Ultimate Guide to Godo Kaisha in Japan (2026 Updated)

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Key Takeaways

• A Godo Kaisha offers the lowest-cost corporate structure in Japan (¥70,000-80,000 total: ¥60,000 registration tax + ¥10,000-20,000 for hanko stamp, transportation, printing, and other fees)
• Critical for 2026: GK owners are eligible for Business Manager Visa; however, the visa now requires ¥30M+ capital as of October 2025 reforms (or ¥10M with additional requirements including employee hiring and Japanese language proficiency)
• No notarization required for GK Articles of Incorporation, saving ¥50,000+ compared to KK
• Immediate banking access is the #1 challenge for foreign-owned GKs > challenging for residents to open accounts immediately, and super challenging for Business Manager Visa holders. Megabanks can sometimes require 2 years of business history before approving accounts
• Post-establishment compliance has strict deadlines (as short as 5 days) > missing them results in penalties
• All Legal Affairs Bureau documents must be in Japanese > adequate language support is essential
• Possible to convert to KK later if you raise institutional funding or plan to go public
• Virtual offices work for GK registration but create problems for visas and banking

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A Godo Kaisha (GK) is a type of limited liability company in Japan, akin to the LLC (Limited Liability Company) in the United States. Introduced in 2006 under the Companies Act, the Godo Kaisha structure offers flexibility and simplicity in its formation and operation, making it an attractive option for small to medium-sized businesses and foreign entrepreneurs looking to enter the Japanese market. Unlike the more traditional Kabushiki Kaisha (KK), a Godo Kaisha does not require a board of directors and allows for a more straightforward management structure, where members can directly manage the company.

Important note for 2026: If you’re establishing a GK to obtain a Business Manager Visa, be aware that significant reforms took effect in October 2025, dramatically increasing capital requirements from ¥5 million to ¥30 million (or ¥10 million with additional requirements including employee hiring and Japanese language proficiency). This guide covers GK establishment requirements—for visa-specific guidance, see our comprehensive article on Business Manager Visa.

When choosing the appropriate business structure in Japan, it is essential to understand how a Godo Kaisha compares to other options available:

• Godo Kaisha vs Kabushiki Kaisha (KK): A Kabushiki Kaisha is a more complex and formal business entity, comparable to a corporation in Western countries. It requires a minimum of one director and often necessitates more stringent regulatory compliance, including annual shareholder meetings and detailed reporting. In contrast, a Godo Kaisha offers greater flexibility and lower administrative burden, with members enjoying direct control over business operations.
• Godo Kaisha vs Other Business Structures: There are other business structures in Japan, such as the sole proprietorship (kojin jigyo) and partnership (kumiai). A Godo Kaisha provides the benefit of limited liability, protecting members’ personal assets from business debts, which sole proprietorships and general partnerships do not offer. Additionally, the simplicity of setting up and managing a Godo Kaisha makes it a favorable choice for many entrepreneurs.

For more detailed information on the Kabushiki Kaisha, refer to our article on Kabushiki Kaisha in Japan. To explore the various types of companies available in Japan, see our comprehensive guide on Types of Companies in Japan.

Who Should Establish a Godo Kaisha in Japan?

Establishing a Smaller, More Flexible Company

Members and Managers: A Godo Kaisha requires at least one member, who can be either an individual or a corporate entity. Members can also serve as managers, providing a straightforward and efficient management structure.

Flexibility in Management: One of the main advantages of a Godo Kaisha is its flexible management structure. Unlike the more rigid Kabushiki Kaisha, a Godo Kaisha allows members to directly manage the company without the need for a formal board of directors. This flexibility can be particularly beneficial for startups and small businesses that require agility and quick decision-making.

Table for business sizes

Industry	Small Business	Medium Business
Manufacturing, Construction, Transportation	Capital Size: Up to ¥300 million Number of Employees: Up to 300	Capital Size: Between ¥300 million and ¥1 billion Number of Employees: Between 300 and 1,000
Wholesale	Capital Size: Up to ¥100 million Number of Employees: Up to 100	Capital Size: Between ¥100 million and ¥300 million Number of Employees: Between 100 and 300
Retail	Capital Size: Up to ¥50 million Number of Employees: Up to 50	Capital Size: ¥50 million and ¥100 million Number of Employees: Between 50 and 100
Service	Capital Size: Up to ¥50 million Number of Employees: Up to 100	Capital Size: Between ¥50 million and ¥300 million Number of Employees: Between 100 and 300

How Difficult Is It To Set Up Your Company in Japan?

