Starting a Business in Japan: 12 Key Steps for Success

Starting a business in Japan sounds exciting, but where do you even begin? With strict regulations, cultural nuances, and a unique consumer market, it’s not as simple as setting up a shop. This guide breaks down what works—and what doesn’t—so you can start strong.

Best and Challenging Business Opportunities in Japan: What to Start and What to Avoid

Japan offers great opportunities for entrepreneurs, but not every business idea will succeed. Some industries thrive due to strong demand and government support, while others struggle with strict regulations or cultural differences. Here’s a look at the best and worst businesses to start in Japan: 

Best Business Opportunities in Japan

1. Tech Startups (AI, Robotics, Fintech)

Japan is a global leader in artificial intelligence, robotics, and fintech, making it an excellent place for startups in these fields. The government supports innovation, and there’s strong demand for automation and digital transformation.

2. E-commerce and Online Retail

With a growing preference for online shopping, niche e-commerce stores—especially those offering unique or foreign products—can perform well. Japan’s digital economy is booming, and consumers appreciate convenience and high-quality products.

3. Tourism and Hospitality

Japan attracts millions of tourists yearly, creating opportunities in guesthouses, specialty tours, and travel services. Unique cultural experiences, eco-tourism, and luxury hospitality businesses are particularly in demand.

4. Eco-Friendly and Sustainable Products

Sustainability is a growing trend in Japan. Businesses focusing on eco-friendly packaging, vegan products, and sustainable alternatives are gaining traction. Consumers and companies alike are looking for greener solutions. 

5. Health and Wellness

Japan’s aging population increases demand for health services, organic food, fitness centers, and mental wellness solutions. Businesses catering to elder care, nutritional supplements, and mental health support have strong potential.

6. English Language Education and Language Services

With English education a priority in Japan, language schools, tutoring, and translation services remain in demand. Online English learning platforms are also growing. 

6 Business foreigners should avoid starting

1. Traditional Retail Stores

With high rent costs and a preference for online shopping, brick-and-mortar stores struggle unless they offer something truly unique. E-commerce is often the better option.

2. Nightclubs and Bars

Strict licensing requirements, high competition, and cultural preferences make it difficult for new nightlife businesses to succeed. The market is already saturated, especially in major cities.

3. Real Estate (Without Strong Local Knowledge)

Japan’s property market is complex, with strict zoning laws and declining demand in rural areas. Foreign investors often struggle without local expertise.

4. Fast Food Chains

The fast food industry is dominated by major brands like McDonald’s and local chains, making it tough for new entrants to gain market share. Japanese consumers also favor high-quality, fresh food over mass-produced options.

5. Legal and Consulting Services (for Foreigners)

Breaking into legal, tax, or business consulting as a foreigner is challenging due to licensing barriers and trust issues. Local firms dominate these industries.

6. General Import Businesses

Importing generic goods faces high tariffs, strong domestic competition, and strict regulations. Without a niche market or exclusive product, profitability is low.

4 Things to Know Before Starting Your Business in Japan

Before diving into the legalities, here are some crucial insights every aspiring entrepreneur should know:

1. Visa Requirements

To start a business in Japan, obtaining a long-term visa, such as the Business Manager Visa, is essential. Short-term visas, including tourist visas, do not permit business registration, making them unsuitable for entrepreneurial activities. If you are considering working in Japan, it is important to explore different types of working visas to determine the most appropriate option for your specific business and professional needs.

2. Capital Investment

If you’re applying for a Business Manager Visa, you’ll need at least 5 million yen (around $35,000 USD) in company capital. This money must be deposited into a Japanese bank account before you can register your business.

Since opening a bank account in Japan as a non-resident can be tricky, here are some common workarounds:

• Using a Japanese partner’s bank account to hold the funds temporarily.
• Work with a legal representative who can assist with the deposit process.
• Register your company first, then open a corporate bank account and transfer the capital.

This requirement is in place to show immigration that your business has the financial stability to operate in Japan.

3. Startup Visa Challenges

• Startup visas are only available in select cities (e.g., Tokyo, Fukuoka) and require an innovative business model (typically tech or sustainability-focused).
• They are temporary (6–12 months) and must transition into a Business Manager Visa.

4. Professional Assistance

Hiring experts can prevent costly mistakes and delays.

• Visa Consultants – Help with Business Manager Visa applications and legal requirements (e.g., One Visa Japan, Tokyo Immigration Law Firm).
• Business Registration Specialists – Assist with setting up a Kabushiki Kaisha (KK) or Godo Kaisha (GK).
• Accounting & Tax Advisors – Ensure compliance with Japanese tax laws (HLS Global, Mizuno Tax & Accounting).
• Office & Virtual Address Providers – Secure a physical office for registration (Bridgehead Japan).

