Proper Guide For Foreigner To start A Business In Japan 2023
The article is a guide to starting a business in Japan for foreign entrepreneurs. It outlines the different residency status options available for foreign entrepreneurs to manage a business in Japan, including the Business Management VISA. The article also provides a step-by-step process for starting a business in Japan, including creating a business plan, establishing a company, applying for necessary business licenses, and obtaining financial backup. It also highlights important considerations such as negotiating with banks for financing and securing a business office. Overall, the article serves as a useful resource for anyone looking to start a business in Japan as a foreign entrepreneur.
【Contents】
1. Foreign Entrepreneurs to start up in Japan
2. Status of Residence for Business Management
3. Key for Starting Business in Japan
3.1 Flows of Starting Business in Japan
3.2 STEP1：Create your Business Plan
3.3 STEP2：Establish a company
3.4 STEP3：Apply business licenses (as necessary)
3.5 STEP4：Getting Business Management VISA
3.6 STEP5：Financial backup for start business( Bank loan)
4. Summary
1. Foreign Entrepreneurs to start up in Japan
To launch a business in Japan, foreigners must possess a residency status listed in the table. There are two options available: managing a business without changing the current residency status, or obtaining a business management visa to manage the business.
2. Status of residence permitting business management
– Permanent Resident or Special Permanent Resident
– Long Term Resident
– Spouse or Child of Japanese National
– Spouse or Child of Permanent Resident
– Business Management
– Highly Skilled Professional(i)(c) and “Highly Skilled Professional(ⅱ)
【Need to get Business Management VISA】
– Student
– Engineer / Specialist in Humanities / International Services
– Skilled Labor
– Dependent
3. Key for starting business in Japan
If the foreign entrepreneurs start a business in Japan, you will need the following steps.
1) Set up your company
2) business License(if necessary)
3) Apply Business Management VISA
4) Financial backup for start business
5) Extension of Business Management VISA
(Financial results will be reviewed in the Immigration Bureau)
Even those who can operate the business without acquiring a business management visa, the following points are commonly required.
“Creating a Business plan”
“Acquiring a business licenses (if necessary)”
“Negotiating with Banks for startup financing”
STEP 1: Create your Business plan
As an entrepreneur, it is crucial to develop a comprehensive business plan. This plan should address the following questions: What type of business will you establish, and how will you differentiate it from your competitors to succeed in the market? Additionally, it should include a thorough revenue plan and a strategy for managing capital investment and cash flow. Lastly, it should also outline risk management tactics for mitigating potential market challenges in the event of a deteriorating market environment.
Creating a business plan is an important step for any entrepreneur looking to start or grow a business. Here's a general outline for creating a comprehensive business plan:
Executive Summary: A brief overview of the business plan, including the business idea, objectives, target market, and financial projections.
Company Description: A detailed description of the business, including its legal structure, products or services offered, target market, and unique value proposition.
Market Analysis: An analysis of the industry and competition, including an assessment of the target market size and growth potential, current market trends, and the strengths and weaknesses of competitors.
Marketing and Sales Strategies: A description of the marketing and sales strategies that will be used to reach the target market, including pricing, promotion, advertising, and distribution channels.
Operations Plan: A description of the day-to-day operations of the business, including the processes involved in producing and delivering products or services, staffing needs, equipment requirements, and production timelines.
Financial Plan: Financial projections for the business, including startup costs, operating expenses, revenue projections, and cash flow analysis, as well as funding sources such as loans or investment capital.
Risk Analysis: Identification of potential risks and challenges that the business may face, and strategies for mitigating those risks.
By following this outline and conducting thorough research, an entrepreneur can create a comprehensive business plan that increases the chances of success for their venture.
STEP 2: Set up a company
Setting up a company involves choosing a legal structure such as a sole proprietorship, partnership, LLC or corporation, and registering the business with government agencies such as the Secretary of State, IRS, and state tax agencies.
To set up a company, you'll need to follow these key steps:
Need Personal bank account in Japan (If you do not have a personal bank account in Japan you can not establish a company)
If you do not have a personal bank account in Japan (Japanese bank or Japanese branch of a foreign bank), you can not establish a company because there is no account to transfer capital when setting up a company. Japanese banks are not allowed to make a bank account for foreigners who do not have Japanese resident cards to prevent money laundering.
If you do not have a bank account in Japan, you need a business partner to lend a bank account in Japan.
contract real estate(office / shop)
In order to establish a company in Japan it is necessary to determine the company address.
In addition, when acquiring a business management visa, you must secure a business office separate from your home. Generally, you need a seal imprint certificate and identification card when you lease real estate in Japan. However, because you have not yet got an address in Japan, you can not obtain a Japanese seal stamp certificate and you do not have a residence card. It is difficult to contract real estate.
In some rental offices, there seems to be some properties that contract with passports alone, but in reality it is difficult to contract office properties. Therefore foreigners living overseas can have business partners in Japan (directors of your company) contract for real estate for business.
Need to prepare for foreigners
The following items are prepared by foreigners in establishing a company.
If you have directors who are living abroad, you must be aware that it may take a long time to deliver arrangements and of the international postal documents.
If all the executives reside in Japan, it will take 2 to 3 weeks to complete the company establishment.
If there is a nonresident, it takes about 1 month because it takes a long delivery time.
