【2024】Guide to start Business in Japan

Foreign entrepreneurs in Japan｜More than Double in 10 years

Transition of business management visa acquirer (unit: person)
Source: Ministry of Justice

1. Foreign Entreprenurs to startup in Japan

• In order for foreigners to startup in Japan, it is necessary to have the status of residence of the following table.
  There are two cases where you can manage the business without changing the current status of residence, and business management by acquiring business management visa.

2. Flows and Notes of starting business in Japan

• If the foreign entrepreneurs start a business in Japan, you will need the following steps.
  1) Setting up your company
  2) Acquiring business License (if necessary)
  3) Getting Business Management VISA
  4) Financing for starting business
  5) Extension of Business Management VISA
  (Financial results will be reviewed in the Immigration Bureau)
• Even those who can operate the business without acquiring a business management visa, the following points are commonly required.
  “Creating a Business plan”
  “Acquiring a business licenses (if necessary)”
  “Negotiating with Banks for startup financing”
  

Flows 

STEP 1: Create Business plan

For entrepreneur, it is important to create a business plans thoroughly.
“What kind of business do you start and how you differentiate and win the game?”
“Revenue Planning” and “Capital investment and cash flow”
“Risk management when the market environment has deteriorated”

STEP 2: Set up A company

You need to establish a company such as a Kabushiki Kaisha(KK) or Goudou Kaisha(GK) in Japan.
Foreigners who already have Japanese resident cards and have Japanese bank accounts can proceed smoothly to establish the company. On the other hand, if you do not have Japanese resident cards and bank accounts in Japan , you will have problems when establishing a company.

Personal bank account in Japan (If you do not have a personal bank account in Japan you can not establish a company)

• If you do not have a personal bank account in Japan (Japanese bank or Japanese branch of a foreign bank), you can not establish a company because there is no account to transfer capital when setting up a company. Japanese banks are not allowed to make a bank account for foreigners who do not have Japanese resident cards to prevent money laundering.
• If you do not have a bank account in Japan, you need a business partner to lend a bank account in Japan.

Difficult to contract real estate(office / shop)

• In order to establish a company in Japan it is necessary to determine company address.
  In addition, when acquiring a business management visa, you must secure a business office separate from your home. Generally, you need a seal imprint certificate and identification card when you lease real estate leasing in Japan. However, because you have not yet got an address in Japan, you can not obtain a Japanese seal stamp certificate and you do not have a residence card. It is difficult to contract real estate.
• In some rental offices, there seems to be some properties that contracts with passports alone, but in reality it is difficult to contract office properties. Therefore foreigners living overseas can have business partners in Japan (directors of your company) contract for real estate for business.
  
  Learn More: Office requirement details

What foreigners prepare for

• The following items are prepared by foreigners in establishing a company.
  If you have directors who are living abroad, you must be aware that it may take a long time to delivery arrangements and of the international postal documents.
• If all the executives reside in Japan, it will take 2 to 3 weeks to the complete the company establishment.If there is a nonresident, it takes about 1 month because it takes a long delivery time.

Flows of establish a company

STEP 3: Acquire business license (as necessary)

Depending on the content of the business you want to start, you may have to get business license from the government. There are requirements on the size of the office, the purpose of the business that must be stated in the articles of incorporation, and the amount of capital (ex. 20 million yen for temporary staffing service). You need to check with government agencies and specialists to see if licenses are needed for the business you want to start with. You must obtain the required business license to get a business management visa.

Examples of projects that require business licenses

• Foreign entrepreneurs can use the start-up loan system provided by the Japanese government. However, it is essential for foreigners to have a status of residence to manage business in Japan. Also, in principle, it is necessary to repay the loan within the period of stay.
• In the loan repayment period exceeding the period of stay, “business continuity (sustainability)” and “extension of status of residence” are mandatory conditions. Business continuity (sustainability) is judged complexly from business plans, own funds, residence history, ownership of real estate, etc.

• In addition, securing business funds and procuring funds is one of the most important things when starting a business. Even foreigners have to communicate with Japanese financial institutions to raise necessary funds appropriately.
• Japanese banks are interested in the business’s sustainability, such as recent financial situation, monthly profit and loss, business risk, and future profit outlook. In addition to establishing our own judging model within the bank, the qualitative aspects are also evaluated by judges’ staff.

STEP 4: Acquiring business management visa

Capital of a company

• To acquire a business manager VISA, it is necessary to invest over 5 million yen. In this case, a foreigner (you) applying for business management visa needs to make a capital of 5 million yen or more by one person.
• The process of preparing capital will be reviewed by the Immigration Bureau. Therefore, it is necessary to explain whether the funds were saved by themselves or borrowed from parents or relatives. The immigration bureau will check you and your family’s bankbook（account） and contract.

Requirements for office

• When acquiring a business management visa, there is a requirement that business establishments must be secured separately from home.
• In this case,  you must contract “under your corporate name” and “for business use”.
  Even if you contract an apartment room, SOHO room by your personal name or for residential use, business purpose visa can not be allowed. Also, free desk plans and virtual offices that are often used at startup are not allowed.
  It is necessary for the office to have a clear delimiter and it is necessary to clearly separate other rooms with walls and doors, it is necessary to have a signboard and signs and to provide indoor facilities with necessary equipment. We need you to have it all together.
• You must complete the contract and the interior work and business preparation must be completed before applying for business management visa.

Educational background and work experience

• Business management visa does not require applicant’s educational background or work experience as a requirement if it meets the requirements of business scale (investment of 5 million yen or more).
• However, if you do not have business experience, you must explain your business plan for success.
  International students and senior citizens who do not have experience in business will be checked strictly, so it is necessary to prepare business plan with sufficient content.
• In addition, when trying to obtain business management visa without investment as manager, more than 3 years experience is needed.

Schedule

• the project will take about 5 to 6 months
  →Creating a business plan for startup 1 month
  → company establishment 2 weeks to 4weeks
  → acquisition of licenses ● months
  → Getting Business Management VISA 3 months
• If you do not need to obtain a business management visa,  and not need business license, you can start the project in about 1 month in the shortest.

Summary

As described above, in starting up in Japan, it is necessary to comprehensively preliminarily consider the plan of business that can satisfy the requirement required for licenses, business management visas, startup loans, etc. necessary for business start. Continental will help your startup business with highly capability.

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Professional

Masakazu Murai
Immigration consultant, Financial advisor
18 years experience in Investment Banking at Mitsubishi UFJ Morgan Stanley. He had provided financial advisory more than 500 entrepreneurs and senior management.

Gyoseishoshi Immigration Lawyer
CMA(Japanese financial analyst license)
CFP (Certified Financial Planner)
Master of Business Administration in Entrepreneurship(Hosei Business School)