Starting a business in Japan: A guide for Indian residents with requirements, fees, and opening a Japan business account

Think of technological advancements; the first name that comes to mind is Japan. Japan is the world leader in various industrial sectors and is home to major trading hubs like Yokohama and Tokyo. Learn about opening a company in Japan and what to expect from the process, especially for Indian passport holders.

Can you register a company in Japan from India?

Yes, technically Indians can register a company in Japan as long as they hold the appropriate visa. However, it would be easiest for a resident or citizen of Japan to start a company. One new option is the Startup visa offered by the Japanese government for qualifying scalable businesses. Check out the section on visa requirements later on in this article.

Existing Indian businesses can operate in Japan in one of three ways:

• A representative office
• A branch office, OR
• A subsidiary company.

A representative office does not need to be registered in Japan, but it will not be able to open its own bank accounts or lease a physical space because those will need to be under the parent company. The branch office and subsidiary company will need to be registered, and in each case, the parent company is held responsible for obligations and debts. There are several foreign companies in Japan, so take a look at the Japanese External Trade Organization website to learn more about how a foreign business can get started.

Indian business entities and owners must follow the rules and procedures for establishing and running businesses in Japan as the country has a strict regulatory environment. It requires identifying the right business structure, having the correct documents and establishing a business bank account. It is also recommended to either have a translator or a working knowledge of Japanese, as English is not as prevalent as it is in India. Additionally, all businesses must comply with Japanese tax regulations to start and operate in the country.¹

Different types of companies in Japan

Japan offers multiple options for business structures in the country. The most common business structures are the following:²

• Joint Stock Company (Kabushiki Kaisha -KK) - The structure is similar to that of joint stock companies worldwide. It has a separate legal entity from its stakeholders so the company remains responsible for its business debts. The minimum capital requirement is ¥1 million JPY and KKs must have at least one representative director.
• Limited Liability Company (Godo Kaisha - GK) - Shareholders own the limited liability company and are responsible for its business debts and obligations only to the extent of their contribution. The minimum capital requirement is ¥1 million JPY, and the company must have at least one representative director.
• General Partnership (Gomei Kaisha - GMK) - This business entity is a partnership owned by two or more individuals. All the partners are responsible for the company’s business debts. There is no minimum capital requirement for GMKs.
• Limited Partnership (Teikan Seiho Kaisha - TSK) - This business entity has a mixture of general partners who are personally liable for the company’s business debts and limited partners who are not. TSKs do not have any minimum capital requirements and are not considered legal personalities.
• Simple Partnership (Yugen Kaisha - YK) - As the name goes, this business is simpler to open compared to other partnerships and has lower registration fees. There are no minimum capital requirements and are not considered legal entities.

Other business structures may be available in Japan; consult with your tax or business advisor to find the right one for you.

Requirements to start a Japanese company from India

There are five main steps to starting a company in Japan:³

1. Set up the business - do your research for what you need for the size and industry of your new business.
2. Have the right visas - only specific permits or visa-holders with existing approval to work in Japan, or citizens, will be allowed to open a business.
3. Appoint a local representative and set up an office.
4. Register the company and identify tax notices.
5. Ensure to have a certificate of eligibility, if required, and open a bank account.

You may face additional steps in the process. Companies must also keep the following documents ready during the registration process, if applicable:

• Application for registration
• Articles of incorporation
• List of directors, shareholders, and their addresses
• Proof of payment of registration fee
• The corporate seal of the company
• Tax payment certificate
• Document certifying the company’s capital and assets
• Details about the company’s activities

Once the documents are ready, companies can proceed with the registration process.

1. Choose the company’s name and get the approval of the Legal Affairs Bureau to avoid duplication.
2. Prepare the required documents, like Articles of Incorporation and shareholder information.
3. Submit the documents to the Legal Affairs Bureau and pay the registration fee.
4. Obtain a company seal.
5. Register the business with the tax department and get a Tax ID number.
6. Obtain a seal registration by registering the company with the local city hall.
7. Apply for the necessary permits and licenses to run the business.
8. Register the company for employee pension and social insurance plans.

