A Step-by-Step Guide to Start a Recruitment Agency in Japan (2025 Update)

Why Consider Starting a Recruitment Agency in Japan?

Japan’s labor market is undergoing a significant transformation due to demographic shifts, including an aging population and a shrinking workforce. Companies face increasing difficulties securing skilled professionals, particularly those with specialized expertise or English proficiency. This challenge presents a compelling business opportunity for recruitment entrepreneurs who can effectively bridge the gap between employers and qualified candidates.

If you want to start a recruitment agency in Japan, now is an opportune time. This guide provides a structured overview of the essential steps to establish a successful agency in this dynamic market.

Understanding the Industry: Recruitment Agencies vs Staffing Agencies

Before proceeding, it is important to distinguish between the two primary employment business models in Japan to clarify the focus of this guide:

• Recruitment Agencies (有料職業紹介) – These firms act as intermediaries, matching job seekers with employers. The agency earns a success-based fee upon the candidate’s successful placement. This model is particularly attractive for foreign entrepreneurs due to its relatively straightforward regulatory requirements and lower initial capital investment.
• Staffing Agencies (人材派遣) – These companies directly employ workers and dispatch them to client organizations on a temporary basis. Unlike recruitment agencies, staffing agencies must manage payroll, benefits, and labor law compliance, making the model significantly more complex and capital-intensive.

While both models serve critical functions in Japan’s labor market, this guide focuses exclusively on recruitment agencies. This is because recruitment agencies offer a more accessible entry point for entrepreneurs, require fewer regulatory hurdles, and provide a scalable business model with lower operational costs compared to staffing services.

If your goal is to start a recruitment agency in Japan, this step-by-step guide will walk you through the essential requirements, from licensing and incorporation to building a sustainable client and candidate network.

Step 1: Meeting Capital Requirements

To start a recruitment agency in Japan, securing the necessary financial capital is one of the fundamental prerequisites. The Ministry of Health, Labour, and Welfare (MHLW) mandates that agencies maintain a minimum of ¥5 million in net assets per office to operate legally.

Key Financial Requirements:

• A minimum of ¥1.5 million must be in liquid assets (cash or bank deposits).
• Loans cannot be used to meet capital requirements; funds must originate from personal savings or direct investment.

These financial regulations are designed to ensure the long-term stability of recruitment agencies operating in Japan’s competitive labor market.

Estimated Capital Costs:

• Net Assets: ¥5,000,000 (minimum per office)
• Liquid Assets (Cash/Bank Deposit): ¥1,500,000 (minimum per office)

Step 2: Securing an Office Space

Office Requirements:

A physical office location that meets legal requirements is mandatory to start a recruitment agency in Japan before applying for a recruitment license. Renting office space in Japan requires careful planning, as government inspections will be conducted to verify compliance.

• Fixed Telephone Line – A landline is required for official business registration.
• Private Interview Room – The office must have a designated interview space with non-transparent walls at least 180 cm high to ensure candidate confidentiality.
• Data Protection Measures – Recruitment agencies must implement secure storage solutions to protect personal and confidential data. This means storing physical documents in lockable cabinets and using password-protected systems for digital records, in compliance with Japan’s Personal Information Protection Act (PIPA).
• Strongly Recommended: Accessible Location – While not a strict legal requirement, securing an office in a well-connected area, ideally near a train station, can significantly improve access for both clients and job seekers. This enhances business credibility and facilitates in-person meetings.

To start a recruitment agency in Japan, budgeting for office rental costs is crucial. In major cities like Tokyo, prices typically range from ¥500,000 to ¥1,000,000 per month, depending on size and location.

Estimated Office Space & Equipment:

• Total Office Setup: ¥2,000,000 – ¥3,000,000
  • Office Rent (monthly): ¥500,000 – ¥1,000,000
  • Deposit & Key Money (2-3 months upfront): ~¥1,000,000
  • Office Setup (Furniture, Equipment, Internet, Phone): ¥300,000 – ¥500,000

Step 3: Incorporate Your Recruitment Agency in Japan

Before applying for a recruitment license, you must legally establish your business. Choosing the right corporate structure and completing the registration process are essential steps to start a recruitment agency in Japan.

If you are unfamiliar with the process of setting up a company in Japan, understanding the legal and administrative requirements is crucial. For a comprehensive guide on business incorporation, visit this detailed article on setting up a company in Japan. This resource outlines key considerations, including choosing a business structure, legal registration, and compliance with Japanese regulations.