Minimum Capital Requirements and Initial Contributions: One of the significant advantages of a Godo Kaisha is the lack of a minimum capital requirement—legally, you can establish a GK with as little as ¥1. However, most founders contribute between ¥100,000 and ¥3,000,000, depending on business scale and banking requirements. Members must agree on their initial contributions, which can be in the form of money, property, or other assets.

Take a look at our guide for Cost of Setting up a Company in Japan for more information.

Critical note for visa holders: If you’re establishing a GK to support a Business Manager Visa application, the October 2025 reforms now require ¥30,000,000+ in capital (or ¥10,000,000 with additional requirements including hiring Japanese employees, demonstrating Japanese language proficiency at N2 level or higher, and obtaining expert verification of your business plan). The low capital flexibility of GKs is only relevant for those NOT seeking visa sponsorship.

Ease of Formation: Setting up a Godo Kaisha is relatively straightforward and less time-consuming. This simplicity makes it an attractive option for small and medium-sized enterprises (SMEs) and foreign entrepreneurs looking for a hassle-free way to establish their business in Japan. For more information on how to form your company in Japan, visit this comprehensive guide on Setting up a Company in Japan.

Registered Address: To establish a Godo Kaisha, you must have a registered address in Japan. This is a crucial requirement for the legal setup of your company.

To establish a Godo Kaisha, you must have a registered address in Japan. This is a crucial requirement for the legal setup of your company. Note: While co-working spaces and virtual offices are acceptable for GK registration itself, they are often rejected by Immigration Services for Business Manager Visa applications, which require a dedicated physical office space. Confirm your address meets both Legal Affairs Bureau AND visa requirements if applicable.

Articles of Incorporation: Drafting the Articles of Incorporation (定款 / Teikan) is a critical step in the formation of a Godo Kaisha. Unlike a Kabushiki Kaisha, GK Articles of Incorporation do NOT require notarization, which saves both time and money (approximately ¥50,000 in notary fees). This document must detail the company’s name, business objectives, members, and management structure. All Articles of Incorporation must be submitted in Japanese to the Legal Affairs Bureau.

There Are Lower Setup and Maintenance Costs

Costs Involved in Setting Up a Godo Kaisha:

• Articles of Incorporation Drafting: ¥0 if you draft yourself; ¥30,000-80,000 if using a professional administrative scrivener (行政書士)
• Notarization Fees: ¥0 for GK (this is a major advantage over KK, which requires ¥50,000-52,000 in notarization)
• Registration and License Tax (登録免許税): ¥60,000 OR 0.7% of capital amount, whichever is greater
  • Example: ¥10,000,000 capital = ¥70,000 tax (0.7%)
  • Example: ¥3,000,000 capital = ¥60,000 tax (minimum applies)
• Company Seal Creation (会社印鑑): ¥5,000-20,000 for basic set
• Certificate Copies: ¥600 per certificate from Legal Affairs Bureau

Total DIY setup cost: Approximately ¥70,000-80,000 | Total with professional support: Approximately ¥115,600-181,500

These figures are current as of 2026 and may be updated by relevant authorities.

Ongoing Expenses for Maintaining the Business:

• Annual Reporting: While a Godo Kaisha has fewer reporting requirements than a KK, there are still costs associated with annual financial reporting and tax filings. Budget ¥100,000-300,000 annually for accounting services.
• Operational Costs: Regular operational costs, including office rent, utilities, and salaries, must be considered.
• Professional Fees: Hiring accountants, legal advisors, and other professionals may incur additional ongoing expenses.
• Mandatory Insurance: Social insurance and labor insurance costs for employees (and potentially yourself as representative).

