Legal requirements for starting a company in Japan

By / 2026年2月25日
Legal requirements for starting a company in Japan

Key Takeaways

  • Japan incorporation is filing-led. GK requires Articles of Incorporation (定款 / Teikan) without notarization, while KK requires drafted and notarized Articles. Registration with the Legal Affairs Bureau (法務局) legally establishes the company.
  • No resident director is legally required, but in practice, most banks and landlords expect a Japan-based representative, so foreign-founded companies typically appoint one.
  • Governance and record-keeping are mandatory. KK requires initial shareholders’ meeting minutes to appoint directors, and both GK and KK must maintain formal decision records and accurate financial books.
  • Post-registration compliance is critical. Company seals, tax registrations (corporate, consumption), and social insurance enrollment must be completed promptly once the entity is formed.
  • Operating in Japan means ongoing compliance. Updated Business Manager Visa thresholds, labor law obligations, and product liability requirements make continuous documentation and internal checks essential.

Starting a business in Japan presents a unique opportunity for entrepreneurs and startups due to the country’s advanced economy, technological innovation, vibrant business environment, and Legal requirements for starting a company in Japan. However, to ensure a successful venture, understanding and adhering to the legal requirements is crucial. This article aims to provide comprehensive information on Japan’s business laws, offer practical guidance, and support entrepreneurs in their decision-making and business planning processes.

Explanation of Japanese Business Laws

Japan has a well-defined legal framework that governs the establishment and operation of businesses. Key components include:

  1. Japan has a well-defined legal framework governing the establishment and operation of businesses. Key components include:
  2. Company Registration: Every business must be registered with the Legal Affairs Bureau (法務局 / Houmu-kyoku). This involves choosing the appropriate business structure, such as a Joint-Stock Company (Kabushiki Kaisha / KK) or a Limited Liability Company (Godo Kaisha / GK).
  3. Capital Requirements: Japan does not impose a statutory minimum capital for either KK or GK. In theory, ¥1 is sufficient. In practice, most advisors recommend at least ¥1,000,000 to cover initial operating expenses and to appear credible to banks, landlords, and business partners. If you require a Business Manager Visa to manage the company in Japan, the capital requirement under immigration law is ¥30,000,000 as of October 2025.
  4. Articles of Incorporation: This document (定款 / Teikan) outlines the company’s objectives, structure, and operational guidelines. For KK, it must be notarized by a Japanese notary public (公証人 / Kouonin), adding approximately ¥30,000 to ¥50,000 in fees. GK articles do not require notarization. Full details are in our guide to incorporation documents in Japan.
  5. Resident Director: Not a Legal Requirement, But Practically Expected. Since March 2015, Japan’s Ministry of Justice abolished the mandatory resident representative director rule for KK and GK companies. All directors can legally reside overseas. That said, major Japanese banks and most landlords still require a resident representative in practice before opening accounts or signing leases. If you plan to operate the company from Japan yourself, you will need a Business Manager Visa (経営管理ビザ / Keiei Kanri Biza) rather than relying on company registration alone.
  6. Verification note: Branch offices of foreign companies still require a Japan-resident representative under current regulations.
  7. Office Address: A registered office address in Japan is mandatory. This can be a physical office space or a virtual office address. Note that Business Manager Visa applicants cannot use a home address as their registered business address.
  8. Tax Registration: Businesses must register for corporate tax (法人税 / Houjinzei), consumption tax (消費税 / Shouhizei) once thresholds are met, and social insurance contributions. Understanding Japan’s tax obligations is essential for compliance. For a full breakdown of each obligation, see our guide to the legal requirements for starting a company in Japan.
  9. Employment Laws: Companies must adhere to Japan’s labor laws, which cover employee rights, working conditions, and social insurance requirements.
  10. Business Licenses and Permits: Depending on the nature of the business, specific licenses and permits may be required. For example, businesses in the food and beverage industry need health and safety permits.