Choose a Business Structure for your Company:

• Kabushiki Kaisha (KK) – Japan’s equivalent of a corporation, offering credibility and investor appeal. This structure is ideal for agencies aiming for long-term growth. It requires the notarization of the Articles of Incorporation and a more formal governance framework. For a detailed guide on its setup, benefits, and legal requirements, visit our Complete Guide to Kabushiki Kaisha in Japan.
• Godo Kaisha (GK) – Similar to a limited liability company (LLC), a GK offers a faster and more cost-effective setup without notarization. While easier to manage, it has less prestige compared to a KK, which may impact business negotiations.

If you want to learn more about Godo Kaisha and how it works in Japan, check out our Ultimate Guide to Godo Kaisha in Japan. This in-depth guide covers everything from setup requirements to key benefits, helping you decide if a GK is the right structure for your recruitment agency in Japan.

Instead, If you want to learn more about Kabushiki Kaisha check out our Ultimate Guide to Godo Kaisha in Japan. This in-depth guide covers everything from setup requirements to key benefits, helping you decide if a GK is the right structure for your recruitment agency in Japan.

Company Registration Steps:

Register Your Company with the Legal Affairs Bureau (法務局)

Prepare and submit the Articles of Incorporation (定款 – Teikan), which outline the company’s name, purpose, registered address, business activities, capital structure, and governance framework.

• For KK companies – Notarization of the Articles is required before submission.
• For GK companies – No notarization is necessary.
• The registration process typically takes 1–2 weeks after submission.

Open a Corporate Bank Account

Once the company registration is complete, you must establish a corporate bank account to handle business transactions.

• Requirements for Opening a Business Bank Account:
  • Company Registration Certificate (登記事項証明書) – Issued by the Legal Affairs Bureau (available approximately 7 days after registration).
  • Registered Company Seal (Inkan) – Official seal required for banking and legal documents.
  • Proof of Business Operations – Some banks may require a business plan or evidence of financial activity.
  • Resident Director Requirement – Most Japanese banks require at least one company director to be a Japan resident.
  • Office Lease Contract – Verifies that the company has a legitimate business location.
• Bank Selection Considerations:
  • Traditional Banks (Mizuho, MUFG, Sumitomo Mitsui) – Offer credibility but have stricter requirements, particularly for foreign entrepreneurs.
  • Digital Banks (SBI Shinsei, Rakuten Bank, PayPay Bank) – More accessible, with a streamlined application process, but may have limitations on international transactions.

It is essential to transfer the initial capital from the representative director’s personal bank account into the corporate account after registration.

Obtain an Official Company Seal (Hanko)

Japan requires businesses to use official seals (hanko or inkan) for legal agreements, registrations, and financial transactions. The main types are:

• Registered Seal (Jitsuin / 実印) – Used for official business transactions and must be registered with the Legal Affairs Bureau.
• Bank Seal (Ginko-in / 銀行印) – Required to open and manage a corporate bank account.
• Representative Seal (Daihyosha-in / 代表者印) – Used by the company’s CEO or representative director for legal and financial documents.

Company seals can be purchased at specialized hanko shops, online platforms, or department stores.

Register for Corporate Taxes and Social Insurance

After incorporation, all businesses must register with the National Tax Agency (NTA) and local tax offices for corporate taxation and social insurance.

• Corporate Tax Registration:
  • Companies are subject to corporate tax, local inhabitant tax, and enterprise tax.
  • The standard corporate tax rate ranges between 23.2% and 30%, depending on revenue and business size.
  • If the company’s revenue exceeds ¥10 million, it may become subject to consumption tax (equivalent to VAT in other countries).
• Social Insurance Registration:
  • Mandatory enrollment in health insurance, employee pension, and labor insurance is required for all full-time employees.
  • The employer typically covers 50% of the social insurance premiums, with the remaining amount deducted from employee salaries.
  • Even if you are the sole business owner with no employees, you must register for national health insurance and pension schemes.

Non-compliance with tax or social insurance registration may result in penalties, business restrictions, or license suspension. Consulting a local tax specialist is recommended to ensure compliance with Japanese tax regulations.