Lower Compliance Requirements: The regulatory and reporting requirements for a Godo Kaisha are generally less stringent compared to those of a Kabushiki Kaisha, reducing the administrative burden and associated costs.

 Consideration of Credibility

It is important to note that in Japan, a Kabushiki Kaisha often carries more prestige and credibility with customers, investors, and partners compared to a Godo Kaisha. This factor should be considered when deciding on the business structure that best suits your strategic goals.

Banking Realities for Foreign-Owned GKs

Opening a corporate bank account is one of the most significant challenges foreign entrepreneurs face when establishing a GK in Japan. Understanding these realities upfront can save considerable time and frustration.

Why banks screen foreign-owned GKs strictly:

Japanese banks have become increasingly cautious about foreign-owned companies due to anti-money laundering regulations and past issues with shell companies. This means even legitimate businesses face rigorous screening.

Common rejection reasons:

• Insufficient proof of genuine business activity
• Representative lacks Japanese language proficiency
• Virtual office or co-working space address (some banks)
• Inability to explain business model clearly in Japanese
• No letter of introduction from existing client or partner
• Low capital amount raising red flags

Recommended banking strategy:

1. Prepare comprehensive documentation before approaching banks:
   
   • Detailed business plan in Japanese
   • Proof of office lease (avoid co-working if possible)
   • Business registration certificates (登記事項証明書)
   • Representative’s residence card and seal certificate (印鑑証明書)
   • Expected transaction volume and cash flow projections
2. Target appropriate banks:
   
   • Japan Post Bank (ゆうちょ銀行) is often more accessible to startups
   • Regional banks (地方銀行) may be more flexible than megabanks
   • Consider having a Japanese partner or advisor make the introduction
3. Plan for 2-6 weeks of screening time, even with perfect documentation
   
4. Have a backup plan: Some founders use personal accounts initially (risky for liability) or work with specialized financial service providers

When you’re a resident: Difficult to open accounts immediately after GK establishment
Have Business Manager Visa: Super challenging but possible
Megabanks: Can require up to 2 years of business history
Our Recommendation: Plan an alternative banking strategy (Japan Post Bank, regional banks, etc.)

SmartStart can help: We provide bank introduction services and documentation support to increase your approval likelihood.Book a consultation to discuss your specific situation.Verification note: Banking requirements are determined individually during each bank’s screening process and are not standardized. The information above reflects common patterns as of 2026 but should be confirmed with your target financial institution.

What Should I Know Regarding Management, Governance, and Operations?

Members Can Directly Manage the Company

In a Godo Kaisha, the management structure is designed to be flexible and straightforward. Members of the Godo Kaisha can directly manage the company, which means that there is no requirement for a separate board of directors as seen in a Kabushiki Kaisha. The roles and responsibilities of managers and members include:

Managers: Typically, managers are appointed from among the members, although external managers can also be appointed if desired. Managers are responsible for the day-to-day operations of the company, making executive decisions, and ensuring that the company complies with all relevant laws and regulations.

Members: Members are the owners of the Godo Kaisha. They contribute capital to the business and have voting rights proportional to their contributions. Members can also participate in the management of the company, depending on the internal agreements established in the Articles of Incorporation.

One of the significant advantages of a Godo Kaisha is the limited liability protection it offers to both members and managers. This means that:

Members: The personal liability of members is limited to the amount of their capital contributions. This protects their personal assets from being used to satisfy the company’s debts and obligations.

Managers: Managers also benefit from limited liability protection in their managerial roles. However, they are expected to act in the best interest of the company and comply with all relevant laws. Failure to do so could result in personal liability in cases of gross negligence or illegal activities.

6 Options for Fundraising and Attracting Investors

While a Godo Kaisha offers numerous benefits, securing financing or attracting investors can sometimes be more challenging compared to a Kabushiki Kaisha. However, there are several options to consider for Godo Kaisha.

Bank Loans: Traditional bank loans are a common source of funding for Godo Kaisha. Japanese banks offer various loan products tailored to small and medium-sized enterprises.

Venture Capital: For businesses with high growth potential, seeking investment from venture capital firms can be an attractive option. Although less common than in other countries, Japan has a growing venture capital scene.