Compliance with Japanese business laws is not just a legal obligation but a cornerstone of building a successful business in Japan. Here’s why it is essential:

  1. Legal Protection: Adhering to legal requirements protects the business from potential lawsuits and legal disputes, ensuring long-term stability.
  2. Credibility and Trust: Compliance enhances the credibility of the business in the eyes of customers, investors, and partners. It demonstrates professionalism and reliability.
  3. Smooth Operations: Understanding and following legal requirements prevents operational disruptions caused by non-compliance issues, such as fines or business suspension.

Differences Between GK and KK

AspectGK (Godo Kaisha)KK (Kabushiki Kaisha)
Legal StructureLimited Liability CompanyJoint-Stock Company
Formation RequirementsSimple, fewer requirementsMore complex, involves more steps
Minimum CapitalNo minimum capital requiredNo legal minimum, can be established with ¥1, Commonly recommended ¥1,000,000+ (often more for banks/visas)
ManagementManaged directly by members (owners)Managed by a board of directors
OwnershipMembers hold ownership and manage the companyShareholders own the company; board manages it
LiabilityMembers’ liability limited to their capital contributionsMembers’ liability is limited to their capital contributions
Decision MakingDecisions made by membersDecisions made by the board of directors and shareholders
FlexibilityPass-through taxation (profits taxed at member level)More rigid, with structured corporate governance
TaxationShareholders’ liability is limited to their share investmentsDouble taxation (company profits taxed, then dividends taxed)
RegulationsFewer regulations and formalitiesSubject to more regulations and formalities
SuitabilitySuitable for small to medium-sized businessesSuitable for larger businesses and those seeking investment
corporate strucuture Japan

Filings for GK (Godo Kaisha)

Articles of Incorporation

When establishing a GK (Godo Kaisha), the Articles of Incorporation must be prepared. This document outlines the company’s objectives, structure, and operational guidelines. Unlike a KK, notarization is not required for a GK.

The company must be registered with the Legal Affairs Bureau. This involves submitting the Articles of Incorporation and other necessary documents to officially recognize the company as a legal entity in Japan.

Company Seal and Tax Registration

Once registered, the company must create an official company seal, which is used for signing contracts and official documents. Additionally, the company needs to register for various taxes, including corporate tax, consumption tax, and social insurance contributions.

Filings for KK (Kabushiki Kaisha)

Articles of Incorporation and Notarization

For a KK (Kabushiki Kaisha), the Articles of Incorporation must be drafted and notarized. This document serves as the company’s foundational charter, detailing its objectives, structure, and governance.

After notarization, the company must be registered with the Legal Affairs Bureau. This step involves submitting the notarized Articles of Incorporation and other required documents, thereby officially establishing the KK as a legal entity.

Initial Shareholders’ Meeting Minutes

An initial shareholders’ meeting must be held to appoint directors and auditors. The minutes of this meeting need to be documented and submitted as part of the registration process.

Company Seal and Tax Registration

Similar to a GK, a KK must create an official company seal for signing contracts and official documents. Additionally, the company must register for corporate tax, consumption tax, and social insurance contributions to comply with Japan’s tax regulations.

Regulatory Compliance (規制遵守, kisei junshu)

Compliance with regulatory requirements is essential for operating a business in Japan. Companies must adhere to industry-specific regulations and general business laws to ensure lawful operations. This includes maintaining accurate records, submitting required reports, and following guidelines set by relevant authorities.

For example, a Kabushiki Kaisha (株式会社, Kabushiki Kaisha) must keep detailed records of their shareholders’ meetings (株主総会, kabunushi soukai). These records include minutes of meetings, decisions made, and attendance lists. Additionally, the company must ensure that these records are kept up-to-date and are readily available for inspection by regulatory bodies. This helps in demonstrating compliance and transparency in corporate governance.

Similarly, a Goudou Kaisha (合同会社, Goudou Kaisha) must maintain records of important decisions made by its members (社員総会, shain soukai). This includes the minutes of the meetings where business strategies, financial decisions, and operational policies are discussed and decided upon. Keeping these records ensures that the company adheres to legal requirements and maintains good corporate governance practices.

