How to Set Up Business in JapanCost Estimation
Basic Premises of Model Case
- The model case is based on the most common type of new business operation established by foreign firms entering the Japan market with an initial staff of two: one person from the foreign firm (who typically serves as managing director) and a Japanese national (manager-level person).
- The company makes use of a temporary office to establish a corporation or branch office, and then moves into a permanent office (rented).
- Japan representative to stay at a hotel or a monthly-contract apartment during the preparation period, then move to a permanent residence upon completion of company registration.
- Applications and notifications completed by professional service providers.
Initial Costs in Tokyo
Subsidiary company: About US$121,000~US$131,000
Branch: About US$70,000~US$80,000
For the establishment of a Japanese corporation or a branch, the costs are generally as follows. See below for details.
1. Company establishment and tax notices
Subsidiary company: About US$7,500 , Branch: About US$ 5,000(unit: $US; 1US$ =JPY105.14)
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks |
|---|---|---|---|
| Costs to register company | 2,380 | 950 | Registration and license tax, stamp tax for article of incorporation, obtaining official copy etc. |
| Name seals for company and personal use | 290 | 290 | Price for standard kit (4 company seals：registered seal, square seal, seal used for bank transactions, a rubber stamp) at major seal chain store in Japan. |
| Professional fees for company registration and notifications (through proxy) | 2,380 | 1,900 | Includes fees to prepare affidavit(s). |
| Stock acquisition report to the Bank of Japan (through proxy) | 480 | N/A | |
| Tax and social insurance notices (through proxy) | 1,900 | 1,900 | |
| Subtotal | 7,420 | 5,040 |
2. Paid-in capital
Subsidiary company: About US$48,000 , Branch: N/A(unit: $US; 1US$ =JPY105.14)
| Details |
Subsidiary Company (Kabushiki Kaisha) |
Branch | Criteria/Remarks |
|---|---|---|---|
| Paid-in capital | 47,560 | N/A |
Although establishment with a capital of 1 yen is possible under the Companies Act of Japan, you need to invest 5 million yen or more if you are entitled to a "Business Manager" visa status. ＊The Tokyo Metropolitan Government, Fukuoka City, Niigata City, etc. have started accepting applications for the "Startup Visa Program" (Entrepreneurial Incentives for Foreigners). (For more information, see “How to Set Up Business in Japan:Section 2. Promoting acceptance of foreign entrepreneurs.”) |
| Subtotal | 47,560 | N/A |
3. Obtaining visas
About US$2,000(unit: $US; 1US$ =JPY105.14)
| Details | Cost for subsidiary company and branch | Criteria/Remarks |
|---|---|---|
| Temporary visitor visa (short-term stay visa) | 0 |
Japan has taken measures concerning the Visa Exemption Arrangements with 68 countries and regions (as of November 2020). But currently, in some countries/regions, visa exemption measures have been suspended for the time being, as a border measures against novel coronavirus (COVID-19). Please see theMinistry of Foreign Affairs website for details.
|
| Certificate of eligibility through proxy (work or long-term stay visa) | 1,900 | Commission to professional (proxy) varies depending on type of visa. |
| Subtotal | 1,900 |
4. Setting up an office
About US$38,000~US$48,000(unit: $US; 1US$ =JPY105.14)
| Details | Cost for subsidiary company and branch | Criteria/Remarks |
|---|---|---|
|
Rent (3 months) for temporary office (includes security deposit) |
0~9,510 |
Assuming the use of a temporary office until finding an official location, for a period of up to three months. Rental fees and required deposits vary among private companies and public organizations that offer such facilities. JETRO IBSCs provide free temporary office space (for up to 50 business days). |
| Monthly rent | 3,160 |
A typical rent for a 50 sq.m office in Tokyo's Minato ward. SeeComparative Survey of Investment-Related Costs for details. Security deposit is equivalent to ten months' rent.
|
| Security deposit (approximately 10 months of rent) | 31,610 | |
| Real estate brokerage fee (equivalent to one month's rent) | 3,160 | |
| Subtotal | 37,930~47,440 |
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In addition to the above, it costs about 0.5 million yen to purchase office furniture and office automation equipment, communication expenses, etc
5. Hiring local personnel
About US$20,000(unit: $US; 1US$ =JPY105.14)
| Details | Cost for subsidiary company and branch | Criteria/Remarks |
|---|---|---|
| Fee paid to recruiting agency for hiring a manager | 20,830 |
Equivalent to 35% of expected first year salary (Manager class in the non-manufacturing sector). SeeComparative Survey of Investment-Related Costsfor details.
|
| Subtotal | 20,830 |
6. Setting up housing (for foreign national)
About US$6,000(unit: $US; 1US$ =JPY105.14)
| Details | Cost for subsidiary company and branch | Criteria/Remarks |
|---|---|---|
| Monthly rent (includes maintenance fee) | 1,540 |
Based on average rent for 50 sq.m apartment in Tokyo's Bunkyo ward. SeeComparative Survey of Investment-Related Costsfor details.
|
| Deposit two month's rent, key money two month's rent. | 3,080 | There has been a trend towards reduced or no deposit and key money in recent years. |
| Real estate brokerage fee (equivalent to one month's rent) | 1,540 | |
| Subtotal | 6,160 |
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See below for commentary page.
Reasonable business costs of Japan compared to major cities of the world
Comparison of business costs in major cities(Tokyo = 100)
Office Rent
| Tokyo |
Yoko hama |
Nagoya | Osaka | Hong Kong | Seoul |
Singa pore |
New York |
San Fran cisco |
London | Paris |
|---|---|---|---|---|---|---|---|---|---|---|
| 100 | 58 | 65 | 78 | 195 | 87 | 127 | 219 | 131 | 187 | 105 |
