Starting a business in Japan

Being your own boss in Japan 

Before starting your own business in Japan, a brief review of the genesis of your project will allow you to start on the right foot. Creating a company is already a challenge. Creating it in Japan is an additional adventure. Why Japan, first of all? Take the time to ask yourself the right questions and write down all the answers that cross your mind.

Why start a business in Japan

• Do you plan to immigrate to Japan? Is it a long-term project?
• Have you ever traveled to Japan (short stay)?
• Have you ever lived in Japan (long stay)? What was your status?
• Have you already started a business, or is this your first project?
• Have you taken a training course in business creation in your country? Was it in Japan?
• Do you speak Japanese, or are you learning the language?

The sector of activity

• In which industry do you plan to start your business?
• Do you have work experience in your intended industry?
• Does this sector require any prior qualifications? Do you have them?
• Is this sector competitive? What assets do you have that will help you stand out?
• Do you have start-up capital?
• Do you have a network in Japan in your field of activity?
• Do you know other professionals who are opening or have opened a business in Japan (in your industry or not)?

The location of the company 

Some entrepreneurs choose Tokyo right away. As the capital, it reassures the creators. But Tokyo is not Japan, and there are many other opportunities elsewhere. Other prefectures compete with each other to attract international talent with the help of subsidies and tax breaks. 

Miyagi Prefecture has launched its "Invest Miyagi" project to attract foreign investors and entrepreneurs. Tochigi is especially innovative in the automotive sector. Chiba City has its "Makuhari new city center" and "Soga suburban" to promote entrepreneurship. The prefecture also benefits from the business of Narita airport. Fukuoka Prefecture has been supporting startups since 2021 and launched its "Engineer Friendly City Fukuoka". A new milestone was reached in 2017 with Fukuoka Growth Next (FGN), again to attract international entrepreneurs. FGN promotes meetings between professionals via the creation of STARTUP CAFE, a place for exchange and advice open to the international community.

Innovation is not only seen in the professions of tomorrow, on the contrary. In Hokkaido, Kyoto and Okayama prefectures, agriculture is an economic pillar that is being renewed. From engineering to research, from consulting to food processing, the opportunities are vast.

Many other prefectures are developing their startup pole. Take the time to study your market well to set up your business structure in the best place.

Freelancers in Japan

After a slow decline since the 1980s, the number of self-employed in Japan has jumped between 2020 and 2021 to a little more than 10 million in 2020, against 16 million in 2021. That's 24% of the working population (Lancer's Freelance Fact-Finding Investigation 2021 figures). A figure that marks a "Covid effect", but that hides a mixed reality.

According to Lancer's investigation, 33% of freelancers in Japan own their own company, 22.3% work for 2 or 3 specific companies in parallel, 18.4% are sole proprietors, and 26.3% are employed full-time with a freelance side business. The increase in the number of full-time and part-time freelancers is accompanied by an increase in casualization.  

Read also The Japanese labor market

Visas for business in Japan

To start your business in Japan, you will need a visa and a status. The visa allows you to enter the Japanese territory. The status allows you to exercise the professional activity for which you are in Japan. For simplicity of language, we speak, for example, of "researcher visa" to define a visa with a researcher status. You work in Japan as a researcher and cannot do any other activity (unless you have a highly skilled visa).

Investor visa (investor/business manager) in Japan

It allows you to create a company, but under the following conditions:

• You must have a business address in Japan. You must have an office in the territory, different from your personal address. 
• You must have a starting capital of at least 5,000,000 yen or hire Japanese employees or foreign residents.

Self-sponsored visa in Japan

This visa allows you to be a self-sponsor. 

Requirements:

• Justify at least 3,000,000 yen of annual income.
• You must have an employer who will sponsor your visa renewal application. The procedure is different from the classic sponsorship: here, the employer will not pay anything. They simply fill out a document and indicate their number of employees, capital, etc. 
• Fill in the form to create a self-employed business: kojin jigyō nushi.

Startup visa in Japan

Launched in 2020, the startup visa is a new government initiative to encourage innovation and boost growth. 8 ecosystems are created to host future startups, namely in Tokyo, Fukuoka, Hamamatsu, Aichi and the Keihanshin (Kyoto, Osaka, Kobe). Requirements:

• Invest at least 5,000,000 yen. 
• Employ at least 2 full-time employees.