Both types of companies are also required to keep accurate financial records (会計帳簿, kaikei choubo) and submit annual financial statements (財務諸表, zaimu shohyou) to the relevant authorities. This includes maintaining records of income, expenses, assets, and liabilities, which must be accurately documented and reported to ensure compliance with tax regulations and financial reporting standards.

Labor Laws and Employment Regulations

Japan has stringent labor laws designed to protect workers’ rights. Key aspects include:

  • Employment Contracts (雇用契約, koyou keiyaku): Must clearly state terms of employment, including salary, working hours, and job responsibilities.
  • Working Hours and Overtime (労働時間と残業, roudou jikan to zangyou): Standard working hours are regulated, and overtime must be compensated according to legal standards.
  • Social Insurance (社会保険, shakai hoken): Employers are required to enroll employees in social insurance programs, including health insurance, pension, and unemployment insurance.
  • Workplace Safety (職場の安全, shokuba no anzen): Companies must comply with safety regulations to ensure a safe working environment.

Taxation

Understanding and complying with Japan’s tax system is crucial. Key taxes include:

  • Corporate Tax (法人税 / Houjinzei): Levied on company profits. The effective combined national and local corporate tax rate for small and medium companies (capital under ¥100 million) is approximately 23% to 34% depending on income level and municipality. National corporate income tax alone is 23.2% for most companies on income exceeding ¥8 million annually. Smaller income brackets attract a reduced rate.
  • Consumption Tax (消費税 / Shouhizei): Japan’s consumption tax is currently 10% (8% for certain food and beverages under the reduced rate). Companies with annual taxable sales exceeding ¥10 million (1,000万円) in the base period must register and collect consumption tax. New companies are generally exempt in their first two years unless their capital is ¥10 million or more at incorporation, in which case they must register immediately.
  • Withholding Tax (源泉徴収税 / Gensen Choushuzei): Required on payments including salaries, dividends, and certain service fees. Withholding rates vary by payment type and recipient status.
  • Social Insurance Contributions (社会保険料 / Shakai Hokenryou): Both employers and employees contribute. Employers are responsible for deducting employees’ contributions and remitting payments monthly.
  • Invoice System (インボイス制度 / Invoisu Seido): Japan’s qualified invoice system took effect October 2023. If your customers are consumption tax registrants, they will need you to be a registered qualified invoice issuer (適格請求書発行事業者 / Tekikaku Seikyu-sho Hakkou Jigyousha) to claim input tax credits. Newly incorporated companies should evaluate whether to register for the invoice system even before reaching the ¥10 million threshold.
  • *Local corporate taxes vary by municipality and prefectural government. Confirm your effective combined rate with a certified tax accountant (税理士 / Zeirishi).

Product Liability

Businesses must comply with Japan’s product liability laws to ensure consumer safety. Key requirements include:

  • Safety Standards (安全基準, anzen kijun): Products must meet specified safety standards and regulations.
  • Labeling (表示, hyouji): Proper labeling is required, providing information on usage, ingredients, and safety warnings.
  • Recalls (回収, kaishuu): In case of defects or safety issues, companies must have procedures for product recalls and notifying consumers.