Government Grants and Subsidies: The Japanese government offers various grants and subsidies to support small businesses and encourage innovation. Researching and applying for these can provide a significant financial boost.

Private Equity: Private equity firms can provide substantial capital in exchange for equity stakes. This option is more suitable for established businesses looking to scale.

Crowdfunding: Platforms like Campfire and Makuake offer opportunities for businesses to raise funds from the public in exchange for products, services, or equity.

Internal Financing: Members can also increase their capital contributions to fund business operations and growth initiatives.

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Reporting and Compliance Obligations

Regular Reporting Requirements and Compliance

Operating a Godo Kaisha in Japan involves adhering to specific reporting and compliance obligations to ensure the business remains in good standing with regulatory authorities. These requirements include:

• Annual Financial Statements: Godo Kaisha do not need to publicize annual financial statements unlike other company types.
• Tax Filings: Companies are required to file corporate tax returns annually. This includes national corporate tax, local corporate tax, and consumption tax if applicable. Timely and accurate tax filings are crucial to avoid penalties and ensure compliance with Japanese tax laws.
• Annual General Meeting (AGM): It is not mandatory for Godo Kaisha to hold an AGM as required for a Kabushiki Kaisha.
• Changes in Business Information: Any changes in the company’s registered information, such as changes in address, capital, or management structure, must be reported to the Legal Affairs Bureau promptly. If you need to change to Kabushiki Kaisha in the future you will need unanimous support from all founding members.
• Social Insurance and Labor Insurance Reports: Companies must file regular reports related to social insurance (health insurance and pension) and labor insurance (employment insurance and workers’ compensation insurance) for their employees.

Maintaining proper records and timely reporting is essential for compliance and can prevent legal issues and fines.

Regular Reporting Requirements and Compliance

Understanding when specific notifications and registrations are due can prevent penalties and ensure smooth operations.

Deadline After Establishment	Required Action	Submission Location
Within 2 months	Corporation Establishment Notification (法人設立届出書)	Local Tax Office (税務署)
Within 3 months (or before fiscal year end)	Blue-Form Tax Return Application (青色申告承認申請書)	Local Tax Office
Within 15 days	Prefectural tax office notification	Prefectural Tax Office (都道府県税事務所)
Within 15 days	Municipal tax office notification	Municipal Office (市区町村役場)
Within 5 days (if hiring employees)	Social Insurance Registration (健康保険・厚生年金)	Japan Pension Service
Within 10 days (if hiring employees)	Employment Insurance (雇用保険)	Public Employment Security Office (ハローワーク)
Immediately (if hiring employees)	Workers’ Compensation Insurance (労災保険)	Labor Standards Inspection Office

Important: These deadlines are strictly enforced. Late submissions can result in penalties or complications with tax benefits. SmartStart offers post-establishment compliance support to ensure you meet all requirements on time.Learn more about our services.

Verification note: Specific deadlines and required forms may vary by municipality. Confirm exact requirements with your local tax office and municipal authorities.

Employment and Labor Regulations

Compliance with employment and labor laws is essential for successfully operating a Godo Kaisha in Japan. These laws ensure fair treatment of employees and protect both the business and its workforce. You should be aware of these key regulations:

Labor Standards Act

This act establishes the fundamental working conditions, including regulations on working hours, breaks, holidays, and overtime pay. Employers must ensure that all working conditions comply with these standards to uphold workers’ rights and avoid legal issues.

Minimum Wage Compliance

Employers must adhere to the minimum wage rates set by regional governments. These rates are reviewed and adjusted regularly to reflect current economic conditions. [Refer to the table below for current minimum wage rates.]

Social Insurance Requirements

A godo kaisha is required to enroll its employees in social insurance programs, which include health insurance, pension insurance, and employment insurance. These programs are vital for providing employees with essential benefits and ensuring their long-term well-being.

Workplace Safety

Compliance with the Industrial Safety and Health Act is mandatory for maintaining a safe work environment. Employers must conduct regular safety inspections, provide necessary training, and implement measures to prevent workplace accidents and health hazards.

