Comprehensive Guide to Starting a Business in Japan: Taxes, Accounting, and Compliance
Starting a business in Japan involves more than simply registering a company. Entrepreneurs also need to consider Japanese tax rules, accounting and record-keeping requirements, social insurance, consumption tax, tax filing, and important elections that can affect how the business is taxed in the future.
For international business owners, Japanese taxation may also interact with overseas income, foreign companies, U.S. LLCs, foreign tax credits, remittances, and tax residency. For that reason, this guide also includes selected international tax topics in addition to the basic accounting and tax requirements that apply to businesses in Japan.
You do not necessarily need to read every article from beginning to end. Start with the sections that match your current situation, and use this page as a reference as your business develops.
Business Essentials for All Entrepreneurs in Japan
The following topics are relevant to many entrepreneurs operating in Japan, regardless of whether the business is run as a sole proprietorship or through a corporation.
■ Consumption Tax in Japan
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・Basic Knowledge of Japanese Consumption Tax
An Easy Explanation of Consumption Tax for Doing Business in Japan -
・Should You Register as a Qualified Invoice Issuer?
Japan’s Qualified Invoice System Explained: A Simple Guide for Foreign Business Owners -
・Should You Elect the Simplified Consumption Tax System?
Understanding Japanese Consumption Taxes: Simplified Consumption Tax System -
・Consumption Tax on Real Estate Purchases for Private Lodging Businesses
Consumption Tax on Real Estate Purchases for Private Lodging Businesses in Japan
■ Accounting Records and Document Retention Requirements
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・Seven-year record-keeping obligation
What Happens in Japanese Tax Audits if You Discard Ledgers and Documents? -
・The Electronic Record-Keeping Law
Japan’s Electronic Record Keeping Law: A Practical Guide for Businesses
■ Blue Return (Aoiro Shinkoku) Tax System
■ Tax Planning and Tax-Saving Strategies
■Business Manager Visa Renewal
■Social Insurance
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・When is enrollment in social insurance required?
Is Social Insurance Mandatory for Foreign Entrepreneurs in Japan?
■ International Tax and Accounting Topics
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・Foreign Tax Credit
Foreign Tax Credit for Non-Permanent Residents in Japan -
・Statement of Assets and Liabilities
Japan’s Statement of Assets and Liabilities: Reporting Worldwide Assets -
・Statement of Overseas Assets
Do You Need to File a Statement of Overseas Assets in Japan? -
・Controlled Foreign Company (CFC) Rules
Japan’s Controlled Foreign Company (CFC) Rules: A Guide for Foreign Business Owners
■ U.S.-Specific Tax Topics for Japan Residents
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・U.S. LLC Owners
U.S. LLC Tax Issues for Japan Residents: PE Risk, Remittance Taxation, and Foreign Tax Credits -
・How to File a Japanese Tax Return as a U.S. Non-Permanent Resident
How to Prepare a Japanese Tax Return for U.S. Non-Permanent Residents -
・How U.S. Income Is Taxed After Moving to Japan
Moving to Japan? How Your U.S. Income Will Be Taxed
If you are moving from the U.S. to Japan, you may also be interested in [one American client’s experience working with our English-speaking tax office in Japan].
■Inheritance & Gift Tax
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・Inheritance Tax in Japan
Inheritance Tax in Japan: A Practical Guide -
・International Inheritance and Gift Tax
International Inheritance and Gift Tax in Japan: Who Pays Tax on Worldwide Assets?
■ Other Tax and Business Issues to Consider
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・Understanding the Year-End Tax Adjustment
Understanding Japanese Taxes: Year-end Tax Adjustment -
・Withholding Income Tax Obligations
Withholding Income Tax: Key Info for Starting a Business in Japan -
・Property Taxes in Japan
Essential Tax Information When Starting a Business in Japan: Property Taxes -
・Tax Returns and Penalties
The Penalty for Filing Late Tax Returns in Japan - ・Exit Tax on Securities
Japan Exit Tax on Securities: What You Need to Know Before Leaving Japan -
・Remittance-Based Taxation for Non-Permanent Residents
Non-Permanent Resident Tax Rules in Japan: What Foreign Residents Should Know -
・Incorporation
What Are the Advantages of Incorporation for Sole Proprietors in Japan? -
・Determining Your Individual Tax Residency Status in Japan
Non-Permanent Resident Tax Rules in Japan: What Foreign Residents Should Know
Additional Considerations for Corporations
If you establish a Japanese corporation, several additional tax and accounting decisions should be considered at or shortly after incorporation.
■Corporate Tax Rates in Japan
■ Key Decisions When Establishing a Company in Japan
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・How much will your company’s paid-in capital be?
Recommended Paid-In Capital for Starting a Corporation in Japan -
・When will you set the end of the fiscal year?
Choosing the Best Fiscal Year-End for a New Company in Japan
How the Tax Office Selects Audit Targets in Japan -
・How Much Should Directors’ Compensation Be?
Director Compensation in Japan: When Can You Change It?
Setting Director’s Compensation: A Key Step When Starting a Company in Japan
■ Corporate Tax Planning and Tax Saving
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・Company house and travel allowance
Effective Ways to Save Taxes When Running a Business in Japan part 2
■ Other Things You Should Know
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・Per Capita Levy
Per Capita Levy for Corporations in Japan: What to Know, Even with a Deficit -
・Individual Income Tax for Salaried Employees in Japan
Understanding Individual Income Tax in Japan for Salaried Employees -
・Required documents for corporate tax filing in Japan
Required Documents for Corporate Tax Filing in Japan
Need Professional Accounting and Tax Support in Japan?
Some tax and accounting decisions need to be considered soon after starting a business, while others become important only as the business grows. The right approach depends on factors such as whether you operate as a sole proprietor or corporation, your expected revenue and expenses, consumption tax status, director compensation, employees, and whether you have income or business interests outside Japan.
At Koshida Accounting and Tax Office, we provide accounting and tax services in Japan with English support for foreign entrepreneurs and small business owners. Our services include bookkeeping, tax returns, corporate taxation, tax planning, and ongoing accounting and tax advice. We can also help identify issues that may require coordination with other specialists when establishing and operating a business in Japan.
If you are unsure which tax filings, elections, or accounting procedures apply to your situation, please feel free to contact us for a consultation.