Incorporation in Japan

Advantages and Disadvantages for Incorporation
Advantages

  • More reliance   

There is a certain numbers of companies don't deal with freelancers and sole proprietorship still in Japan. And you will get a loan with better deal from financial institutions.

  • Tax reductions

The highest rate for tax is different between corporates and individuals. So if your business profit reaches to the certain amount every year, it might be a profitable factor for your business.

  • Facilitate succession of business

When inheritance occurs happens, every property will be subjected to taxation with freelancers and sole proprietorship but not for corporate property (except owned shared by  the representative of company).

Disadvantages
  • Cost for starting and operating company

Incorporation takes time and money compare to be a freelancer or sole proprietorship.

And it is a obligation for every corporates to entry Social insurance and Welfare pension.

  • Corporate local inhabitant tax

It is a duty to pay corporate local inhabitant tax with every corporates in Japan whether or not the company has a loss. 

Types of Corporation 

There are two main types of Incorporation in Japan.

They are called Kabushiki-Kaisha (Stock Company) and Godo-Kaisha ( Limited Liability Company).

Kabushiki Kaisha

Type : Joint stock company, Equivalent to an American corporation

Liabilities of Investors : Limited

Recognition : High Prestige

Ownership : Shareholders

Organization : Clear distinction between ownership (shareholders) and management

Minimum Capital Requirement : 1 Yen

Distribution of Profit : Proportion of shares

Maintenance : High

Godo Kaisha

Type : Equivalent to a Limited Liability Company (LLC)

Liabilities of Investors : Limited

Recognition : Normal Prestige

Ownership : Akin to a partnrship

Organization : No distinction between ownership and management

Minimum Capital Requirement : 1 Yen

Distribution of Profits : At your distriction

Maintenance : Low

General flow of procedures for establishing
a Kabushiki Kaisha

Determination of profile of Kabushiki Kaisha to be established (Such as: Name of the Company, Purpose of the Business, Address of the head office, Amount of capital, Issue price of shares, Existence of board of directors and Business year).

                                                        

Create a seal for the Company 

Preparation of the company's articles of incorporation

Notarization of the company's articles of incorporation by Japanese notary

Transfer the capital to account of representative director

Preparation of documents for registration

( Such as :  Payment certificate, Appointment of directors, Seal certificate or Signature certificate of all directors, Application form to register company's seal )

Apply to register the  company at the Legal Affairs Bureau which jurisdiction the address of your company

Registration procedure will complete in 1 week - 2 weeks assuming conditions and documentation requirements are met

Acquisition of certificate on registered information and company seal impression certificate at the Legal Affairs Bureau

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Notifications required to the authorities

 ( Tax Offices, Labor standards inspection authorities,

Public employment security authorities, Pension authorities)

Generally all these procedures take a total of 2 - 4 weeks

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