How much should the paid-in capital be when you establish a corporation in Japan?

Hi, my name is Taisei Koshida, and I am a certified public accountant and tax accountant.

I aim to assist non-Japanese business owners who struggle with reading or writing in Japanese. If you find the Japanese tax return system challenging, I can help you with your tax filings.

If you are unclear about the amount of suitable paid-in capital in Japan, you might find this blog helpful.

When you establish a corporation in Japan, it is generally said that the paid-in capital should be at least 3 million yen. I will describe the reasons below.

Credibility

Both a stock company and a limited liability company can be established with a paid-in capital of just one yen. However, potential clients you meet for the first time may feel uneasy about doing business with you.

If deficits occur, the net assets will become negative easily

For example, if a deficit of two million yen occurs in the first fiscal year, and the paid-in capital is just one yen, the net assets become negative. On the other hand, if the paid-in capital is three million yen, the net assets become positive at one million yen, with the deficit of two million yen subtracted from the paid-in capital of three million yen. Negative net assets are a significant indicator of an unsteady financial foundation, therefore major difficulties are likely to arise, such as obtaining loans and securing new business deals.

Outlook on consumption taxes

If the initial capital for establishing a company is not less than 10 million, your company is subject to consumption tax. If you wish to avoid being taxable, your initial capital should be less than 10 million.

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