How to Set Up Business in Japan Initial Cost Estimation

Model Case

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 complete incorporation procedures to set up joint-stock company or branch office, and then moves into a permanent office (rented).
The foreign national (managing director) lives in an extended-stay apartment or hotel, then moves to permanent housing in a residential area after completing incorporation procedures.
The company engages licensed professionals with publicly administered qualifications for a kind of procedures.

The following is an example case. You start setting up a company with two - person staff a staff of two people: a foreign national who is a managing director and a Japanese who is a manager recruited through a staff agency. After staying at a temporary office for three months,the company relocates to a permanent office in central Tokyo. Approximate floor space of the office is 50 sq.m. After a temporary stay at an extended-stay apartment for three months,the foreign managing director relocates to permanent housing in central Tokyo. Approximate floor space is 60 - 70 sq.m.

Initial Costs (in Tokyo)

(All figures shown in $US; 1 $US=JPY102.9)

	Subsidiary Company (Kabushiki Kaisha)	Branch	Criteria/Remarks

Preparation ( Pertinent information )

Rent (3 months) for temporary office (includes security deposit)	0 - 9,720	Rental fees and required deposits vary among the private companies and public organizations that offer such facilities. JETRO IBSCs provide free temporary office space (for up to 50 business days).
Rent (3 months) for temporary housing (in extended-stay apartment)	4,310	20 to 30 sq.m
Subtotal	4,310 - 14,030

Obtaining visas ( Pertinent information )

Temporary visitor visa	-	Not required for citizens of countries with which Japan has visa exemption agreements; View list of 67 countries (as of December 2014) on Ministry of Foreign Affairs website.
Certificate of eligibility (through proxy)	1,940	Commission to professional (proxy) varies depending on type of visa.
Subtotal	1,940

Company establishment and tax noticess ( Pertinent information )

Costs to register company	2,430	970	Registration and license tax, stamp tax for article of incorporation, obtaining official copy etc.
Paid-in capital	48,590	-	Although establishment with capital of 1 yen is possible under the Companies Act of Japan, you need to invest 5 million yen or more if you are in receipt of an "Business Manager" visa status. ＊The Tokyo Metropolitan Government, Fukuoka city and Niigata city, etc. have started accepting applications for the "Startup Visa Program" (Entrepreneurial Incentives for Foreigners). (For more information: How to Set Up Business in Japan: Section 2. Promoting acceptance of foreign entrepreneurs)
Name seals for company and personal use	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.
Company registration and notifications (through proxy)	2,430	1,940	Includes fees to prepare affidavit(s).
Notification of stock acquisition to the Bank of Japan (through proxy)	290	-
Tax and social insurance notices (through proxy)	1,940
Subtotal	55,970	5,140

Hiring local personnel ( Pertinent information )

Fee paid to recruiting agency for hiring a manager	34,010	Equivalent to 35% of expected first year salary (JPY 10 million)
Subtotal	34,010

Setting up a permanent office ( Pertinent information )

Monthly rent (do not include maintenance fee)	2,660	Based on rates for a 50 sq.m office in one of Tokyo's five major districts (Source: "MIKI OFFICE REPORT 2015 June," Miki Shoji). Security deposit is equivalent to ten months' rent.
Security deposit	26,600
Real estate brokerage fee (equivalent to one month's rent)	2,660
Basic office furnishings (desks, chairs, etc.)	1,460	New items bought at major office equipment stores.	Cost-savings is possible through leasing equipment or buying items second hand. Rental serviced offices are generally furnished with desks, chairs and equipment such as telephones.
Basic office equipment (computers, printers, phones, Internet initial cost etc.)	5,150	New items bought at major electronics retail stores.
Communication costs (basic monthly fee for Internet and telephone)	240	Same provider for fixed telephone, cell phone and Internet service. Subscription fee for fixed telephone is not included.
Fire and accident insurance (one-year policy)	240	Covers costs for damage to building/office equipment due to fire, lighting/flood and theft.
Subtotal	39,010

Setting up permanent housing (for foreign national) ( Pertinent information )

Monthly rent (includes maintenance fee)	2,700	Based on average rent for 60 to 70 sq.m apartment in Tokyo's Minato district.
Deposit two month's rent, key money two month's rent	10,800	There has been an increasing trend towards properties that reduce the deposit and key money amounts or do not require them at all.
Real estate brokerage fee (equivalent to one month's rent)	2,700
Subtotal	16,200

Grand total	151,440 - 161,160	100,610 - 110,330

Comparison of initial start-up costs for subsidiary company in major business areas

If the initial cost of starting up a business in Tokyo is set at 100%, Sapporo is 75%, Sendai 77, Yokohama 83, Nagoya 83, Osaka 83, Kobe 81, Hiroshima 79 and Fukuoka 77.

* Comparison chart of initial start-up costs in Japan's major business areas.(271KB)
* For more information on the business environments of Japan's regions .

This model case is meant to be only a "guide". The actual costs of setting up a business in Japan vary from company to company (and depend on current economic and business conditions).

(as of July, 2016)