Employment Contracts

Written employment contracts are mandatory and must clearly outline job responsibilities, working conditions, wages, and other terms of employment. These contracts serve to protect both the employer and the employee by establishing clear expectations and obligations from the outset.

Termination and Severance

When terminating an employee, employers must follow the proper legal procedures, including giving advance notice and providing severance pay as required by law. Failure to adhere to these procedures can result in legal disputes and penalties, making it crucial to manage terminations carefully and fairly.

Region	Per Hour (Effective October 2024)	Per Hour (Effective October 2025)
Tokyo prefecture	¥1,163	¥1,215
Kanagawa prefecture	¥1,162	¥1,215
Osaka prefecture	¥1,104	¥1,159
Saitama prefecture	¥1,078	¥1,128
Chiba prefecture	¥1,076	¥1,126
Aichi prefecture	¥1,077	¥1,127
Kyoto prefecture	¥1,058	¥1,110
Hyogo prefecture	¥1,051	¥1,001

Source: Ministry of Health, Labour and Welfare (厚生労働省), 2025

Minimum wage rates are reviewed and updated annually in October. Always confirm current rates with the Ministry of Health, Labour and Welfare or your prefectural labor bureau before setting employee wages.

Checklist for creating a Godo Kaisha in Japan

This checklist is designed to help you determine whether establishing a Godo Kaisha (GK) in Japan is the right choice for your business. Each question and consideration will guide you through the critical aspects of this decision-making process. Use this checklist to evaluate your business needs, goals, and the legal and operational implications of forming a Godo Kaisha.

Business Needs and Goals

Assess Your Business Structure Needs

• Do you need a flexible management structure where members can directly manage the business?
• Are you looking for a business entity that offers limited liability protection for its members?

Evaluate Your Business Scale and Growth Plans

• Is your business small to medium-sized, or are you a startup looking for a straightforward setup process?
• Do you plan to expand your business significantly or seek public listing in the future?

Legal and Financial Considerations

Understand the Legal Requirements

• Are you familiar with the legal requirements for setting up a Godo Kaisha, including the drafting and notarization of the Articles of Incorporation?
• Do you have a registered address in Japan, or can you obtain one?

Evaluate Initial Capital Requirements

• Do you have the necessary capital to deposit into the company’s bank account? Note that there is no minimum capital requirement, but you must agree on initial contributions.

Consider Liability and Member Roles

• Do you understand the limited liability protections for members and the roles they can play in managing the company?
• Are all potential members aware of their responsibilities and the extent of their liabilities?

Operational Factors

Assess Your Ability to Meet Compliance Obligations

• Are you prepared to handle the annual financial reporting, tax filings, and other regulatory compliance required for a Godo Kaisha?
• Do you have access to professional accounting and legal services if needed?

Consider Employment and Labor Regulations

• Are you familiar with Japanese labor laws, including the Labor Standards Act and Minimum Wage Law, to ensure compliance when hiring employees?
• Can you provide the necessary social insurance and benefits for your employees?

Strategic Planning

Evaluate Your Funding and Investment Needs

• Do you have a strategy for raising funds, such as securing bank loans, venture capital, or private equity?
• Are you aware of the potential challenges in attracting investors compared to a Kabushiki Kaisha?

Plan for Intellectual Property Protection

• Have you considered the steps needed to secure trademarks, patents, and copyrights for your business in Japan?

Analyze Market Expansion Opportunities

• Do you have plans for international trade and expansion, and are you prepared to navigate the complexities of entering global markets?

How to use this Checklist

Go through each item on the checklist and count how many times you answer “yes.” This will help you evaluate whether establishing a Godo Kaisha (GK) in Japan is the right decision for your business.

• 14 or more yes answers: Forming a Godo Kaisha is highly recommended as it aligns well with your business goals and circumstances. You are well-prepared to meet the requirements and manage the operational aspects of a Godo Kaisha.
• 8 to 14 yes answers: Forming a Godo Kaisha could be beneficial, but you may need to address some areas to ensure readiness and compliance. Consider seeking additional information or professional advice to strengthen your position.

Fewer than 8 yes answers: Consider other business structures or take steps to address the gaps before deciding to form a Godo Kaisha. It’s important to ensure that you fully understand the implications and are prepared for the responsibilities involved.

