Quick Answer
Foreigners can start a business in Japan as either a 個人事業主 (sole proprietor — just file 開業届) or a 法人 (corporation — requires capital and registration). Most freelancers start as 個人事業主 and incorporate later when revenue exceeds ¥8-10M. Your visa must allow business activity.
個人事業主 vs 法人: which structure is right for you? — 事業形態の比較
When starting a business in Japan, the first major decision is your business structure. The three most common options for foreigners are 個人事業主 (sole proprietor), 株式会社 (kabushiki kaisha / KK — stock corporation), and 合同会社 (goudou kaisha / GK — limited liability company, similar to a US LLC). Here's how they compare:
| Feature | 個人事業主 (Sole Proprietor) | 株式会社 (KK) | 合同会社 (GK) |
|---|---|---|---|
| Registration | File 開業届 at tax office | Register at 法務局 (Legal Affairs Bureau) | Register at 法務局 |
| Setup cost | ¥0 (free) | ¥200,000-300,000 (registration tax ¥150K + fees) | ¥60,000-100,000 (registration tax ¥60K + fees) |
| Capital required | None | ¥1 minimum (¥5M+ for 経営・管理ビザ) | ¥1 minimum (¥5M+ for 経営・管理ビザ) |
| Tax type | 所得税 (income tax) — progressive 5-55% | 法人税 (corporate tax) — flat ~23.2% | 法人税 (corporate tax) — flat ~23.2% |
| Personal liability | Unlimited — personal assets at risk | Limited — to capital investment | Limited — to capital investment |
| Credibility | Low — some clients won't work with 個人 | Highest — "KK" is the gold standard | Medium — growing acceptance |
| Annual maintenance | 確定申告 only (or outsource ~¥100K) | 法人決算 + tax filing (~¥200-500K if outsourced) | 法人決算 + tax filing (~¥200-500K if outsourced) |
| Social insurance | 国民健康保険 + 国民年金 (self-pay) | 社会保険 mandatory (company pays half) | 社会保険 mandatory (company pays half) |
KK vs GK — which corporation?
A 株式会社 (KK) is the most recognized and trusted business form in Japan — many large companies and banks prefer dealing with KKs. A 合同会社 (GK) is cheaper to set up, simpler to manage, and has the same limited liability. If your clients are Japanese corporations or you plan to raise outside capital, go KK. If you're a solo operator or small team and credibility with Japanese firms isn't critical, GK saves money and hassle. Note: Apple Japan, Amazon Japan, and Google Japan are all 合同会社.
Starting as a sole proprietor — 個人事業主として開業する
Becoming a 個人事業主 is the simplest and cheapest way to start a business in Japan. There's no registration fee, no capital requirement, and no need for a lawyer. You can do everything in a single visit to your local tax office (税務署).
Step 1: File 開業届 — 個人事業の開業届出書
The 開業届 (business commencement notification) is a one-page form you submit to your local tax office within 1 month of starting your business. It's free to file. You can download the form from the 国税庁 website or get it at the tax office. The form asks for basic information: your name, address, business type, business start date, and expected income.
You can also submit it online through e-Tax (the national tax filing system) or through the free app freee開業 (kaigyo.freee.co.jp) which generates the form for you and lets you submit it digitally — in English-supported interface.
Step 2: Apply for 青色申告 — 所得税の青色申告承認申請書
At the same time as filing 開業届, submit the 青色申告承認申請書 (blue return approval application). This is critical — 青色申告 gives you up to ¥650,000 in extra tax deductions and allows you to carry forward losses for 3 years. The deadline is within 2 months of starting your business (or by March 15 if you started before January 16). There's no reason not to apply — it's free and has no downside.
Same-day tip
File both the 開業届 and 青色申告承認申請書 on the same day. Bring your residence card (在留カード) and マイナンバー notification. The tax office staff will process both immediately. Total time: about 30 minutes. Total cost: ¥0. For a detailed walkthrough of 青色申告, see our Freelancer Tax Guide.
Other forms you may need
- 給与支払事務所等の開設届出書 — if you plan to hire employees (even part-time), file this within 1 month of hiring
- 源泉所得税の納期の特例の承認に関する申請書 — allows you to pay withheld employee income tax semi-annually instead of monthly (available if you have fewer than 10 employees)
- 消費税課税事業者届出書 — required if your revenue exceeds ¥10M (you become a taxable business for 消費税 purposes). See our Invoice System guide
- 適格請求書発行事業者の登録申請書 — register for the invoice system (インボイス制度) if your clients need qualified invoices
Starting a company (法人設立) — 会社を設立する
Setting up a 株式会社 or 合同会社 is more involved than becoming a 個人事業主, but it's far from impossible. Many foreigners incorporate in Japan every year. Here's the process:
Prepare the articles of incorporation — 定款 (ていかん)
The 定款 is the foundational document of your company — it specifies the company name, address, business purpose, capital amount, fiscal year, and structure. For a 株式会社, the 定款 must be notarized by a 公証人 (notary public), costing about ¥50,000. For a 合同会社, notarization is not required. You can draft the 定款 yourself or hire a 司法書士 (judicial scrivener) or 行政書士 (administrative scrivener) to do it for ¥50,000-100,000.