Permanent residence visa in Japan

You can also create a business with your residence visa (spouse visa, for example). So you will not have to apply for an additional visa. However, Japanese immigration may ask you for specific information, especially to ensure the viability of your marriage.

Work visa in Japan

You can create your company while being employed in Japan under certain conditions (to see with your work contract). 

Before starting a business in Japan 

Two organizations are specialized in supporting entrepreneurs: JETRO (Japan External Trade Organization) and the Chamber of Commerce and Industry of your country. JETRO will help you set up your file: type of business, visa, legislation, and human resources. There are several offices in the world. You can also call upon a specialized legal advisor.

Steps to starting a business in Japan

Apply for a visa with the Japanese immigration services. Here is the list of documents to provide. Depending on your profile, the visa you are applying for, and the nature of your business, the administration may ask you for other information.

• Your business plan: company name, legal status, sector of activity, number of employees planned, starting capital, possible partners, projected budget, marketing plan, etc.
• If applicable, the rental contract for your business premises, with the sign's name, logo, etc. If you plan to work from home, check with your landlord to make sure you can convert your home into a workplace. Many do not allow this. In this case, rent an address (mailbox) from a specialized company. 
• A website. 
• Registration of your company name at the National Institute of Industrial Property in your country (after checking that the name is available).
• The establishment of the statutes by a notary.
• A professional bank account.
• The professional inkan (the company seal, which will be used to sign).
• Registration of the company with the relevant ministry.

All these elements prove that your business is already in operation. Regarding the place of business, you will have to rent it before getting the answer from immigration. The same goes for the website, which will have to be actually built. You are not presenting a business project but your already established business.

All these steps are done in Japanese. Make sure you have a good command of the language before undertaking them. You can go through a legal advisor specialized in administrative procedures (gyoseishoshi). They will take care of all the formalities for you and will be the link between you and the immigration services. They will also send the application for registration of your company to the ministry you are spending money on (depending on your activity).

If you opt for the specialized legal advisor, you will have to send your entire file to him. The process can take 6 months on average. It is shorter if you use a specialized advisor (from 3 weeks to 1 month). The fees to be paid vary between 300,000 and 500,000 yen (fees of the advisor and the cost of the company registration).

Create your company with a startup visa in Japan

For the startup visa, you need to obtain an investor visa. Then, apply to one of the Japanese municipalities that are part of the program (Tokyo, Fukuoka, Osaka, Aichi, etc.), with the required documents, including your business plan. If the municipality approves your application, you will receive a Certificate of Confirmation of Business Startup Activities. 

You must submit this certificate to the Immigrations Services Agency of the approved municipality (the one that is part of the startup program). If your application is successful, you will be granted a temporary visa for 6 months. You must then prepare to launch your business. After 6 months, the municipality will re-examine your file. If it is validated, you will renew your visa for 1 year. 

The Japanese micro-business: kojin jigyô

The most economical and quickest solution, the status of micro-entrepreneur allows you to start a business quickly. It is similar to the one existing in France. With this status, you will not pay any corporate tax. Your tax declaration will also be simplified. The micro-entrepreneur status is reserved for people working alone and having little or no assets.

The company in Japan

The investor visa allows you to create a company in Japan. There are two main types: 

• The kabushiki kaisha: it is a joint-stock company (similar to a limited company). Count 370 000 yens for its creation. 
• The godo kaisha: it is a limited liability company. The initial contribution is 200,000 yen. 

Starting a business in Japan: additional advice

You're advised to learn Japanese before starting your business or get help. The procedures are done in Japanese and require a bilingual or even expert level. Even if you are not completely bilingual, have a sufficient level to keep your hands on the files and remain independent. Seek the help of a specialized advisor. Do not minimize the complexity of Japanese law. Even Japanese entrepreneurs seek this type of service.

Before (and after) arriving in Japan, learn about Japanese business culture.

Good to know:

Japanese immigration allows you to run a deficit for the first year but no longer. If you are also in deficit the second year, you risk losing your visa. In case of exceptional circumstances (health crisis, for example), the administration may grant you a deferment. It is up to you to provide solid proof of your finances.

Useful links:

JETRO: starting a business in Japan

Immigration Services Agency of Japan

Ministry of Economy, Trade and Industry of Japan

Japan visa