Are you a foreign worker or student in Japan who wants to build your own business? Or are you an international business owner looking to establish a branch in Japan? Here is the process to own a business in Japan as a foreign resident.
Check your residence status
Foreigners can own a business in Japan. However, depending on your Japanese residence status, the first step to establishing a company in Japan will slightly differ. You are automatically allowed to manage a business if you are a permanent resident or special permanent resident, long-term resident, spouse or child of a Japanese national, or spouse or child of a permanent resident.
Other than those visas, you will need to change your residence status. This requirement makes establishing a company different from a freelancing or sole proprietorship.
Japan Visa
Getting the visa
There are multiple types of visas that allow foreigners to build a business. Each has different requirements and benefits, so you can choose what suits you best.
Business Manager Visa
Basically, you will need a Business Manager to own a business. It is a short-term visa that allows foreigners to engage in business activities by creating their own company or managing an already established company.
You can get 1 year, 3 years, or 5 years of stay in Japan. However, there’s also a possibility to get only a 4-month visa, but you can extend it and change to a 1-year visa later.
The requirements of a Business Manager visa:
Have a registered company and office in Japan
Submit your business plan to prove its sustainability
Either invest 5 million yen as the company’s capital or employ 2 full-time workers
The types of companies you can build as a Business Manager visa holder:
Stock company (Co. Ltd) or Kabushiki Keisha (KK) in Japanese
Limited Liability Company (LLC.) or Goudou Kaisha (GK) in Japanese
Usually, the Japanese government will give a 1-year visa at first. If your company is doing well, you can renew it for another year. If it keeps going, you can be granted 3-years and 5-years visas.
Start-up visa
Owning a business in Japan can be challenging for foreigners, but fortunately, the Japanese government was fully aware of that. They created a Start-up visa to give extended time and support for potential foreigners to fulfill business manager visa requirements.
Start-up Visa is a temporary visa that allows foreigners to prepare to build a business and get a Business Manager visa in 6 months to a year. However, this visa is limited to foreigners in certain cities or international students in selected universities.
A Start-up visa is part of the Japanese government’s vision to create start-up ecosystem areas. They appointed 16 municipalities to be the entrepreneur-friendly city. They are Hokkaido Prefecture, Sendai City, Niigata City, Ibaraki Prefecture, Tokyo Metropolitan Government, Shibuya City, Kanagawa Prefecture, Aichi Prefecture, Gifu Prefecture, Kyoto Prefecture, Osaka City, Kobe City, Hiroshima Prefecture, Imabari City, Fukuoka City, and Kitakyushu City.
The government-appointed universities are the universities affiliated with the International Student Employment Promotion Program and Top Global University Creation Support Project. International students can change their visa to a Startup Visa while they are still a student or after graduating without returning to their country first.
The requirements of a Start-up Visa:
Submit the business plan and other required documents to the relevant municipality. The applicant will be issued a Certificate of Confirmation of Business Startup Activities if the application is approved.
Submit the certificate to the Immigrations Services Agency for the relevant municipality.
If your application is approved, you will get a six-month Start-up visa. You are expected to get a Business Manager visa before your residency expires. However, you can extend the Start-up visa for another 6 months once.
Each municipality has its targeted business for Start-up Visa. For example, Shibuya targets the fashion industry, and Osaka targets the green energy sector. Some areas, such as Tokyo and Niigata, have none in particular.
Highly Skilled Professional type C
A highly Skilled Professional visa is a mid to long-term visa given to foreign workers with outstanding abilities and credentials. This visa is divided into 3 categories: type A for professionals in advanced academic research activities, type B for advanced specialized or technical activities, and type C for advanced business management activities.
This visa permits you to build a company and stay in Japan for as long as you engage in business management. You won’t need a Business Management visa and don’t have to renew it annually. However, you need a company to sponsor your visa. Once you resign from the company, your visa will be invalid too. Therefore, you can only open a business while working in your sponsor company.
The Highly Skilled Professional (i) visa allows you to stay in Japan for 5 years. After more than 3 years, you can apply for a Highly Skilled Professional visa (ii) and get an indefinite stay. Another choice is to apply for Permanent Residence after 1 or 3 years of a Highly Skilled Professional (i) visa.
If you work in business management and reach 70 points on the Point Evaluation Mechanism, you can apply for a 5-years Highly Skilled Professional (i)c visa. The points for type C are calculated based on academic background, professional career, and annual salary.
Academic background
Holders of a Doctorate or Master’s degree get 20 points
Holders of a Bachelor’s degree 10 points
Professional career
Work experience of ten years and more gets 20 points
Work experience of seven years and more gets 15 points
Work experience of five years and more gets 10 points
Work experience of three years and more get 5 points
Annual salary
An annual salary of 10 million Yen gets 40 points
An annual salary of 9 million Yen gets 35 points
An annual salary of 8 million Yen gets 30 points
An annual salary of 7 million Yen (unless you are 40 years of age or above) gets 25 points
An annual salary of 6 million Yen (unless you are 40 years of age or above) gets 20 points
An annual salary of 5 million Yen (unless you are 35 years of age or above) gets 15 points
An annual salary of 4 million Yen (unless you are 30 years of age or above) gets 10 points
How to Set Up the Company
Survey the market and make a business plan.
Rent a place to be your business or office. It shouldn’t be your residential address, but some business types can be based in the Small Office Home Office (SOHO).
Create Articles of Incorporation (定款, teikan), trademark registration, and Hanko seals.
Notarized the Articles of Incorporation.
Deposit the initial capital to the Representative Director’s personal bank account.
Submit all documents to the Registry Office or Homukyoku.
After approval, collect the registry certificate, company’s seal certificate, and corporate number. You can use this document to sign employment and open a corporate bank account.
Notify the tax office.
Acquire a business license if necessary.
Setting up a company can take 1 month if you are a permanent resident or special permanent resident, long-term resident, spouse or child of a Japanese national, spouse or child of a permanent resident, or highly skilled professional. If you have to apply for a Business Management visa, it will be longer by 1-3 months.
Harajuku shopping street
Establishing a company in Japan and getting a Business Manager visa is not easy, but there is much accessible information and support to help you. The Japanese Government offers free assistance through Foreign Residents Support Center (FRESC). This support center includes the Immigration Services Agency of Japan, JETRO, the Tokyo Employment service center for foreigners, and the Tokyo labor bureau consultation and support office for foreigners.
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