Can Foreigners Start a Business in Japan?

2025/04/13

Japan has one of the world’s largest economies and offers significant opportunities for entrepreneurs, including those from overseas. While there are specific requirements and procedures for foreign nationals, starting a business in Japan is definitely possible and is becoming increasingly accessible due to recent policy changes and support programs.

Can Foreigners Establish Companies in Japan?

Yes, foreign nationals can establish companies in Japan, regardless of their residency status or nationality. The Japanese legal framework allows non-Japanese citizens to found and operate businesses under the same corporate structures available to Japanese nationals.

Legal Business Structures Available to Foreigners

Foreign entrepreneurs can choose from several business structures when establishing a company in Japan.

• Kabushiki Kaisha
  Similar to a corporation, this is the most prestigious and common business structure. It offers limited liability protection and is well-regarded by Japanese clients and partners.
  
• Godo Kaisha
  Similar to a limited liability company (LLC), this structure requires less administrative complexity than a KK and has lower setup costs, while still providing liability protection.
  
• Branch Office
  An extension of a foreign company that can conduct business activities in Japan but is not a separate legal entity.
  
• Representative Office
  A non-taxable presence for market research and promotional activities, but cannot engage in direct business operations or sales.

Recent Policy Changes to Encourage Foreign Entrepreneurs

The Japanese government has been actively working to make the country more appealing to foreign entrepreneurs. As of 2023, Japan plans to implement new policies that would.

• Allow foreign entrepreneurs to live in Japan for up to two years without establishing a place of business or making the traditional 5 million yen investment
• Combine existing entrepreneurship programs to create a more streamlined approach
• Create more flexibility for foreign students to start businesses while still studying at universities

These changes reflect Japan’s recognition of the value that international talent can bring to its economy and startup ecosystem.

Requirements for Starting a Business in Japan

While Japan is making entrepreneurship more accessible, there are still specific requirements that foreign nationals need to meet to establish and operate a business.

Visa and Residency Requirements

To stay in Japan and manage a business, you generally need one of these visa statuses.

• Business Manager Visa
  The primary visa for entrepreneurs. Traditionally requires proof of a physical office and either 5 million yen (approximately $33,000) in capital or two full-time employees.
  
• Startup Visa
  Available in specific regions like Tokyo, Fukuoka, and several other cities, offering a 6-month period (extendable) to prepare your business.
  
• Other Valid Statuses
  Those with Permanent Resident, Spouse of Japanese National, or Long-Term Resident status can start businesses without specific business visas.

With the upcoming policy changes, entrepreneurs may soon be able to obtain residency for up to two years without meeting the investment or office requirements, giving them time to establish their business gradually.

Financial Requirements

Financial requirements for establishing a business in Japan include these.

• Minimum Capital
  While legally a company can be established with as little as 1 yen, a Business Manager Visa traditionally requires 5 million yen in capital (though this requirement is being relaxed).
  
• Bank Account
  A Japanese bank account is required for depositing capital and business operations. Opening a business account can be challenging for foreigners and often requires residency status.
  
• Business Plan
  A detailed and realistic business plan is essential for visa applications and incorporation.

Physical Office Requirements

Traditionally, a physical office space is required for these.

• Registration of your company at a fixed address
• Meeting visa requirements (virtual offices typically don’t qualify)
• Establishing credibility with Japanese clients and partners

The upcoming policy changes may provide more flexibility regarding this requirement for new entrepreneurs.

Documentation and Legal Procedures

Starting a business requires proper documentation, including the below.

• Articles of Incorporation (teikan)
• Company seal (hanko)
• Registration with the Legal Affairs Bureau
• Tax registrations with local and national tax offices
• Notifications to relevant government agencies

Most of these documents must be prepared in Japanese, which can be challenging for non-Japanese speakers.

How Non-Japanese Nationals Can Conduct Business in Japan

There are several approaches for foreign nationals to establish a business presence in Japan, depending on their circumstances and goals.

Starting a New Japanese Company

This approach involves establishing a brand new company under Japanese law.

1. Determine the best business structure (typically KK or GK)
2. Prepare and file all necessary incorporation documents
3. Secure appropriate visa status
4. Establish banking relationships and business operations

This option provides the most control and flexibility but requires navigating all aspects of Japanese business establishment.

Establishing a Branch of an Existing Foreign Company

If you already operate a business outside Japan, you can do the following.

• Register a branch office in Japan
• Appoint a branch representative
• Conduct business activities under your existing company structure

This approach is simpler than establishing a new company but provides less separation between Japanese operations and the parent company.

Using a Business Partner or Representative

Some entrepreneurs choose to

• Partner with a Japanese resident who can handle local requirements
• Use a representative director who is based in Japan
• Work with a trusted Japanese business partner who can navigate local regulations

This approach can simplify entry into the market but requires finding trustworthy partners.

Taking Advantage of Special Economic Zones

Japan has designated special economic zones that offer

• Simplified procedures for foreign entrepreneurs
• Support services for business establishment
• Networking opportunities with local businesses
• In some cases, subsidies or tax incentives

Cities like Fukuoka and Tokyo have established startup-friendly zones specifically targeting international entrepreneurs.

Process of Establishing a Company in Japan

The procedure for establishing a company in Japan follows a specific sequence of steps.

Planning and Preparation Phase

Before formal registration, you’ll need to do the following.

1. Develop a detailed business plan
2. Choose your business structure (KK, GK, etc.)
3. Decide on company name, location, and business objectives
4. Prepare initial capital
5. Create the articles of incorporation
6. Obtain necessary seals (hanko)

This phase typically takes 1-2 months, depending on how quickly you can gather information and make decisions.

Registration and Legal Establishment

The formal establishment process includes the below.

1. Having the articles of incorporation notarized (required for KK, not for GK)
2. Depositing capital in a bank account
3. Filing registration documents with the Legal Affairs Bureau
4. Obtaining company registration certificate
5. Registering company seal

This process typically takes 2-4 weeks and costs approximately 150,000-240,000 yen in registration taxes and fees, plus professional service fees if you use judicial scribes or lawyers.

Post-Registration Requirements

After company registration, additional steps include these.

1. Notifying the tax office of business commencement
2. Registering for the appropriate tax categories
3. Setting up social insurance for employees
4. Opening a corporate bank account
5. Obtaining any industry-specific licenses or permits

These steps can take another 2-4 weeks to complete.

Visa Application Process

If you’re establishing a business as a foreign national, you’ll need to the following.

1. Prepare documentation proving your business meets visa requirements
2. Submit application for Certificate of Eligibility through the Immigration Bureau
3. Once approved, apply for the actual visa at a Japanese embassy or consulate
4. Enter Japan and register your residence

The visa process typically takes 2-3 months, though this can vary based on your nationality and individual circumstances.

Starting a business in Japan as a foreign national is becoming increasingly accessible due to government initiatives aimed at attracting international talent. While certain requirements and procedures remain, the overall process is well-structured and, with proper planning and possibly professional assistance, can be navigated successfully. Japan’s upcoming policy changes further demonstrate its commitment to welcoming foreign entrepreneurs who can contribute to its economy and business ecosystem.