Immigration Compliance

  • For foreign entrepreneurs planning to live and manage a business in Japan, immigration compliance is critical. The most significant development for 2026 is the October 2025 overhaul of the Business Manager Visa (経営管理ビザ / Keiei Kanri Biza).
  • Business Manager Visa (経営管理ビザ) — October 2025 Reforms
  • Effective October 16, 2025, Japan’s Ministry of Justice revised the Business Manager Visa criteria significantly. The changes affect all new applications and renewals from that date. Existing visa holders renewing before October 16, 2028 may receive some transitional flexibility if they can demonstrate a credible path toward compliance.
  • The five key requirement changes are:
RequirementBefore October 2025From October 2025
Capital¥5,000,000 OR 2 full-time employees¥30,000,000 AND 1+ full-time employee
Employee hiring2 full-time employees (alternative to capital)Mandatory: 1+ full-time employee (in addition to capital)
Japanese languageNo requirementJLPT N2 or equivalent required for applicant OR one full-time employee
Applicant backgroundNo specific requirement3+ years management experience OR master’s/doctoral/professional degree in management or the relevant field
Business planStandard submissionMust be verified by a qualified professional (SME consultant, CPA, or certified tax accountant)
  • A few clarifications on the new rules:
  • Full-time employees counted toward the employment requirement must hold unrestricted work authorization, such as Japanese nationals, permanent residents, spouse of Japanese national, permanent resident spouse, or settled status holders (定住者 / Teijuusha). Employees on standard work visas do not qualify.
  • Capital here means paid-in capital (資本金 / Shihonkin) or total equity contribution for GK. Operating expenses, salaries, and investments cannot be added to reach the ¥30 million figure.
  • Work Visas for Employees: All foreign employees must hold appropriate work visas (就労ビザ / Shuurou Biza) for their roles. Employing foreign nationals without proper status is a criminal offense.
  • Reporting Requirements (報告義務 / Houkoku Gimu): Companies must report the employment of foreign nationals to immigration authorities and maintain compliant records.
  • SmartStart Japan’s team works directly with foreign entrepreneurs navigating the Business Manager Visa under the new rules, including business plan preparation, qualified professional verification coordination, and incorporation structure. Contact us for a free consultation.

This video walks through Japan’s company registration legal requirements with real examples of document preparation and submissions:

Setting Up a Subsidiary in Japan | SmartStart Japan

Tips for Maintaining Japan Business Compliance

Best Practices for Ongoing Compliance

  1. Stay Informed: Regularly update yourself on changes in Japanese business laws and regulations. Subscribe to industry newsletters, join business associations, and attend relevant seminars. With our video with an accountant
  2. Maintain Accurate Records: Keep detailed and accurate records of all business transactions, employee information, and compliance-related documents. This is essential for audits and regulatory reviews.
  3. Regular Audits: Conduct regular internal audits to ensure compliance with legal requirements. This helps identify and rectify any potential issues early.
  4. Employee Training: Educate employees about compliance policies and legal requirements. Regular training sessions can help ensure everyone is aware of their responsibilities.
  5. Compliance Officer: Appoint a compliance officer or create a compliance team responsible for monitoring and ensuring adherence to regulations.
  6. Legal Consultation: Regularly consult with legal experts to review compliance practices and address any legal concerns promptly.
  7. Implement Compliance Programs: Develop and implement comprehensive compliance programs tailored to your business operations. This includes policies, procedures, and monitoring systems.

  1. Legal Affairs Bureau: The Legal Affairs Bureau offers guidance and support on business registration and compliance issues. Their website provides resources and contact information for further assistance.
  2. Japan External Trade Organization (JETRO): JETRO provides support for foreign businesses entering the Japanese market, including legal and regulatory guidance.
  3. Business Associations: Join local and international business associations such as the Japan Chamber of Commerce and Industry (JCCI) or the American Chamber of Commerce in Japan (ACCJ) for networking and support.
  4. Professional Services: Engage with professional services such as legal firms, accounting firms, and compliance consultants specializing in Japanese business laws.
  5. Tokyo One-Stop Business Establishment Center (TOSBEC): TOSBEC provides comprehensive support for establishing a business in Tokyo, including registration, legal advice, and various administrative services. More information can be found on their website.

Business Manager Visa 2025: What the New Rules Mean for Your Company Setup

What Did the October 2025 Business Manager Visa Reforms Change?

The reforms, which took effect October 16, 2025, represent the most significant tightening of Japan’s foreign entrepreneur visa in over a decade. The government’s stated goal was to address abuse of the previous low-barrier system and shift focus from quantity of foreign business registrations toward economic quality and genuine employment creation.