Deposit capital — 資本金の払込み
Deposit the capital into a personal bank account (the company doesn't have an account yet). The legal minimum is ¥1, but practically you'll want more — especially if applying for a 経営・管理ビザ, which requires ¥5,000,000 in capital. Even without a visa requirement, ¥1,000,000-3,000,000 is common for credibility and operating buffer. Get a bank statement showing the deposit as proof.
Register at the Legal Affairs Bureau — 法務局で登記
Submit the registration documents to the 法務局 (Legal Affairs Bureau) in your company's jurisdiction. Required documents include the 定款, capital proof, representative's seal certificate (印鑑証明書), and the registration application. The 登録免許税 (registration tax) is ¥150,000 for a 株式会社 or ¥60,000 for a 合同会社. Your company officially exists from the date of registration. Processing takes about 1-2 weeks.
Post-registration filings — 設立後届出
After registration, you must file notifications with the tax office (税務署), prefectural tax office (都道府県税事務所), municipal tax office (市区町村), pension office (年金事務所), and the labor standards office (労働基準監督署) if hiring employees. Key forms include 法人設立届出書, 青色申告承認申請書 (for corporate tax), and 給与支払事務所等の開設届出書.
Total cost summary for 株式会社
登録免許税: ¥150,000 + 定款認証: ~¥50,000 + 司法書士 fees: ¥50,000-100,000 + 会社印 (company seal): ¥10,000-30,000 = Total: approximately ¥200,000-330,000. For a 合同会社, the total is roughly ¥60,000-150,000 (no notarization, lower registration tax). Online services like freee会社設立 and マネーフォワード会社設立 can guide you through the process and reduce 司法書士 costs.
Visa requirements for business — ビザ要件
Your visa status directly affects what kind of business activity you can engage in. This is one of the most critical considerations for foreigners starting a business in Japan.
経営・管理ビザ (Business Manager Visa)
If your current visa does not permit business activity (e.g., you're on a standard work visa and want to run your own company), you'll need to switch to a 経営・管理ビザ (Business Manager visa). Key requirements:
- Capital of ¥5,000,000+ OR employ 2+ full-time employees who reside in Japan
- A physical office in Japan (not a virtual office — immigration requires a real, dedicated space with a separate address from your residence, though a small rented office suffices)
- A viable business plan demonstrating the company can sustain itself
- The business must be a 法人 (corporation) — 個人事業主 generally does not qualify for this visa
Visas that already allow business activity
Some visa types allow you to start a business without switching visas:
- 永住者 (Permanent Resident) — no activity restrictions, can do anything
- 日本人の配偶者等 (Spouse of Japanese National) — no activity restrictions
- 永住者の配偶者等 (Spouse of Permanent Resident) — no activity restrictions
- 定住者 (Long-Term Resident) — no activity restrictions
Important: work visa + side business
If you're on a standard work visa (技術・人文知識・国際業務 etc.) and want to do freelance work or run a small side business, you need a 資格外活動許可 (permission to engage in activities outside your visa status). This is applied for at immigration and typically allows up to 28 hours/week of side work. Operating a 個人事業主 as a side business on a work visa is technically possible with this permission, but becoming the representative director (代表取締役) of a corporation requires a visa change. Consult an immigration lawyer (行政書士) for your specific situation.
Tax differences: 個人 vs 法人 — 税金の違い
The tax treatment is one of the biggest reasons people incorporate. Here's the key difference: as a 個人事業主, you pay progressive income tax (所得税) that increases with your income. As a 法人, the company pays flat corporate tax (法人税), and you separately pay income tax only on the salary you draw from the company.
