Bookkeeping in Japan: How to Keep Accurate and Efficient Accounting Records

Hello, my name is Taisei Koshida, and I am a certified public accountant and tax accountant in Japan.

I assist foreign business owners who may have difficulty dealing with Japanese accounting and tax procedures. If you find the Japanese tax system challenging, I can help you with your tax filings.

Keeping accurate accounting records is important, but bookkeeping does not have to take a lot of time.

By organizing your bank, cash, and credit card transactions properly, you can make your bookkeeping in Japan both accurate and efficient.

Here are some practical tips.

1. Three Main Sources for Bookkeeping

(1)Bank Account Transactions

Your bank account is one of the main sources of information for bookkeeping.

It shows money received from clients and payments for purchases, outsourcing, salaries, and other business expenses.

Using bank transaction data also makes it easier to check whether your accounting records are complete.

(2) Cash Payments

If you pay business expenses in cash, receipts and other supporting documents are important sources for your bookkeeping.

Cash transactions usually require more manual work because they may not automatically appear in your bank or credit card data.

(3)Credit Card Transactions

If you use a credit card for business expenses, your credit card transaction data can be another useful source for bookkeeping.

Many credit card companies allow you to download transaction data, which can reduce manual data entry.

2. Tips for Efficient Bookkeeping

(1) Reduce Cash Payments

The more cash payments you make, the more receipts you usually need to enter manually into your accounting software.

If you make most of your business payments through bank accounts or credit cards, you can reduce manual data entry and make your bookkeeping much easier.

(2) Use Fewer Bank Accounts

Most banks provide online banking services that allow you to download transaction data. This can save you from entering each transaction manually.

However, if you use many different bank accounts for your business, your bookkeeping becomes more complicated.

Using fewer bank accounts for business transactions can make your accounting records easier to manage.

(3) Use Credit Cards Efficiently

Credit card transaction data can usually be downloaded, so using a credit card can save time when preparing your accounting records.

However, credit card statements alone may not be sufficient for Japanese consumption tax purposes. You should also properly keep invoices, receipts, and other documents required under the applicable record-keeping rules.

If you are subject to the Japanese Invoice System and want to claim an input consumption tax credit, you may also need to confirm whether the supplier is a registered invoice issuer.

What is the Invoice System in Japan?

3. The JPY 650,000 Blue Form Deduction

For sole proprietors using the Blue Form tax return system, proper bookkeeping can also be important for claiming the JPY 650,000 special deduction.

To qualify for the full JPY 650,000 deduction, you generally need to keep books using double-entry bookkeeping and prepare the required financial statements. Additional requirements, such as filing your tax return by the deadline and using e-Tax or keeping qualifying electronic books, also apply.

Keeping your bank transactions properly recorded is an important part of maintaining accurate double-entry bookkeeping.

For more information about the Blue Form and the JPY 650,000 deduction, please see the article below:

I hear about the Blue-Form Tax Return system, 青色申告制度, in Japan. What is it like?

4. Simple Bookkeeping Is Often Better

Accurate bookkeeping does not necessarily mean complicated bookkeeping.

Using fewer bank accounts, reducing cash payments, and using downloadable bank and credit card data can save time and make it easier to keep accurate accounting records.

The important thing is to keep the necessary supporting documents and make sure your records meet Japanese tax requirements.

Koshida Accounting and Tax Office assists foreign business owners in Japan with bookkeeping, accounting, and tax matters.

If you need help with bookkeeping or tax filings in Japan, please feel free to contact us through the inquiry form.