Step-by-Step Guide to Starting Your Business in Japan

Step 1: G.K. VS K.K. Choosing the right structure 

Your first decision will shape your business operations. The two primary structures are:

Selecting the right structure impacts taxation, liability, and business reputation. Learn more about this topic through our article on A Quick Start on Japanese Sole Proprietorships!

Step 2: Check Legal Requirements for Your Business Type

Registering a business in Japan involves several steps, including choosing the appropriate business structure (G.K. or K.K.) as we have shown you earlier, preparing and notarising the articles of incorporation, depositing capital, and registering with the Legal Affairs Bureau. This process ensures your business is legally recognised and compliant with Japanese laws.

Depending on the nature of your business, you may also need specific licenses and permits to operate legally in Japan. Industries such as food and beverages, healthcare, finance, and real estate have stringent regulatory requirements. It is crucial to research and obtain the necessary approvals from relevant government agencies to avoid legal issues.

Japan offers several visa options for entrepreneurs and employees, including the Business Manager Visa for business owners and the Highly Skilled Professional Visa for talented employees. Understanding the visa requirements and application process is essential for ensuring that you and your team can legally live and work in Japan.

Step 3: Develop a Business Plan

A well-structured business plan is essential for guiding your venture and is often required for visa applications and securing financing. Your business plan should encompass the following components:

• Executive Summary: Provide a concise overview of your business concept, objectives, and the value proposition you offer.
• Market Analysis: Conduct thorough research on your target market, including customer demographics, market size, and trends. Analyze your competitors to identify opportunities and threats.
• Marketing Strategy: Detail how you plan to attract and retain customers. This should include your pricing model, promotional activities, distribution channels, and sales strategies.
• Financial Projections: Present realistic forecasts of your income, expenses, cash flow, and profitability over the next 3-5 years. Include assumptions and scenarios to demonstrate financial planning.
• Operational Plan: Describe the day-to-day operations of your business, including location, facilities, equipment, and staffing requirements. Outline the production process or service delivery method.

Step 4: Register Your Company Name

Choosing a unique and appropriate company name is a critical step in establishing your brand identity. In Japan, the process involves:

• Uniqueness Check: Ensure that your desired company name is not already in use or too similar to existing company names. This can be verified through the Legal Affairs Bureau.
• Compliance with Naming Conventions: The company name must include “Godo Kaisha” (GK) or “Kabushiki Kaisha” (KK) as a suffix, depending on your chosen business structure.
• Cultural Considerations: If you plan to use a foreign name, consider how it will be perceived and pronounced in Japanese. It is advisable to consult with a local expert to ensure cultural appropriateness.

To make sure your company name isn’t already in use, refer to the Corporate Number Publication Site. 

Step 5: Draft and Notarize Articles of Incorporation

The Articles of Incorporation (定款, “Teikan“) are fundamental documents that define your company’s purpose, structure, and operational guidelines. Key elements to include are:

• Company Objectives: Clearly define the scope of your business activities. In Japan, companies are only allowed to conduct activities specified in their objectives.
• Shareholder Information: List the names, addresses, and contributions of all shareholders.
• Capital Structure: Specify the total amount of capital and the number of shares issued.
• Management Structure: Detail the roles and responsibilities of directors and other officers.

For a K.K. (Kabushiki Kaisha), the Articles of Incorporation must be notarized by a public notary (公証役場), adding extra steps and fees. This process ensures the document’s legality and authenticity, making it a more formal and credible business structure.

For a detailed guide on incorporation documents, visit Smart Start Japan. 

Step 6: Deposit Initial Capital

Depositing the initial capital is a crucial step in the incorporation process. The procedure involves:

Opening a Temporary Bank Account

• Before registration, open a bank account under the name of the representative director or incorporator.
• This must be a Japanese bank branch or a foreign bank with a branch in Japan.

Depositing Capital

• Kabushiki Kaisha (K.K.): No legal minimum, but a higher amount (e.g., 5 million yen) is recommended for credibility.
• Godo Kaisha (G.K.): No minimum requirement, but reasonable funding is advised.
• Business Manager Visa Applicants: You must deposit at least 5 million yen as proof of sufficient capital for visa approval.

Proof of Transaction for Registration

• Obtain a Certificate of Deposit from the bank confirming the transaction.
• Other acceptable proof includes:
  • A bankbook copy showing the deposit.
  • A transaction slip from the bank as evidence of fund transfer.

Managing this process correctly ensures smooth company registration and visa approval.

