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.
model case

Initial Costs (in Tokyo)

(All figures shown in $US; 1 $US=JPY122.45)

  Subsidiary Company
(Kabushiki Kaisha)
Branch Criteria/Remarks

Preparation ( Pertinent information )

Rent (3 months) for temporary office (includes security deposit) 0 - 8,170 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) 3,760 20 to 30 sq.m
Subtotal 3,760 - 11,930  

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.External site: a new window will open.
Certificate of eligibility (through proxy) 1,220 Commission to professional (proxy) varies depending on type of visa.
Subtotal 1,220  

Company establishment and tax noticess ( Pertinent information )

Costs to register company 2,040 820 Registration and license tax, stamp tax for article of incorporation, obtaining official copy etc.
Paid-in capital 40,830 - 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.
Name seals for company and personal use 240 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) 2,040 1,630 Includes fees to prepare affidavit(s).
Notification of stock acquisition to the Bank of Japan (through proxy) 240 -  
Tax and social insurance notices (through proxy) 1,630  
Subtotal 47,020 4,320  

Hiring local personnel ( Pertinent information )

Fee paid to recruiting agency for hiring a manager 28,580 Equivalent to 35% of expected first year salary (JPY 10 million)
Subtotal 28,580  

Setting up a permanent office ( Pertinent information )

Monthly rent (do not include maintenance fee) 2,140 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 21,400
Real estate brokerage fee (equivalent to one month's rent) 1,220
Basic office furnishings (desks, chairs, etc.) 990 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.) 4,490 New items bought at major electronics retail stores.
Communication costs (basic monthly fee for Internet and telephone) 200 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 31,830  

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

Monthly rent (includes maintenance fee) 2,190 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 8,760 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) 2,190  
Subtotal 13,140  
Grand total 125,550
-
133,720
82,850
-
91,020
 

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

map

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 June, 2015)

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