How To Establish A Company In Japan

Pre-paperwork decisions

Decide on these 4 things before establishing a company in Japan

1. Your company type: Pick between creating an office branch, Kabushiki-Kaisha (KK), and Godo-Kaisha (GK).
2. Your company name: Choose a name that is not already used, with no special characters, and use the English or Japanese alphabet.
3. Your office location: It will determine the correct Legal Affairs Bureau and notary public office to submit the incorporation documents.
4. Determine whether you will have a board of directors: You do not need a board of directors if you are the sole founder. However, if your company has multiple shareholders, consider appointing a board of at least three directors and an external auditor to oversee financial and operational decisions.

A step-by-step guide to incorporate in Japan

1. Choose an office location: Secure a physical or virtual office address.
2. Make a company seal: Create a corporate seal and register it with the Legal Affairs Bureau, along with the personal seal for each director.
3. Create Articles of Incorporation: Draft the Articles of Incorporation detailing the company’s name, location, business purpose, capital, and other important information with the founders’ seals.
4. Get notarized: Notarize the Articles of Incorporation at a notary office, prepare the necessary documents, and pay the required fees.
5. Deposit capital: Deposit the startup capital in a bank and keep the bankbook copies to prove the capital deposit when registering the company.
6. Register your company: Submit the necessary documents like the application for authority to do business, registration license tax payment, and Articles of Incorporation to the Legal Affairs Bureau.
7. Notify various government offices: including the local tax office, Labor Standards Inspection Office, Japan Pension Service Office, and Public Employment Security Office if applicable.

Avoid these common pitfalls

1. Do not abbreviate the address: Use kanji in street addresses, and do not use hyphens to designate them. For example,「一丁目3番1号」not "1-3-1."
2. Forgetting or stamping in the wrong place: Double and triple-check where to stamp certain items.

3. Using the incorrect seal for a document: each form requires a specific seal. Double check you are using the correct one.
4. Forgetting to include "kabushiki kaisha": Must include the company name and “株式会社” in your forms.
5. Not including future business plans: Ensure that your business objectives align with your immediate services. Inaccuracies or significant errors can lead to the rejection of your application, requiring you to resubmit the entire document.

What is the cost of starting a business in Japan?

Starting a business in Japan can cost between 242,000 to 250,000 yen. Here is the breakdown.

Cost Description	Amount (¥)
Certification of Articles of Incorporation	50,000
Certified Copy of the Articles of Incorporation, etc.	2,000
Revenue Stamps (if not certified electronically)	40,000
Registration and License Tax	150,000
Total	242,000 to 250,000 (depending on electronic certification)

Choosing A Company Type: Godo Kaisha vs Kabushiki Kaisha

Comparison: GK vs. KK

Feature	Godo Kaisha (GK)	Kabushiki Gaisha (KK)
Governing laws	Governed by the Companies Act. Regulations are generally less strict.	Subject to both the Financial Instruments and Exchange Act and the Companies Act. Regulations are stricter compared to GK
Ownership	Owned by members who contribute capital.	Owned by shared holders holding shares. Usually larger and more established.
Management	Decentralized management. Each member can participate in management.	Centralized management with a board of directors overseeing operations.
Liability	Limited liability based on members' contributions.	Limited liability is based on shareholders' investment through shares.
Tax implications	Subject to corporate tax rates. Partners pay individual tax on dividends. If entirely owned by an American corporation, it can be treated as a US branch for purposes of taxation.	Subject to corporate tax, shareholders may face double taxation due to dividend tax. Even if it is entirely owned by an American corporation, it cannot be treated as a US branch for tax purposes.

What is a Kabushiki Kaisha (株式会社)?

Frequently shortened to KK, kabushiki kaisha is a type of Japanese corporation similar to a C corporation in America. It allows shareholders to raise the company’s capital by selling shares to investors. All KKs are subject to strict regulations and must have the board of directors and statutory auditors to hold annual shareholders' meetings.

This type of business is considered prestigious and credible in Japan and is often chosen by larger companies expanding to Japan.

What is a Godo Gaisha (合同会社)?

Often referred to as GK, godo gaisha is a business structure in Japan similar to a Limited Liability Company (LLC) in America. It is best for small to medium-sized companies because it does not allow trading public shares. All GK owners are referred to as partners and are liable based on their contributions to the company.

This business structure is popular for smaller businesses because of its simpler requirements, lower initial capital needs, and more control for the owner.

What's the main difference between a GK and a KK?

KKs have a more traditional corporate structure, where shareholders own the company by holding shares. In a GK, the company is owned by its members, who contribute capital to the business. KKs are usually larger and more established, while GKs are often smaller and more flexible.

Examples of GK and KK in Japan

Examples of US/International GK companies in Japan

• Hewlett Packard Enterprise—日本ヒューレット・パッカード合同会社
• Deloitte—デロイト トーマツ コンサルティング合同会社
• Amazon Japan—アマゾンジャパン合同会社
• Apple Japan—Apple Japan合同会社
• P&G Japan—P&Gジャパン合同会社
• Google—グーグル合同会社

Examples of US/International KK companies in Japan

• Disney—ウォルト・ディズニー・ジャパン株式会社
• Kearney—A.T. カーニー株式会社
• Shell—RSエナジー株式会社
• Coca Cola—コカ・コーラ ボトラーズジャパン株式会社
• Nestle—ネスレ日本株式会社
• Godiva—ゴディバ ジャパン株式会社
• Gap—ギャップジャパン株式会社
• Zara—株式会社ITXジャパン
• Adidas—アディダスジャパン株式会社

How to Open a Corporate Bank Account in Japan

Documents to prepare

Some banks require less documentation, and others require more. Each bank will have its own guidelines on what must be submitted to open a company bank account in Japan.