The practical impact for someone planning to start a company and obtain a Business Manager Visa in 2026 looks like this:

  • Capital planning. You will need ¥30 million (approximately USD 190,000 to 200,000 at mid-2025 exchange rates) in paid-in capital. This must be a genuine investment, not a round-trip transfer or borrowed funds temporarily deposited to satisfy the requirement. Immigration officers increasingly scrutinize the source and flow of capital funds.
  • Hiring timeline. You must hire at least one full-time employee who holds unrestricted work authorization before or concurrent with your visa application. This means budgeting for salary from day one and setting up payroll, social insurance enrollment, and employment contracts before applying.
  • Language. Either you or your qualifying employee must demonstrate Japanese proficiency at JLPT N2 level or its recognized equivalent (CEFR B2). Documentary proof is required.
  • Your background. You need to demonstrate either three or more years of business management or administration experience, or hold a relevant advanced degree (master’s, doctoral, or professional degree). If you are a first-time entrepreneur without a graduate degree, gathering evidence of past management roles is a priority step in your application preparation.
  • Business plan expert review. Your business plan must carry a review and verification sign-off from a qualified professional, specifically a Certified Management Consultant (中小企業診断士 / Chusho Kigyo Shindan-shi), Certified Public Accountant (公認会計士 / Konin Kaikeishi), or Certified Tax Accountant (税理士 / Zeirishi). Generic business plans will not be accepted.

Some entrepreneurs in this situation are exploring alternatives, including:

  • Establishing the company first while residing outside Japan, then building toward the Business Manager Visa requirements over time.
  • Applying under a different visa category (such as Highly Skilled Professional status) if qualifications allow.
  • Partnership structures where a qualifying individual in Japan manages the company while the foreign founder retains ownership.

Verification note: Transitional rules apply to holders of existing Business Manager Visas renewing before October 16, 2028. If you hold a current visa and are facing renewal under the new rules, consult an immigration specialist before your renewal date. The transitional window allows for flexible judgment where circumstances are credibly explained.

If you are planning to set up a company in Japan in 2026 and need a Business Manager Visa, SmartStart Japan’s Business Manager Visa support service can guide you through the new requirements, from capital structure planning to business plan preparation and professional verification.

    Here is an example of a business plan in Japan.

    • Compliance Checklist: Create a checklist of all legal requirements your business must meet. Regularly review and update this checklist to ensure ongoing compliance.
    • Legal Review: Have your business plan reviewed by a legal expert to verify that it adheres to all Japanese laws and regulations.
    • Adapt to Regulatory Changes: Stay informed about changes in Japanese business laws and adjust your business plan accordingly.
    • Detailed Documentation: Ensure all aspects of your business plan are well-documented and supported by necessary legal documents. This includes articles of incorporation, registration certificates, and tax registration forms.
    • Clear Policies and Procedures: Develop clear internal policies and procedures that align with Japanese legal standards. This includes compliance programs, employee handbooks, and operational guidelines.

    Obtaining the Necessary Licenses and Permits in Japan

    Ensuring that your business operates legally in Japan requires obtaining the appropriate licenses and permits. Different industries have specific requirements, and here’s a detailed guide on how to navigate this process.

    1. Identify Required Licenses and Permits

    Food and Beverage Licenses:
    • Restaurant Business Permit (飲食店営業許可): Required for any establishment serving food or beverages.
      • Application: Submit to the local health department (保健所).
      • Requirements: Floor plan, hygiene management plan, food sanitation manager appointment.
      • Inspections: Health inspections of premises.
      • Fees: Vary by location (typically ¥16,000 – ¥24,000).
      • Link: Tokyo Metropolitan Government Food Hygiene

    Import/Export Permits:
    • Customs Registration (輸出入許可): Needed for businesses engaging in import/export activities.
      • Application: Submit to the Ministry of Economy, Trade and Industry (METI) or local customs office.
      • Requirements: Business registration certificate, details of goods, trade history.
      • Inspections: May involve site inspections and documentation checks.
      • Fees: Based on the type and volume of goods.
      • Link: Import Permit

