japanese and it is extremely competitive among the Japanese service providers (incorporators, accountants, lawyers, etc.) If you can do business in Japanese, you can take advantage of such competitive rates.

On the other hand, there isn't much competition for English-based corporation services. Therefore, the service providers charge premium rates and discounts are very uncommon. Most foreign market entry business have money to pay. :-)

The Incorporation Process

For me, it is very easy. I've already incorporated 2 companies and I know the exact procedures to get it done (and even get bank accounts opened). It is just a piece of cake!

However, it is a tedious process and you should expect the timeframe to be 1 to 2 months, including the bank account to be opened.

Consideration and Preparation: timeframe is unspecified, subjective and dependent on your business plan

Preparation of all documentation (Articles of Incorporation, personal identity documents, etc.) and ordering of Corporate Seals: generally, takes about 1 to 3 weeks (expect delays if there are missing or incomplete information, or that you're outside Japan)

Filing to government to approval: 1 week - yes, this is all it takes if all documentation are properly done!

Opening of bank account: 2 weeks (generally, but some banks can reject your application)

Additional Business Costs

The cost information provided here covers just incorporation requirements and accounting/tax filing services. Of course, when you run your business, there are other costs like office rental (or using virtual office), marketing and operational costs, etc.