Step 7: Register Your Company

To register your business, submit these key documents to the Legal Affairs Bureau:

1. Articles of Incorporation (定款, Teikan) – Company details; required for K.K. and G.K. (Drafted by you/lawyer, notarized by KK).
2. Certificate of Capital Deposit (払込証明書) – Proof of initial capital deposit. (Issued by your bank).
3. Shareholder Agreements (株主間契約) – Defines shareholder rights. (Drafted and signed by shareholders).
4. Affidavit of Representative Director (代表取締役の宣誓書) – Declares company’s legal representative. (Signed by Director).
5. Company Seal Registration (印鑑届出書) – Official company seal for transactions. (Registered at the Legal Affairs Bureau).
6. Proof of Business Address (事務所所在地証明) – Lease agreement or ownership proof. (Provided by landlord or owner).
7. Registration Application Form (設立登記申請書) – Official company registration form. (Available at the Legal Affairs Bureau).

All documents must be in Japanese—a legal consultant can help avoid delays.

Fees:

• G.K.: ¥60,000 (no notarization required)
• K.K.: ¥150,000

Timeframe: 2-3 weeks for processing.

Step 8: Secure Necessary Permits and Licenses

Certain industries in Japan require additional permits or licenses. Examples include:

• Food and Beverage: Requires a food business license.
• Healthcare: Requires approval from the Ministry of Health, Labour, and Welfare.
• Finance: Requires registration with the Financial Services Agency.

Research specific requirements for your industry and apply early to avoid delays.

Step 9: Open a Corporate Bank Account

Once your business is registered, you can open a permanent corporate bank account. This is essential for managing operations, paying taxes, and receiving payments.

Pro Tip: Japanese banks often require:

• Proof of registration
• Articles of Incorporation
• Personal ID of the representative

Step 10: Register for Taxes

Register your business for:

• Corporate Income Tax
• Social Insurance Contributions for Employees

Late registration can result in penalties, so complete this step within two months of incorporation. Learn more about Japanese taxes for new businesses. 

Step 11: Hire Employees

If you plan to hire staff, adhere to Japan’s labor laws and regulations:

• Labor Standards Inspection Office: Notify the office about your company and comply with labour standards.
• Employment Contracts: Prepare contracts that outline job responsibilities, working hours, and compensation.

Step 12: Leverage Government Support

Japan offers numerous programs to support entrepreneurs:

• JETRO Services: Free market entry consultations, temporary office space, and regulatory guidance.
• Startup Subsidies: Grants for research, development, and operational costs.
• Startup Hubs: Cities like Fukuoka and Tokyo provide co-working spaces and mentorship programs.

Incorporate your company in Japan with SmartStart Japan! With our help, you can shorten the entire incorporation process from a dreadful 6 weeks down to just 3 weeks!

Government Support for Entrepreneurs

• Startup Cities: Tokyo, Osaka, and Fukuoka are key startup hubs with resources, co-working spaces, and networking opportunities. Fukuoka, a National Strategic Special Zone, offers incentives and support for startups, making it a prime choice for entrepreneurs.
• Startup Visas: Japan’s Startup Visa offers a one-year stay for foreign entrepreneurs to establish their business, with possible extensions upon meeting requirements. Tokyo and Fukuoka have dedicated programs to simplify the process.
• Business Manager Visa: The Business Manager Visa is suitable for business owners and executives who wish to manage their companies in Japan. This visa requires applicants to show a detailed business plan, proof of office space, and sufficient funds to operate the business. It allows for long-term residency and the ability to bring family members to Japan.
• Subsidies and Grants: The Japanese government provides financial support through various subsidies and grants to help startups with research, development, and operational costs. Programs such as the Small and Medium Enterprise (SME) Support Japan offer grants for innovative projects, while the New Business Activity Subsidy Program provides financial assistance for new business ventures.
  

Marketing and Growing Your Business in Japan

Marketing your business effectively in Japan involves a mix of digital and local strategies tailored to the unique preferences and behaviours of Japanese consumers. This is a crucial step to consider if you want to start a business in Japan.

Digital Marketing: SEO, Social Media, Online Advertising

• SEO: Optimize your website for Japanese search engines like Google and Yahoo Japan. Use local keywords and ensure your site is in Japanese.
• Social Media: Platforms like LINE, Twitter, and Instagram are popular for engaging with consumers.
• Online Advertising: Use targeted ads and consider influencer collaborations for broader reach.

Local Marketing Strategies: Traditional Media, Events, Networking

• Traditional Media: Utilize newspapers, magazines, and TV to reach a wider audience. Japan still values traditional media for advertising.
• Events and Networking: Participate in local events, trade shows in Japan, and networking opportunities such as Chambers of Commerce in Japan to build your brand and connect with potential clients.

Conclusion

Starting a business in Japan is both an exciting and rewarding journey. While the process involves multiple steps—from choosing the right business structure to registering for taxes—Japan’s supportive ecosystem and innovative culture make it an attractive destination for entrepreneurs.

Take advantage of government support, tailor your marketing strategies to local preferences, and surround yourself with a knowledgeable team. With persistence and a clear plan, your business in Japan can thrive.