Start Your Own Business in Japan
Japan offers a clear path from sole proprietor to company formation. This guide covers when and how to incorporate.
HustleHub AI provides general information only, not tax, legal, or financial advice. Japanese tax and business rules vary by situation and visa status. Always check official guidance from the National Tax Agency (NTA) or consult a licensed tax accountant (zeirishi).
Self-employed vs company — which is right for you?
| Feature | Sole Proprietor (Kojin Jigyo) | Stock Company (KK) |
|---|---|---|
| Setup | Kaigyou Todoke to tax office (free) | Legal Affairs Bureau + capital + articles of incorporation |
| Legal status | You and business are the same | Separate legal entity |
| Liability | Personally liable for all debts | Limited to company assets |
| Tax | Income Tax 5-45% + Inhabitant Tax ~10% | Corporation Tax ~23.2% + personal tax on salary/dividends |
| Admin | Annual Kakutei Shinkoku | Corporate tax return, payroll, social insurance, annual meetings |
| Costs | Free to register | Registration tax (150,000+), notary, capital deposit |
| Credibility | Standard for freelancers | Higher trust with corporate clients |
| Best for | Low-risk, testing ideas, freelancing | Higher income, client requirements, growth plans |
Stay self-employed when...
- Your income is below 8-10 million yen and Blue Return deduction keeps your tax low
- You are testing an idea or freelancing part-time
- You want minimal paperwork and no corporate compliance
- You work with individual clients rather than large corporations
Consider a KK (Kabushiki Kaisha) when...
- Your annual income consistently exceeds 8-10 million yen (corporation tax becomes more efficient)
- Corporate clients require you to have a company structure (common in Japan)
- You want limited liability protection
- You plan to hire employees or raise capital
How to form a company in Japan
Choose a company name and check availability
Prepare Articles of Incorporation (teikan) and have them notarized
Deposit minimum capital into a personal bank account (1 yen minimum, but practically more is expected)
Register at the Legal Affairs Bureau (registration tax: 150,000 yen for KK)
Obtain a corporate seal (inkan) registered at the Legal Affairs Bureau
Register for corporate tax at the tax office and prefectural/municipal offices
Set up corporate social insurance (shakai hoken) at the pension office
Open a corporate bank account
Japan-specific notes
Japan has a strong preference for corporate entities (KK or GK) in business dealings. Many larger clients will only contract with incorporated companies. However, for freelancers and small-scale operations, the Kojin Jigyo structure with Blue Return is highly efficient and simple to maintain.