Estimated Cost for Incorporation:

• Total Incorporation Costs: ¥5,320,000 – ¥6,150,000
  • Business Structure Registration:
    • Kabushiki Kaisha (KK): ¥250,000 – ¥460,000
    • Goudou Kaisha (GK): ¥110,000 – ¥270,000
  • Notarization Fee (KK only): ¥50,000
  • Company Registration Fees:
    • Legal Affairs Bureau: ¥60,000 (GK) / ¥150,000 (KK)
    • Company Seal Registration (Hanko): ¥20,000 – ¥30,000
  • Corporate Bank Account Setup:
    • Initial Bank Deposit (Capital Transfer): ¥5,000,000
    • Application Fees & Miscellaneous Costs: ¥10,000 – ¥50,000
  • Company Seal Purchase:
    • Registered Seal (Jitsuin): ¥10,000 – ¥15,000
    • Bank Seal (Ginko-in): ¥5,000 – ¥10,000
    • Representative Seal (Daihyosha-in): ¥5,000 – ¥10,000
  • Corporate Tax & Social Insurance Registration:
    • Corporate Tax Registration: ¥50,000 – ¥100,000
    • Social Insurance Setup Costs: ¥50,000 – ¥150,000

For a detailed breakdown of all costs, fees, and financial requirements, visit our Comprehensive Guide to the Cost of Setting Up a Company in Japan.

Step 4: Obtaining a Recruitment Agency License

Once your company is established, the next step to start a recruitment agency in Japan is to secure the Fee-Charging Employment Placement License (有料職業紹介) from the Ministry of Health, Labour, and Welfare (MHLW).

Application Process:

• Appoint a Vocational Placement Manager (職業紹介責任者):
  The designated manager must complete a 7-hour training course (with an approximate fee of ¥10,000).
• Submit the Necessary Documentation:
  Include your articles of incorporation (already established in Step 3), balance sheets, and proof of your office lease.
• Office Inspection:
  Government officials will conduct an on-site inspection to ensure your office complies with all legal requirements.
• Approval and License Issuance:
  The licensing process generally takes at least two months. Note that certain industries, such as port transport, construction, security services, healthcare, and legal professions, may require additional permits.

Estimated Licensing Costs:

• Total Licensing Costs: ¥260,000 – ¥310,000
  • Vocational Placement Manager Training: ¥10,000
  • License Application Fee: ¥140,000 (includes ¥50,000 government fee + ¥90,000 processing fee)
  • Office Inspection & Compliance: ¥50,000
  • Document Preparation & Legal Support (optional): ¥50,000 – ¥100,000

Step 5: Building a Client and Candidate Network

Once licensed, the long-term success of a recruitment agency depends on effectively attracting both corporate clients and job seekers. Below are key strategies to facilitate business growth.

Client Acquisition Strategies:

• Cold Calling – Highly targeted but requires persistence (~¥100-¥200 per call; ~¥5,000 per successful appointment).
• Online Advertising – Budget allocations can range from ¥50,000 to ¥1,000,000+ per month.
• Networking – Attending industry events, business forums, and recruitment expos can help build valuable relationships. For expert insights on how to develop strong business connections in Japan, check out our Complete Guide to Business Networking in Japan.

Candidate Sourcing Strategies:

• LinkedIn & Indeed Advertisements – Effective for reaching professionals actively seeking employment.
• SEO-Optimized Blog Content – Industry-relevant content attracts job seekers organically.
• Referral Programs – Offering incentives for referrals can significantly expand your talent pool.

Estimated Marketing & Operation Costs:

• Total Marketing & Operations: ¥1,500,000 – ¥2,500,000
  • Website Development: ¥300,000 – ¥600,000
  • Job Advertising & Lead Generation: ¥500,000 – ¥1,000,000
  • Recruitment Software/CRM System: ¥200,000 – ¥500,000
  • General Operating Expenses (Utilities, Transportation, etc.): ¥300,000

Estimated Total Initial Investment to Start a Recruitment Agency in Japan:

Want to hear real-world insights on scaling recruitment in Japan? Check out this episode of the Japan Scalers Podcast featuring Ray Sato, co-founder of Grow, a rapidly expanding recruitment business. In this episode, Ray shares his experiences from scaling Uber Eats’ recruitment operations in Japan, discussing challenges, strategies, and key takeaways for anyone looking to start a recruitment agency in Japan.

Listen here: Scaling Recruitment at Uber with Ray Sato

Final Considerations: Is Starting a Recruitment Agency in Japan Worth It?

Establishing a recruitment agency in Japan presents a lucrative opportunity to connect businesses with top-tier talent. While the setup process requires meticulous financial planning, regulatory compliance, and strategic networking, the potential for long-term success is substantial.

Entrepreneurs who start a recruitment agency in Japan with a well-defined strategy, strong industry relationships, and a deep understanding of the country’s employment landscape will be well-positioned to build a thriving recruitment business.