個人事業主 tax rates (所得税)
| Taxable income | Tax rate | + 住民税 | Effective total |
|---|---|---|---|
| ~¥1,950,000 | 5% | +10% | ~15% |
| ¥1,950,001 - ¥3,300,000 | 10% | +10% | ~20% |
| ¥3,300,001 - ¥6,950,000 | 20% | +10% | ~30% |
| ¥6,950,001 - ¥9,000,000 | 23% | +10% | ~33% |
| ¥9,000,001 - ¥18,000,000 | 33% | +10% | ~43% |
| ¥18,000,001 - ¥40,000,000 | 40% | +10% | ~50% |
| ¥40,000,001+ | 45% | +10% | ~55% |
法人 tax rates (法人税)
Corporate tax is much simpler and flatter:
- 法人税 (national corporate tax): 15% on the first ¥8M of income (for companies with capital under ¥100M), 23.2% above ¥8M
- 法人住民税 (local corporate tax): approximately 7% of 法人税 amount
- 法人事業税 (enterprise tax): approximately 3.5-7% depending on income and location
- Effective combined rate: approximately 22-25% for income under ¥8M, approximately 33-35% above ¥8M
The tax crossover point
As a general rule, when your business profit exceeds ¥8,000,000-10,000,000, the total tax burden (income tax + 住民税 + 個人事業税) as a 個人事業主 exceeds what you'd pay as a 法人 (corporate tax on profits + income tax on your salary). This is the typical "crossover point" where incorporation starts saving you money. But it depends on your specific situation — 法人 also has additional costs (see the comparison table above), so consult a 税理士.
法人 tax advantages
Beyond the rate difference, corporations have additional tax benefits:
- Salary as expense: You pay yourself a salary (役員報酬), which is a deductible company expense — reducing corporate taxable income
- 給与所得控除: Your salary income receives the 給与所得控除 (employment income deduction), which 個人事業主 cannot claim
- Wider expense deductions: More items are deductible (company car, travel, entertainment within limits, health checkups, etc.)
- Loss carryforward: 10 years (vs 3 years for 個人事業主 with 青色申告)
- 退職金 (retirement pay): You can set up a retirement fund for yourself as a director, which is tax-advantaged when received
Social insurance obligations — 社会保険
Your business structure directly affects which social insurance system you're in and how much you pay:
個人事業主
- 国民健康保険 (National Health Insurance): You pay the full premium yourself, calculated based on your previous year's income and your municipality. Can be expensive at higher incomes (¥800,000+/year in some cities)
- 国民年金 (National Pension): Flat rate of approximately ¥16,980/month (2026). This is the basic pension — lower benefits than 厚生年金
- If you hire 5+ employees in certain industries, you're required to enroll them (and yourself) in 社会保険 (厚生年金 + 健康保険)
法人 (corporation)
- 社会保険 is mandatory — even if you're the only employee/director. You must enroll in 健康保険 (health insurance) and 厚生年金 (employees' pension)
- The company pays approximately half of the total premium, and the other half is deducted from your salary
- Total social insurance cost (company + employee) is roughly 30% of salary
- You can optimize the amount by setting your director's salary (役員報酬) strategically — lower salary = lower social insurance, but higher corporate profit = higher corporate tax. A 税理士 can help find the optimal balance
Social insurance advantage of 法人
While 社会保険 costs more in total, the benefits are significantly better: 厚生年金 provides much higher retirement pension than 国民年金, health insurance includes 傷病手当金 (sickness benefits — 2/3 of salary for up to 18 months) and 出産手当金 (maternity benefits), and the company's share is a tax-deductible expense. For many people, this alone justifies incorporation.
Banking for business — 事業用銀行口座
Separating your business and personal finances is essential for proper bookkeeping and tax filing. Here's what to know about business banking in Japan:
個人事業主
You don't technically need a separate business account — you can use your personal account. However, it's strongly recommended to open a dedicated account for business transactions. As a 個人事業主, you can open a regular personal savings account (普通預金口座) at any bank and use it for business. Some banks allow adding a 屋号 (trade name) to the account.
法人
A corporation needs a corporate bank account (法人口座). This is one of the biggest challenges for foreign-owned companies in Japan. Major banks (三菱UFJ, 三井住友, みずほ) are notoriously difficult for newly established companies, especially with foreign directors. Expect the screening process to take 2-4 weeks and to be rejected at least once.
More foreigner-friendly options for corporate accounts:
- GMOあおぞらネット銀行 — online bank with relatively smooth application for new companies, English-friendly
- 住信SBIネット銀行 — another online bank option, good for startups
- PayPay銀行 (formerly ジャパンネット銀行) — accepts newer companies
- ゆうちょ銀行 (Japan Post Bank) — sometimes more accommodating, but limited features for corporate accounts
Tip for corporate account approval
To improve your chances: prepare a detailed business plan, bring your 登記簿謄本 (company registry certificate), have your 会社印 (company seal) ready, and visit the branch in person. Having a proper office address (not a virtual office) and a company website help significantly. Some banks may require you to have been operating for a few months first — in that case, use a personal account temporarily and apply later.
