How to Become a Sole Proprietor in Japan as a Foreigner

Hi, 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.

If you want to start a business in Japan as a sole proprietor, what procedures do you need to complete?

Let’s look at some of the basic tax and social insurance procedures for foreign residents starting a sole proprietorship in Japan.

Check Your Status of Residence

When you start a sole proprietorship in Japan, there are several tax forms you may need to submit to the tax office.

You should consider filing an application for Blue Form tax return status (Aoiro Shinkoku). The Blue Form offers several tax benefits, but the application must be filed by the applicable deadline.

If you employ staff and pay salaries, additional notifications may also be required.

The tax office to which you submit these documents is determined based on your place of tax payment (nozeichi).

Submit the Necessary Tax Forms

First, you need to report the establishment of an individual business to the tax office. Usually, you also apply for blue tax return status. If you employ staff, submit a notification of the establishment of a salary-paying office. You can choose your local tax office concerned either based on your home or office address.

For more information about the Blue Form tax return system and its filing deadline, 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?

Check Your National Pension and Health Insurance

If you live in Japan as a sole proprietor, you will generally need to consider National Pension and National Health Insurance.

In principle, people aged 20 to 59 who have an address in Japan are covered by the National Pension system, regardless of nationality, unless another pension arrangement applies.

For National Health Insurance, people who have an address in Japan are generally covered unless they are enrolled in another public health insurance system or fall under an applicable exception.

The procedures are generally handled through the municipality where you live.

For more information about National Pension and National Health Insurance for foreign residents starting a business in Japan, please see the article below:

Is Social Insurance Mandatory for Foreign Entrepreneurs in Japan?

Starting as a Sole Proprietor in Japan

Starting a sole proprietorship in Japan is relatively simple compared with establishing a company, but foreign residents need to consider not only tax procedures but also their status of residence and social insurance.

The procedures required will depend on your individual situation, so it is important to check what applies to you when you start your business.

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

Through our network of specialists, we can also connect clients with professionals in areas such as visas, business registration, social insurance, and legal matters.

If you need help starting a sole proprietorship or filing tax returns in Japan, please feel free to contact us through the inquiry form.