    Health and Safety Permits:
    • Industrial Safety and Health Law Compliance (労働安全衛生法遵守): Essential for manufacturing and construction businesses.
      • Application: Submit to the local labor standards office (労働基準監督署).
      • Requirements: Safety protocols, worker training programs.
      • Inspections: Regular safety inspections.
      • Fees: Minimal; primarily administrative costs.
      • Link: Licence Outline

    2. Prepare Documentation

    • Business Registration Certificate: Proof of your business’s legal establishment in Japan.
    • Articles of Incorporation: Foundational documents of your business.
    • Proof of Address: Lease agreement or property ownership documents.
    • Identification Documents: Passport or residence card of business owner(s).
    • Translations: Ensure all documents are translated into Japanese by a certified translator if required.

    3. Application Process

    • Submission: Applications can often be submitted online through the relevant authority’s website or in-person at local government offices.
    • Fees: Payment of application fees is mandatory. These vary depending on the type of license or permit.
    • Processing Time: Processing times can vary; be prepared for possible delays and plan accordingly.

    4. Compliance Inspections

    • Preparation: Ensure your premises and operations meet all regulatory standards before inspections.
    • Response: Address any issues identified during inspections promptly to avoid delays in obtaining your license or permit.
    • Documentation: Keep all inspection reports and correspondence for records.
    How to Register and Set Up Your Business In Japan | SmartStart Japan

    Taxation for Businesses in Japan

    Filing Requirements and Tax Planning Strategies

    Understanding the taxation system and filing requirements in Japan is essential for businesses to maintain compliance and optimize their tax obligations. Here’s a guide to help you navigate these requirements and implement effective tax planning strategies:

    1. Corporate Tax:
      • Corporate Income Tax: Japanese businesses are subject to corporate income tax on their profits. The standard corporate tax rate is approximately 23.2%, but rates can vary based on company size and income level.
      • Local Corporate Tax: In addition to national corporate tax, businesses must also pay local corporate tax, which is levied by municipal and prefectural governments.
      • Filing Requirements: Companies must file an annual corporate tax return within two months after the end of their fiscal year. Extensions can be requested if additional time is needed.
    2. Consumption Tax:
      • Overview: Japan’s consumption tax is similar to value-added tax (VAT) and is currently set at 10%. This tax applies to the sale of goods and services.
      • Registration: Businesses with annual taxable sales exceeding ¥10 million must register for consumption tax.
      • Filing Requirements: Consumption tax returns are typically filed annually, but businesses with higher turnover may need to file quarterly.
    3. Withholding Tax:
      • Applicable Payments: Withholding tax is required on certain payments, including salaries, dividends, royalties, and interest.
      • Rates: The withholding tax rates vary depending on the type of payment and the recipient’s residency status. For example, the standard withholding tax rate on salaries for residents is 20.42%.
      • Filing Requirements: Employers must withhold the tax from employees’ salaries and remit it to the tax authorities. Annual withholding tax reports must be submitted.
    4. Social Insurance Contributions:
      • Employer Responsibilities: Employers must enroll employees in social insurance programs, which include health insurance, pension insurance, and unemployment insurance.
      • Contribution Rates: Both employers and employees contribute to social insurance. Employers are responsible for deducting employees’ contributions and making the payments.
      • Filing Requirements: Social insurance contributions must be filed and paid monthly.

    tax in Japan

    Conclusion

    Starting a business in Japan involves navigating a complex legal landscape. Ensuring compliance with Japanese business laws, choosing the appropriate business structure, obtaining necessary licenses and permits, and understanding taxation and labor regulations are crucial steps.

    For personalized support and expert guidance, consider seeking our SmartStart Japan services. Our team of experienced professionals can assist with every aspect of starting and managing your business in Japan, from legal compliance to strategic planning. Reach out to us today to ensure your business is set up for success in the Japanese market.

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