【All directors reside in Japan】
· Two Japanese seal impression certificates
· Individual’s seal
· The seal of the company (to be established from now)【If you have directors resident in foreign countries】
· Certificate of seal impression of each country etc. and translation
– China: Seal issued by the home country Notary notarized + translated text
– Taiwan: Taiwan’s seal stamp certificate + translation
– Korea: Korean seal stamp certificate + translation
– Other countries: Signature certificate + translation· Individual’s seal (if any)
· The seal of the company (to make from now)
In addition, when acquiring a business management visa, you must secure a business office separate from your home. Generally, you need a seal imprint certificate and identification card when you lease real estate in Japan. However, because you have not yet got an address in Japan, you can not obtain a Japanese seal stamp certificate and you do not have a residence card. It is difficult to contract real estate.
If you have directors who are living abroad, you must be aware that it may take a long time to deliver arrangements and of the international postal documents.
Flows of establish a company
① Decide the basic matters to set up a company
(Company name, company address, business purpose, founder (shareholder), capital etc)
② Creating the articles of incorporation
③ Certify the articles of incorporation at the notary office
④ Transfer capital to your (director’s) personal bank account
⑤ Registration to the Legal Affairs Bureau
⑥ Notifications to the tax office
⑦ Acquiring Business License (if necessary)
⑧ Apply for Business Management VISA
⑨ Notifications to the pension office · Labor Office
STEP 3: Business license (as necessary)
The acquisition of a business license from the government may be necessary depending on the nature of the business you intend to establish. Specific requirements, such as minimum office size, business purpose stated in the articles of incorporation, and capital investment (e.g. 20 million yen for temporary staffing services), may also need to be met. Consulting with government agencies and experts is crucial in determining the necessity of obtaining licenses relevant to your business. It is imperative to obtain the required business license in order to qualify for a business management visa.
Examples of projects that require business licenses
Another crucial aspect of starting a business is securing adequate funding. This holds true even for foreign entrepreneurs, who must effectively communicate with Japanese financial institutions to obtain the necessary funds. Japanese banks typically assess a business's sustainability by examining recent financial performance, monthly profit and loss statements, business risk, and future profit outlook. Banks may also use their own evaluation models and take qualitative factors into account when evaluating loan applications. It is important for entrepreneurs to be prepared with a solid business plan and financial projections when seeking funding from Japanese banks.
STEP 4: Acquiring business management visa
Capital of a company
To obtain a business management visa, foreign entrepreneurs must invest a minimum of 5 million yen. This requires the applicant to have personal capital of 5 million yen or more. The Immigration Bureau thoroughly reviews the process of preparing the capital, including the source of funds. Applicants must provide documentation and explanations regarding the origin of the funds, whether they were saved by themselves or borrowed from family members. The Immigration Bureau may also examine the applicant's and their family's bank statements and contracts to verify the authenticity of the capital.
Requirements for office
To qualify for a business management visa, it is required to have a separate business establishment that is distinct from one's residential address. This means that the office must be contracted "under the corporate name" and "for business use." Renting an apartment room or SOHO room under one's personal name or for residential use will not qualify for a business purpose visa. Similarly, free desk plans and virtual offices, which are often used for startups, are not allowed. The office must have a clear demarcation and be separated from other rooms by walls and doors. It must also have a signboard and necessary equipment. All of these requirements must be fulfilled before applying for a business management visa, including completing the contract and preparing the office interior for business use.
Educational background and work experience
An applicant's educational background or work experience is not a requirement for a business management visa, as long as the investment meets the minimum requirement of 5 million yen. However, if the applicant lacks business experience, a detailed business plan for success must be provided. International students and senior citizens who lack business experience are scrutinized closely, and therefore, it is necessary to prepare a comprehensive business plan.
Furthermore, if an applicant is seeking a business management visa without investing as a manager, more than three years of relevant work experience is required.
Schedule
-the project will take about 5 to 6 months
-Creating a business plan for startup 1 month
-company establishment 2 weeks to 4 weeks
-acquisition of licenses ● months
-Getting Business Management VISA 3 months
If you do not need to obtain a business management visa, and do not need a business license, you can start the project in about 1 month.
STEP 5: Financing for startup (Bank loan)
Foreign entrepreneurs who want to start a business in Japan can take advantage of the start-up loan system offered by the Japanese government. However, to be eligible for the loan, foreigners must have a valid status of residence that allows them to manage a business in Japan. Additionally, the loan must be repaid within the foreigner's authorized period of stay in Japan.
If a foreign entrepreneur needs a repayment period that exceeds their authorized period of stay, they must meet the mandatory conditions of "business continuity (sustainability)" and "extension of status of residence." Business continuity (sustainability) is evaluated based on various factors such as business plans, personal funds, residence history, and real estate ownership. It is a complex assessment that determines whether the business can continue to operate and generate profits in the long term.
Conclusion: Starting a business in Japan as a foreign entrepreneur requires a residency status permitting business management, such as Business Management Visa, and involves creating a comprehensive business plan, setting up a legal structure, applying for necessary business licenses, securing financing, and extending Business Management Visa. To set up a company, a personal bank account in Japan is required, along with a contract for real estate, which can be challenging for foreigners. Thorough research and preparation are crucial for successful business establishment in Japan.
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