It is recommended to hire a professional or proxy to help navigate setting up a Japanese business.

What does it cost to run a Japanese company?

The cost to open a Japanese company is dependent on a number of factors, including size, industry and type of business. Modern digital businesses may have low starting costs, but innovation and tech companies may need a lot of investment upfront. Here are some costs to consider when opening a company in Japan:

• Employee salaries: Employee salaries can take up a large chunk of business expenses. Make sure you are complying with labour laws and providing the appropriate pay. The minimum hourly wage in Japan is ¥1,002.⁴
• Social services contributions: Employers will need to be aware of social service benefits that are to be awarded to employees. This can be contributions to pension, health or other social benefits.
• Office and maintenance: Tokyo is one of the most expensive cities in the world, and you should allot room in your budget if you are thinking of opening an office there. Otherwise, consider budget-friendly solutions like co-working spaces or remote working.
• Taxes: Ensure you pay the required local and national taxes in Japan. A local tax accountant can help you navigate the tax system.
• Professional services: Local professionals can help you understand the business, government and regulatory environment in Japan. A translator for Japanese, a lawyer, a notary and an accountant can be useful additions to your team and can save you from headaches later.

Starting costs for setting up the company

The costs of starting a company in Japan are going to depend on the type of structure you choose. Here is an example of costs for a Kabushiki Kaisha:⁵

Fees for compliance, annual filings

Meeting compliance standards and your annual filing is compulsory for the business. Missing or skipping the submission of your annual filing can result in penalties. The costs vary from one company structure to the other.

Taxes and Government Fees

Here are some examples of the Japanese tax structure for companies. The tax is calculated based on the company’s size and the income generated in the country:⁶

Starting a business account for a Japanese company

A business bank account is required to open a company in Japan. You will need to show evidence of your articles of incorporation, identification for you and any partners and a business plan, typically, to open an account. Some banks in Japan that offer corporate business accounts are MUFG, SMBC and Mizuho.

Need a personal bank account? Here is our ultimate guide to opening a bank account in Japan.

Challenges in opening and managing accounts from India

You will likely need to be present in Japan to open your business bank account. But once it is open, you will be able to manage the account through online banking or the bank’s mobile app. But that doesn't mean it comes cheap. Between fees and an exchange rate with markups, banks can be an expensive option when sending international transfers globally.

Want to send business payments to India a cheap and easy way? Try the Wise Business Account.

Meet Wise Business

When you need to pay suppliers or freelancers who live overseas, Wise Business can help you make payments the easy way. The Wise Business Account is one account that lets you deposit funds directly into local bank accounts in different countries. Plus, you can integrate the transactions right into your existing accounting software like Quickbooks.

And while it's easy to make payments, the Wise Business Account makes it even simpler for clients to send you payments. The account provides you local bank details in multiple global currencies so clients can make payments in their preferred currency. The money can then be deposited seamlessly into your account.

Our online process lets you open and verify your Japan business account from India. With our customer support available in English and our commitment to providing a seamless digital experience, Wise offers an ideal alternative to traditional banks for your business abroad.

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Moving to Japan from India

It is difficult to get a visa to solely start a new business in Japan. There are short and long-term business visas, but they are generally attached to a full-time role at an existing Japanese company. If you are already living and working in Japan, you can consider opening a company in the country but it is best to consult an immigration lawyer first.⁷

Recently, Japan has introduced a Start-up visa program.

Startup Visa Program

Japan has introduced an innovative Startup visa for scalable businesses to be established in one of 17 special zones in Japan. Applicants must have an approved business plan and set up a company with initial paid-up capital. The company must have at least two employees. The visa allows business entrepreneurs to stay in Japan for up to one year and start a business. There is no renewable option; the visa holder must switch to the Business Manager visa category.⁸

A good place to start to see if you are eligible for the Japanese Startup Visa is the Embassy of Japan in India.