When to incorporate — 法人化のタイミング
Most people start as a 個人事業主 and incorporate later. Here are the key signals that it's time to consider switching:
- Revenue exceeds ¥8-10M annually: At this point, the tax savings from incorporation typically outweigh the additional costs of running a 法人
- Revenue exceeds ¥10M (消費税 threshold): You'll become a taxable business for 消費税 regardless. Incorporating in the first 2 fiscal years of a new 法人 can potentially give you another period of 消費税 exemption (if capital is under ¥10M), though rules have tightened
- You need credibility: Some Japanese companies, especially larger ones, will not sign contracts with 個人事業主. Having "株式会社" in your name opens doors
- You want to hire employees: While 個人事業主 can hire, a 法人 is more attractive to potential employees (social insurance, stability perception)
- Liability concerns: If your business has significant liability risks, the limited liability of a 法人 protects your personal assets
- You need a 経営・管理ビザ: This visa type requires a 法人
Don't rush to incorporate
Incorporation adds significant complexity: mandatory 社会保険, 法人決算 (corporate tax filing) which almost always requires a 税理士 (¥200-500K/year), and 均等割 — a minimum local tax of approximately ¥70,000/year even if you have zero profit. If your revenue is under ¥5M, the overhead of a 法人 will likely eat into any tax savings. Start as 個人事業主 and incorporate when the math clearly works in your favor.
Frequently Asked Questions — よくある質問
Can I start a business on a work visa?
It depends. On a standard work visa (技術・人文知識・国際業務 etc.), you can do freelance work related to your visa category with 資格外活動許可. However, becoming a company director (代表取締役) or running a full-scale business typically requires a 経営・管理ビザ. Spouse visas, permanent residency, and 定住者 visas allow unrestricted business activity. Always verify with an immigration specialist before acting.
Can I convert from 個人事業主 to 法人?
Yes — this is called 法人成り (houjin-nari). The process involves creating a new 法人, transferring assets and contracts from your 個人事業, and filing a closure notification (廃業届) for the 個人事業. It's common and well-established, but the timing and transition details affect taxes, so work with a 税理士 to plan the optimal switch date (often aligned with the start of a new tax year).
Do I need a 税理士 (tax accountant)?
For 個人事業主 with simple businesses: not strictly required, but helpful. Cloud accounting tools (freee, マネーフォワード) can handle bookkeeping and 確定申告 for most sole proprietors. For 法人: practically essential. Corporate tax filing (法人決算) is significantly more complex and must follow strict accounting standards. Most small company owners budget ¥200,000-500,000/year for 税理士 fees, which includes monthly bookkeeping review and annual tax filing.
Can I run a business from outside Japan?
Partially. A 個人事業主 must be a tax resident of Japan. For a 法人, a foreign non-resident can be a shareholder, but at least one representative director must have an address in Japan (though this requirement was relaxed in 2015 — all directors can be non-residents if at least one "contact person" is registered). Running the company day-to-day from abroad raises tax residency questions and may not satisfy 経営・管理ビザ requirements. Consult both a tax advisor and immigration specialist.
What about 消費税 (consumption tax)?
Both 個人事業主 and 法人 are exempt from 消費税 if their taxable sales in the base period (基準期間 — two years prior) are under ¥10M. New businesses and newly incorporated companies can be exempt for their first 1-2 fiscal years (with conditions). However, with the invoice system (インボイス制度) now in full effect, you may want to voluntarily register even if exempt — otherwise your corporate clients can't claim input tax credits on your invoices. See our Invoice System guide for details.
How much does it cost to close a company?
Closing a 法人 (解散・清算) is more complex and expensive than closing a 個人事業. It involves shareholder resolution, 解散登記 (dissolution registration, ¥30,000), 清算結了登記 (liquidation completion registration, ¥2,000), final tax filings, and settling all debts. Total cost with professional help: ¥100,000-300,000. The process takes at minimum 2 months. Closing a 個人事業主 is simple: file a 廃業届 (business closure notification) at the tax office — free and immediate.
Have a question about tax?
Search our guides and FAQ for answers about finances in Japan.
Sources
- 所得税法 (Income Tax Act)
- 会社法 (Companies Act)
- 法人税法 (Corporate Tax Act)
- 国税庁タックスアンサー No.2070 青色申告制度
- 国税庁タックスアンサー No.2090 新たに事業を始めたときの届出など
- 国税庁タックスアンサー No.5759 法人税の税率
Related Guides
Freelancer Tax in Japan
Complete guide to 確定申告 for freelancers — 青色申告, deductible expenses, and 消費税.
Invoice System (インボイス制度)
What the qualified invoice system means for freelancers and small businesses in Japan.
Employment Types Guide
Understanding 正社員, 契約社員, 業務委託 and how your employment type affects taxes and benefits.