However, here is a standard list.

• Error-free completed application form
• Photocopy of the business owner (director/representative's) ID; *if someone is assisting with the application process, then that individual's ID will also be requested
• Personal seal (hanko) of the director/representative
• Certificate of company's seal
• Articles of company incorporation (tohon)
• Business plan of the corporation to prove the company is operating

Factors for refusal

Each financial institution will have its own criteria for deciding on applications, but the requirements are strict across the board.

Here are the following reasons that banks will refuse an account:  

• The amount of capital is too small
• The phone number listed was a mobile phone, not a landline
• The business in question has no official website
• The company could provide no contracts, invoices, or receipts
• The company's business goals are unclear

A step-by-step guide for opening a corporate bank account

Use this checklist to help you chart a path to opening your company bank account in Japan.

Step 1: Audit your business.  

Ensure your business has a clear online presence, a landline phone number, enough capital, a clear company business plan, and proof of doing business (invoices, receipts, etc.).

If your business lacks in any of these areas, focus on improvements before applying to open a business bank account.

Step 2: Prepare your documents.

Apply for and gather all the documents you need for the initial application.

Refer to the bank's website for the bank's document requirements, which will often request:

• Copy of corporate registration (within 3 months)
• Corporate seal certificate (within 3 months)
• Articles of Incorporation (Verified with original)
• Documents verifying the ultimate beneficial owner(s):

• Shareholder register
• ID of the major shareholder (front and back)
• If the beneficial owner is a corporation, shareholder register of that corporation and ID of its major shareholder (front and back)

• Documents that can confirm business details

• General investor relation materials showing the business plan in Japan
• Website information
• Brochures, if available

• Document verifying the business location (e.g., office lease agreement)

If you have a representative applying on your corporate’s behalf, they will need to submit the following documents:

• Document proving the relationship between the representative and the corporation

• (5) Power of attorney (separately attached)

• Identity verification document for the representative
• Identification documents of the representative’s director
• Identification documents of the person handling the application process

Additional, for corporations that has been established in Japan for more than one year will need to submit their most recent third quarter financial statements.

Step 3: Fill out and send in your application form.

The application form will likely need to be filled out in Japanese. Fill out the form and make sure all the correct documents are included.

Step 4: Wait for approval.

The bank will screen your documents. This process typically takes between 1 to 2 weeks.

The bank most often requests an in-person appointment to verify documents and ask any unanswered questions.  

Step 5: In-person appointment at the bank.

After the document screening, the bank will ask you for an appointment. Bring the documents they requested, usually:

• All original documents that were previously submitted via email
• A copy (both sides) of all identification documents

• Copies will be accepted for documents that cannot be submitted in original form.

• Identification document with a photo of the visitor
• Corporate bank seal
• Cash for deposit on the day (at least 1 yen)
• Company stamp (with address, company name, and representative's name)
• Business card

At this point, the bank may ask you a few questions about your business, so it's best to be prepared to explain your business' mission eloquently. If you need language support, such as an interpreter, that individual must bring a photo ID.

It may take 1-2 hours to confirm the documents, fill out the account opening documents, and create the card for the account.

Step 6: Banking documents are sent to your registered address.

The process will be complete once the banking documents (cash card, passbook, contract, and other related banking documents) arrive at your business' registered address.

Congratulations!

You now know how to open a corporate bank account in Japan.

Mistakes to avoid

The following list was collected from recent first-hand experiences opening corporate bank accounts in Japan.

Mistake #1: Not submitting the proper documents.

Each banking institution will have its list of what must be included when filing to open a corporate account.

Refer to each bank's official guidance on the matter.

Mistake #2: Mismatch of name on the application with the name on the tohon.

For opening corporate bank accounts, the representative/director's name on the bank application must match the one on your company's articles of incorporation (tohon).

The following is an example of what will be refused.

• ドウ ジョン on tohon 
• ドー ジョーン on the application

Katakana is a phonetic alphabet, and occasionally, foreign names can be open to creative pronunciations, depending on the person doing the writing. However, whatever is first listed on the tohon must then be listed on the application.

Mistake #3: Using a computer to fill out the form.

Applications for corporate accounts must, for the most part, be handwritten.

Even if you receive a PDF copy of the application form, unless specified otherwise, the standard method you are expected to follow is to print out the files, handwrite your application entries, and mail in your documents via the postal service.

Mistake #4. Erasing an error with white correction fluid.

The correct way to fix a mistake is to strike through the error twice.

Then, in whatever space remains, write out the correct text and add your seal next to the corrected text. Don't use whiteout.

Mistake #5: Stamping your seal in the wrong place.

English-language contracts often have two spaces for both parties to sign. Similarly, Japanese application forms have two spaces for seals (hanko).

One space is for you, and the other is for the bank. Don't use the wrong space.

Mistake #6: Not using the correct seal in your forms.

When filing for other banking services, such as the online banking application, use the same seal you used to open an account.

For your business account, always stamp with the same hanko (銀行印) you registered when you created your account.

Mistake #7: Using the wrong display name in your application.

For most bank forms, the name display should be "company name + title + name."

For example: 株式会社 代表取締役 ドウ ジョン