6 Common Mistakes Foreign Founders Make

Establishing a GK in Japan presents unique challenges for foreign entrepreneurs. Learning from common pitfalls can save time, money, and frustration.

Mistake 1: Confusing GK Establishment with Visa Eligibility

The problem: Many founders assume that incorporating a GK automatically qualifies them for a Business Manager Visa. These are separate processes with different requirements.

The reality: As of October 2025, Business Manager Visa requirements include ¥30 million+ in capital (or ¥10 million with additional conditions), dedicated office space, and extensive documentation beyond GK registration.

How to avoid: Plan your visa strategy simultaneously with your incorporation timeline. Consult with immigration specialists before finalizing your capital structure.

Mistake 2: Underestimating the Banking Challenge

The problem: Founders assume opening a corporate bank account is a formality after GK registration.

The reality: Bank account rejection rates for foreign-owned GKs can exceed 50% at major banks, and the process can take 4-8 weeks even when successful.

How to avoid: Prepare comprehensive documentation in Japanese, consider working with introduction services, and budget 2-3 months for the banking process in your timeline.

Mistake 3: Using Virtual Offices Without Understanding Limitations

The problem: Choosing the cheapest registered address option (virtual office or co-working space) to save costs.

The reality: While legally acceptable for GK registration, virtual offices create serious problems for visa applications, bank account opening, and business credibility with Japanese partners.

How to avoid: If you need a Business Manager Visa or plan to open bank accounts, invest in a dedicated physical office from day one. The cost difference is marginal compared to the delays caused by address issues.

Mistake 4: Missing Post-Establishment Notification Deadlines

The problem: Focusing only on Legal Affairs Bureau registration and overlooking the dozens notifications required after establishment.

The reality: Tax office, social insurance, and municipal notifications have strict deadlines (as short as 5 days). Missing these can result in penalties and loss of tax benefits like blue-form filing.

How to avoid: Use the compliance timeline in this guide and consider professional support for the first 90 days post-establishment.

Mistake 5: Inadequate Japanese Language Support

The problem: Attempting to navigate Legal Affairs Bureau filings, banking applications, and tax office interactions without sufficient Japanese language capability.

The reality: All official documents must be in Japanese, bank interviews are conducted in Japanese, and even small translation errors in Articles of Incorporation can cause registration rejection.

How to avoid: Work with bilingual professionals (administrative scriveners, accountants) who can ensure accurate documentation and smooth communication with authorities.

Mistake 6: Choosing GK for the Wrong Reasons

The problem: Selecting GK solely for lower setup costs without considering long-term business goals.

The reality: If you plan to raise venture capital, go public, or build a consumer-facing brand in Japan, a KK’s prestige and investor-friendly structure may justify the higher initial cost.

How to avoid: Use our GK vs KK decision framework below, and consult with business advisors about your 3-5 year growth plans before deciding.

SmartStart’s comprehensive support: We guide foreign entrepreneurs through every step—from structure selection through banking and compliance—eliminating these common pitfalls.

Book a free consultation to discuss your specific situation.

Final Thoughts

Establishing a Godo Kaisha in Japan presents a viable and attractive option for small to medium-sized enterprises and foreign entrepreneurs seeking a flexible and manageable business structure. With the benefits of limited liability, ease of formation, and reduced compliance requirements, a Godo Kaisha can serve as a robust foundation for your business operations in Japan. This business entity is particularly advantageous for those who value direct management and lower administrative burdens, making it an ideal choice for innovative startups and growing companies.

However, it is essential to conduct a thorough evaluation of your business needs and readiness before committing to this structure. Utilizing our comprehensive checklist can help ensure you have considered all critical factors and are well-prepared to meet the necessary legal and operational requirements. By understanding the full scope of responsibilities and potential challenges, you can make an informed decision that aligns with your strategic goals. Should you need further assistance, seeking advice from legal and business professionals can provide valuable insights and support. Ultimately, with careful planning and preparation, a Godo Kaisha can be a powerful vehicle for scaling your business in Japan’s dynamic and competitive market.

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